New Church of England ethical investment policy on alcohol to bear down on irresponsible drinks retailers
A new ethical investment policy on alcohol has been adopted by the Church of England investing bodies following advice from the Church's Ethical Investment Advisory Group (EIAG).
Together, the Church Commissioners, the Church of England Pensions Board and the CBF Church of England Funds hold assets of more than £8 billion.
The EIAG - concerned about the continuing negative health and social consequences of the misuse of alcohol - recommended continued restrictions on investment in companies involved in the production and sale of alcoholic drinks.
But, in a change from previous policy, all producers and retailers deriving more than five per cent of their revenues from alcoholic drinks will now be covered by the alcohol policy.
This brings general retailers such as supermarkets within the scope of the policy relating to alcoholic drinks for the first time. The EIAG and the investing bodies concluded that it was wrong to bar investment in every producer of alcohol while ignoring the mass retail of low-cost alcohol by supermarkets.
John Reynolds, Chair of the EIAG, said: "The EIAG is concerned about corporate complicity in the misuse of alcohol, including through inappropriate pricing and promotions. Institutional investors don't talk to the supermarkets about this and our old policy had no teeth because we couldn't divest from a supermarket. We want to use our influence as shareholders to bear down hard on poor corporate practice and to encourage good practice."
The new approach will involve the EIAG defining minimum standards of corporate responsibility that it expects from companies deriving more than five per cent of their revenues from alcoholic drinks. The EIAG will analyse companies to see which meet its minimum standards and will engage with those who do not. The EIAG's ultimate sanction will be to recommend to the investing bodies that companies who do not meet the minimum standards should be excluded from investment.
The new policy will be implemented in partnership with CCLA who are adopting a similar approach for several of the church and charity funds they manage following a client survey in 2007/8. Policy implementation will be supported by an advisory group whose members will include experts associated with health, youth, and law and order charities. Labelling, marketing, and pricing and promotions are key areas of concern.
The EIAG expects to make its first recommendations on which companies to exclude from investment under the new policy in 2013. Until the EIAG makes new recommendations, the old exclusions of companies deriving more than 25 per cent of revenues from alcohol will continue to be applied by the National Investing Bodies.
The Church of England Ethical Investment Advisory Group (EIAG) makes recommendations on ethical investment policy to the Church of England's three national investing bodies. These are the Church Commissioners for England, the Church of England Pensions Board and the CBF Church of England Funds. Together they hold assets in excess of £8bn.
CCLA Investment Management is the leading manager of UK church and charity investments by assets under management or number of clients.* CCLA is a pioneer of ethical and responsible investment and exists to help charities, faith organisations and local authorities make the best of their investments. CCLA is owned by its not-for-profit clients.
The Church of England has no temperance doctrine. The new alcohol policy notes that alcohol is a gift of God in creation, to be enjoyed in moderation but not abused.
The former ethical investment policy was to exclude from investment all companies deriving more than 25 per cent of their revenues from the production or sale of alcohol drinks.
The new policy covers all companies deriving more than five per cent of their revenues from the production or sale of alcohol drinks, including general retailers such as supermarkets. It gives the EIAG discretion to advise which companies should be excluded from investment because of an insufficiently responsible approach to alcohol production or sale.
There will be a two year transitional period during which the EIAG will agree the standards it expects of companies and engage with them, before giving its advice on investment restrictions. In the meantime companies deriving more than 25 per cent of their revenues from the production or sale of alcohol drinks will continue to be excluded from investment.
Investment has been permitted since 1998 in selected companies that have diversified away from brewing into catering, hotels, health and family-focused activities.
Between them the National Investing Bodies currently hold the shares of all the major UK supermarkets. Total holdings in Tesco, Sainsbury, Morrison and Walmart (owners of Asda) are £86m.
The EIAG's new ethical investment policy is published at: http://www.churchofengland.org/media/1284847/alcohol%20policy%20june%202011.doc
* Charity Finance Fund Management Survey 2010