Britain’s state church announced on Thursday that it is leaving oil and gas companies after its assessment found they have not aligned with the Paris Agreement, although it hopes for a return.
The Church of England has faced increasing internal pressure in recent years to divest from fossil fuel companies. More than half of its 42 dioceses, which have their own investment bodies, have now pledged to exclude hydrocarbons from their investment portfolio, according to the Christian group Operation Noah, which has campaigned for these investment bodies stop financing oil and gas.
The move brought forward on Thursday involves the Church of England commissioners, who oversee the church’s $13.13 billion (GBP 10.3 billion) endowment fund, and the church’s pensions board.
The commissioners “have decided to exclude from their portfolio all remaining oil and gas companies and will exclude all other companies that are primarily engaged in the exploration, production and refining of oil or gas, unless they are in true alignment with a 1 ,5°C [degrees Celsius] way, at the end of 2023″, they said in a press release.
Meanwhile, the pension board “will divest from Shell plc and other oil and gas companies that do not show sufficient ambition to decarbonise in line with the targets of the Paris Agreement,” the board said in a statement separate
The withdrawal by both bodies was in response to a report by the church’s National Investment Bodies which found that “while some companies have made significant progress, no fossil fuel company has passed the 2023 hurdles set by the NIBs “, the church said in another statement.
Commissioners had already excluded 20 oil and gas companies from the church’s investment program by 2021. Its announcement on Thursday expands the list to include British multinational giants BP PLC and Shell PLC; the Colombian Ecopetrol SA; the Italian Eni ASA; Equinor ASA of Norway; US majors ExxonMobil Corp. and Occidental Petroleum Corp.; Mexico’s Pemex; the Spanish Repsol SA; Sasol Ltd. from South Africa; and the French TotalEnergies SE.
Meanwhile, the board will divest “all oil and gas companies that do not have short-, medium- and long-term emissions reduction targets aligned with limiting global warming to 1.5”.°Cas assessed by the independent Transition Pathway Initiative.”
“The exclusion will apply to equity as well as debt investments,” he said.
“We have long called on companies to take climate change seriously and, specifically, to align with the goals of the Paris Climate Agreement and strive to limit the increase in temperature to 1, 5.°C above pre-industrial levels. In practical terms, this means phasing out fossil fuels, investing in renewable energy and charting a credible path to a net zero world,” said chair of commissioners and the Archbishop of Canterbury, Justin Welby. “There have been some progress, but not enough”.
The pensions board’s chief executive, John Ball, said: “There is a significant mismatch between the long-term interests of our pension fund and continued investment in companies that seek to maximize short-term profits at the expense of ‘ambition necessary to achieve the goals of the Paris Agreement’. .
The board said it had engaged with the industry over the past 10 years to push them to fully sign up to the 2015 Paris Agreement, in which governments pledged to prevent the global average temperature from rising two degrees Celsius (35.6 degrees Fahrenheit) above pre-industrial levels. levels
“Recent reversals of previous commitments, notably by BP and Shell, have done so [sic] it undermined confidence in the sector’s ability to transition,” added Ball.
Shell has decided to reverse a target to cut oil production by one to two percent annually after selling some fossil fuel assets, including its US shale operations, a Reuters report said on 10 June that quoted anonymous company sources. However, in a statement on June 14, Shell maintained that it can still reach zero by 2050.
Meanwhile, BP has increased its planned investment in oil and gas to a further $8 billion by 2030, it confirmed in its March 10 annual report. It has set its hydrocarbon production target at around two million barrels per day by the end of the decade. falling back to a 40% reduction by 2030.
“Although some companies have come close to achieving alignment as assessed by the TPI [Transition Pathway Initiative]none has reached the threshold to remain investable,” the board statement said.
“As a result, the Pension Board will no longer prioritize engagement with the oil and gas sector on climate change and will instead refocus its efforts on reshaping demand for oil and gas from key sectors such as the the automobile
“The Pension Board will seek strong commitments related to the use of oil and gas from demand sectors such as aviation, utilities, automotive and steel. It will continue to engage policymakers on the need for greater ambition in public policy , including a phase-out of oil and gas that takes into account the different needs of emerging and developing countries.”
Win for activists
Operation Noah, a Christian divestment campaign group which has led the push to get Anglican investment bodies to divest from fossil fuels, welcomed the church’s decision and expressed hope for a domino effect .
“Operation Noah celebrates the Church of England’s decision to divest from all fossil fuel companies, which we believe should send shockwaves around the world, making it clear that these companies do not operate in good faith and they are not preparing for the global transition to renewable energy.” , he said in a statement
“Investor engagement has worked in other sectors, but it has never really worked with fossil fuel companies, and we trust that today’s announcement by the Church of England will encourage many others to divest from fossil fuels and invest in climate solutions,” he added. also crediting the success to church clergy and lay activists.
Environmental coalition UK Divest welcomed the church’s decision, tweeting: “Today’s announcement once again confirms what we’ve known for decades: engagement with fossil fuel companies *not* and * it can’t* work.”
Hope of Return
But the church indicated openness to reinvest in the industry.
“The decision to divest was not made lightly,” First Church Estates Commissioner Alan Smith said in the commissioners’ statement.
“If any of these energy companies align with our criteria in the future, we would reconsider our position. In fact, that’s something we look forward to.”
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