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The climate emergency and the oil and gas sector

The Central Finance Board of the Methodist Church has sold holdings in its funds in all oil and gas companies on climate emergency grounds. We have also excluded a further 11 companies from any future investment.

The divestments and exclusions are the result of new CFB analysis of fifteen fossil fuel companies and the advice we have received from the Joint Advisory Committee on the Ethics of Investment (JACEI).

JACEI was established almost 30 years ago to advise the CFB on ethical aspects of investments and proposed investments. It reports annually to the Methodist Conference.

The work was prompted by a memorial and reply received by the Methodist Conference in 2017. JACEI was asked to look at the extent to which the business investment plans of oil and gas companies were aligned with the Paris Agreement to keep temperature rises below 2°C and to review the divestment criteria. The JACEI report on this work to Methodist Conference 2020 and 2021 (as well as its annual report) is available on the CFB website.

The CFB has factored global warming into its investment approach for over a decade, because we are deeply concerned about the risks to the planet. We have long excluded a range of oil and gas and mining companies from our portfolios because they extract coal or tar sands, or are focused on finding new supplies of oil and gas. We also run an extensive engagement programme to encourage companies to do more to respond to the climate emergency, including co-filing shareholder resolutions.

A report from JACEI on the methodology for responding to the Conference memorial and reply was received by Conference in 2018. JACEI advised that companies should be assessed under five categories: asset mix, capital expenditure, strategy and governance, contributions to a positive transition, and track records and targets related to reducing carbon emissions.

The CFB assessed companies against up to 25 different metrics and gave them a ‘traffic light’ rating. When JACEI reviewed the assessment, it recommended that companies rated red or amber should be excluded from investment on ethical grounds.

Most recently, the CFB have sold its remaining company holdings in the oil and gas sector, including Royal Dutch Shell. This follows advice received from JACEI in April 2021, that no companies in the sector are currently aligned with the climate change targets set out by the 2015 Paris Accord.

Revd Dr Stephen Wigley, Chair of JACEI, commented:

"The Committee has determined that the slow pace of corporate change means that the oil and gas sector is failing to meet the targets set by the Paris Accord. Shell, along with its peers, is currently failing to play a substantial enough role in addressing the climate emergency."

David Palmer, Chief Executive, commented:

"The CFB and Epworth have long been committed to engaging with companies around issues that negatively impact the poor and God’s creation. The pace of change across the oil and gas sector has been inadequate and we welcome the recommendation of JACEI to disinvest."