Socially Responsible Investment Review

September 2021

Ethics process review

It’s been an exciting season for CFB/Epworth as we focus on further refining the processes that underpin our ethical integrity. Andrew Harper, our Head of Ethics, has been working to implement a new approach to our ethical mandate that will better ensure we invest in line with Christian ethics. Along with other stakeholders, JACEI has begun to set the priorities that the CFB/Epworth will follow when taking on engagement with companies. This will be balanced against portfolio exposure to these issues, ensuring we are putting effort and attention on topics where we have maximum opportunity to effect change, whilst meeting the ethical needs of our stakeholders.

In addition to setting clearer priorities, we are also developing a set of ethical pillars. These pillars will provide the CFB/Epworth with a robust and adaptable theological framework, guiding us in our approach to engagement and policy writing. The pillars will also be linked to the UN Sustainable Development Goals to enable us to communicate our theological position with wider groups.

Based on these pillars, we will be refreshing many of our current investment policies whilst being mindful of emerging issues. Our policies will more concisely outline what we expect companies to do on different issues, how we will measure progress, and what action we might take on your behalf. We will give a further update next quarter.

Climate Emergency

We are weeks away from COP26, the United Nations Climate Change conference, which this year will be held in the UK. Recently, CFB/Epworth have worked extensively assessing oil and gas companies, as well as those with exposure to thermal coal. Ahead of COP26 we turned our attention to the global banking sector, joining with ShareAction and other institutional investors to call banks to strengthen their climate ambitions. The engagement targeted 63 banks, recognising the sectors power to drive the transition to a low carbon economy. We have been able to meet with Goldman Sachs and HSBC in the quarter to challenge their pace of change toward a more sustainable future.

The Joint Advisory Committee on the Ethics of Investment (JACEI) previously advised the CFB/Epworth that BHP Group was not aligned with the goals of the Paris Agreement and, therefore, to divest and exclude the company. This was primarily based on its oil and gas assets and the narrative of growth of these assets that BHP set out in recent publications. Since then, BHP Group has agreed to merge its oil and gas assets with Woodside Petroleum. This follows the sale of its share of the Cerrejon mine in Columbia earlier in the year. We will continue to monitor BHP.

Fair Tax Mark

We continue to be active in encouraging companies to increase their transparency when it comes to tax. CFB/Epworth began an engagement piece with our conviction holdings in October 2020 pointing them to the Fair Tax Foundation, which provides a certification scheme for companies which pay the right amount of tax at the right time and in the right place. We have now had responses from 87% of companies we wrote to, with many opportunities to meet and discuss this topic.

Corporate Governance

Q3 is a quieter quarter for voting, particularly for our Global fund. Within our UK funds, we voted against the entire Nomination Committee at two companies due to concerns over sub-board level gender diversity.