Feature

Investing in a better future for all
Paul Keenan attended the ‘Laudato Si’ and Catholic Investing’ Conference in Rome

It is a sad truth of our modern world that the subject of financial investing, with its language of ‘portfolios’ and ‘funds’ is an exercise in eye-glazing disinterest to most who perhaps believe that the pursuit is confined to so-called ‘money men’ operating in brokerages and far beyond our everyday experience. Yet, when adequately elucidated, it very quickly becomes clear that no easy confinement is possible for a practice that has profound implications for us all.

This becomes quickly clear for The Irish Catholic when attending a one-day conference at the Pontifical Lateran University in Rome on the theme of Catholic investing. 

Perusing the literature made available by the Irish bishops’ aid agency Trócaire, one of the organisers of the conference, the following piece of information is revealed: “The Irish Strategic Investment Fund (ISIF), the successor to the National Pension Reserve Fund, is an investment vehicle of the Irish Government funded by tax payer money. According to the NTMA Annual Report, the ISIF in 2014 was invested in some of the world’s most controversial fossil fuel companies, to the value of €72million. Particularly concerning investments include TransCanada, the company behind the highly controversial Keystone XL pipeline to bring oil from Canada’s tar sands to the US market.”

Linked

In an instant, Irish people become linked to one of the first acts of President Donald Trump in resurrecting the contentious pipeline that threatens environmental degradation and has already begun to affect the territories and cultures of Native Americans whose lands it cuts across. Irish money at the heart of a controversial investment.

This is just one illustration of that which ‘Laudato Si’ and Catholic Investing’ hopes to unpick and clarify in numerous sessions. Notably, among the invited speakers are those aforementioned ‘money men’ who have some surprising things to say on how investing, ethically pursued, can offer a better deal for everyone existing in what Pope Francis in his encyclical termed ‘our common home’.

Specifically, the intention of the conference day is to cover one aspect of the Pope’s encyclical Laudato Si’ (On Care for Our Common Home), that of ‘divestment’ from the fossil fuel industry towards combating climate change as a necessary component in eradicating global poverty.

A heady linking of elements, one might think at the outset, but all set to be clarified through the day, and explained through the organisers’ own position paper for the conference: “Eradicating global poverty is within reach, but under threat from a changing climate. Left unchecked, climate change will put at risk our ability to lift people out of extreme poverty permanently by 2030…The evidence is clear: a lasting solution to poverty requires the world’s wealthiest economies to renounce coal, and we can and must end extreme poverty without the precipitous expansion of new coal power in developing ones.”

The conference organisers are not alone in their stance. According to the World Health Organisation: “Delivering affordable, safe and reliable modern energy services to poor homes can be transformative to their wellbeing. Electric lighting replaces expensive lighting fuel, reducing household costs. Electricity also powers mobile phones, fans, TVs and refrigerators that can be used to store food, medicines and vaccines. Clean and safe methods of cooking using better fuels and more efficient stoves reduce indoor air pollution, a leading environmental killer.”

Indeed, as the aid agencies behind the conference attest: “The most prevalent and harmful form of energy poverty is not lack of electricity, but lack of clean, safe and modern cooking. Indoor air pollution from unventilated cooking with fuelwood and charcoal is the fourth largest cause of mortality globally, contributing to 4.3 million deaths each year – more than unsafe water, HIV/AIDS or malaria.”

All valid arguments, but there is a dichotomy here; more power generating capacity is needed in the developing world to bring it out of poverty, yet, through imitation of the industrialised world in its continuing dependence on fossil fuels, more people will die through their polluting effects, while global warming will increase to a point that what developing nations seek to achieve will become an ever more distant goal.

Path

But this need not be the path to follow (despite arguments presented by the fossil fuel companies, the so-called ‘Filthy Fifteen’ whose existence relies on our continued consumption of their products). 

Communicated by the conference speakers: “For the first time in history, renewable energy options are highly competitive with coal in nearly all markets, and becoming increasingly so. Renewable energy resources have the advantage of being more abundant and lower-cost than coal, and renewable technologies can be flexibly deployed to create more jobs.”

On this latter point, it is already established that renewable power is now a promising source of employment. The sector employed 9.4 million people in 2015, compared to the seven million employed by the coal industry.

Thus we arrive at the key message of the day, pointedly delivered by Christina Figueres, former executive secretary with the UN’s Framework Convention on Climate Change: “We must align our moral compass with financial considerations.”

Bringing direct testimony to the conference of the implications of a continued failure to seize the fossil fuel nettle by what tools are at disposal was Cardinal John Ribat of Papua New Guinea, for whose Pacific island nation, and its neighbours, “our situation with climate change is now”.

Afforded the opportunity to address the first session of the conference, the cardinal offered a bleak picture of how rising sea levels in his region have already made flood barriers ineffective, while at the same time crops have been impacted through salt water seepage into fresh water tables amid unpredictable growing seasons.

Without action now, the cardinal warned, entire living communities face being uprooted and displaced.

On behalf of his fellow prelates, Cardinal Ribat said forcefully: “As bishops we cry out for action.”

Hope

But can there be any hope of effective action against a fossil fuel industry armed with a war chest of billions in profits?

Yes, according to Mark Campanale, founder of the Carbon Tracker Initiative and a figure behind a number of responsible investment funds, whose own research presented to delegates showed that, while powerful, the fossil fuel industry that continues to fight for dominance of our energy supply, is in fact operating amid declining fortunes.  

Pointing out that while investment in the fossil fuel sector is rising (thanks to moves such as Ireland’s on the Keystone pipeline), profitability across all of the major companies involved in the industry “is collapsing”, a major disconnect in the offered image of the sector.

“The cost of getting to oil reserves still in the earth is rising,” Campanale revealed, detailing increasingly more difficult explorations in harsh terrains such as the Arctic. “But at the same time, we are still encouraged to invest in the sector.”

Part of this drive for investment, Campanale explains, lies in the desperate need for funding of expensive exploration, but also because a mammoth amount of reserves still await to be tapped within the earth. Herein for Campanale lies a very real threat to the wellbeing of the earth’s climate. If global warming is to be contained below 2 degrees Celsius, as agreed by 195 countries during the Paris Climate Conference of 2015 (COP21), then fully 80% of proven though as yet untapped fossil fuels must be left in the earth. Yet, as Campanale pointed out, countries continue to award exploration licences to fossil fuel companies and investors – perhaps oblivious to the end use of their funds – continue to offer money to fund such explorations.

It is a situation, conference delegates were to subsequently learn, that is changing, but at a pace too slow to offer hope right now that irreversible climate change can be avoided.

It is a change being driven in part by investors who have begun to ask very valid questions around the use of their money (adding to those who already insist that they will not invest in the tobacco industry or in military arms manufacturers).

Enter the money men and the first major shift in the day towards the potential of ‘direct action’ on the part of ethical individuals, communities and indeed congregations.

Jochen Wermuth, the senior fund partner with Berlin-based Wermuth Asset Management revealed that from his purely financial perspective, “renewables are now competitive” and, in his native Germany, “solar power became cheaper than oil for the first time in 2014”.

Cheaper for consumers equals more sales equals growth in the sector, equals a more attractive area of investment, even for those not concerned with responsible investing beyond fossil fuels. Why would an investor not investigate this sector over the ‘Filthy Fifteen’ was the question left hanging in the air.

“Do not let anyone tell you that doing good is expensive,” Wermuth said in response to lobbying figures.

Adding to Wermuth’s voice were those of senior investment analyst Dan Carson of London’s FTSE Russell who said of his company’s activities that while the divestment/ethical investment area had been something of a sideline for a number of years, “in 2015 it began to gain traction and is today no longer niche, it is mainstream”, and Ian Halstead, senior investment analyst with L&P Services, whose company, being cautious around the financial implications of divestment, conducted a full analysis. “We saw no loss in switching to responsible investment,” he reported.

Building on these was Aldo Bonati, deputy head of research at Etica Sgc, a company now operating solely on ethical investments. He reported to delegates that despite an aversion to the fossil fuel sector among a raft of other questionable investments, the fledgling company has gone from strength to strength since 2013.

The reason for offering significant coverage to the money men here is to illustrate that there is a growing momentum beyond the Church/NGO call to arms on climate change that is being perceived by investment companies who, if not morally committed to ethical action, must still adapt to a growing taste for responsible investments.

In the words of Ellen Dorsey, executive director of the Wallace Global Fund/Divest-Invest Philantrophy, during her forceful address to the conference, “it’s time to get out of fossil fuels”.

As much a clarion call to action, Dorsey’s words were a statement of fact that, with investment companies on board, and renewable energy sources catching on at a revolution-building pace, it is, in fact, ‘time’ for aspiration to become action, with investment companies ready and willing to accommodate the ethical concerns of investors. And to illustrate the scale of this quietly building revolution, Dorsey revealed that in 2015 “$5.2 trillion in assets moved to divest from fossil fuel investing”.

That is correct: $5.2 trillion.

Such a heady figure immediately puts one at risk of picturing philanthropic giants bringing chaos to the precincts of Wall Street institutions by their ‘acts of responsibility’, but as the later sessions of the conference were to show, the investment revolution is one just as open to ethical individuals and congregations.

Yes, there is the example brought by George Hanley of the University of Dayton, whose institution’s divestment from fossil fuel funds caused an inspiring domino effect among other universities across the United States. But so too there are the actions undertaken by the Catholic-run Dignity Health. Sister of Mercy Susan Vickers, the body’s vice president of corporate responsibility, explained to delegates how Dignity is currently undertaking a slower divestment path for the good of the group’s own programmes, resulting in a 5% divestment to date in an ongoing process. Baby steps when compared to the impact of Dayton, but, as Sr Susan so accurately put it, “we don’t all need to do the same thing, but we all need to do something”.

Or, as Aldo Bonati put it earlier in the morning by way of illustration for those who can only see divestment/investment as a large-scale project, “buying one solar lantern for a home is a start to make all other things possible in the changes it brings to lives”.

Thus the call to action for all who believe in the message of Laudato Si’ and the aims of Divestment Movement was issued by speakers. As Sheila Kinsey, representing the Union of Superiors General and the International Union of Superiors General, put it, “the potential for congregations around the world is huge” in pushing for divestment from fossil fuels. “Collaboration is key against an opposition that is strong,” she added.

Collaboration

Towards such collaboration, delegates were invited to check for themselves online ‘toolkits’ which have begun to emerge to bring others on board and to facilitate the shared desire to adopt a more ethical – and questioning – approach to investments. The Divest-Invest Toolkit for Catholics can be found at http://bit.ly/divesttoolkit while further resources are available on the conference’s own website: http://bit.ly/catholicdivest

https://fossilfreefunds.org/ meanwhile, allows the user to “search for mutual funds from your portfolio or retirement plan and find the fossil fuels hidden within” and www.catholicimpact.org offers testimonies from Catholic investors on challenges and successes linked to the movement.

The last words on matters are, ironically, those offered at the very commencement of the ‘Laudato Si’ and Catholic Investing Conference’.

In his opening remarks to delegates, Cardinal Peter Turkson, prefect of the Dicastery for Promoting Integral Human Development summed up the goal afforded by the knowledge and tools subsequently imparted to the willing in the fight for our common home.

“Let us move away from fossil fuels,” he urged. “However gradually, let us move!”