By Michael Swan
TORONTO, Canada, (The Catholic Register) – The Vatican’s suggestion that investors dump fossil fuel stocks may be one way to protect the planet, but the strategy is not as easy as it appears.
The Archdiocese of Toronto continues to hold stock in Canadian energy companies, some of them operating in Alberta’s carbon-intensive oil sands.
However, Canada’s largest Catholic diocese is finding other ways to use its investment portfolios to defend the environment and advance the priorities of Pope Francis’ 2015 encyclical Laudato Si’, says chancellor of temporal affairs Jim Milway.
The discussion over Vatican guidance in favour of fossil fuel divestment began with the release of a new document in June which aims to make Laudato Si’ more central in the life of the Church. “Journeying Towards Care For Our Common Home” has been more than a year in the making and sets out recommendations to Catholic institutions and bishops around the world based on Laudato Si’. The 260-page document, released in Italian and not yet available English, examines everything from investing to Catholic school curricula to parish life.
In a section of the document listing “best practices” for Catholic investors — everyone from individual investors to large pension funds — the document mentions the Global Catholic Climate Movement’s successful campaign to persuade more than 150 Catholic institutions around the world, from religious orders to dioceses, to drop their fossil fuel stocks.
It also references the 2019 Synod of Bishops for the Amazon, which recommended to Pope Francis that “we embrace and support campaigns of divestment from extractive companies responsible for the socio-ecological damage of the Amazon, starting with our own Church institutions and also in alliance with other churches.”
The recommendation on fossil fuel stocks is certainly something the Archdiocese of Toronto would want to think about, Milway told The Catholic Register.
“If we get something concrete from the Vatican that says we really ought to consider divestment, we will read it carefully, I promise you that,” he said.
“It would be difficult for us — by no means impossible.”
The archdiocese became an ESG investor more than five years ago, meaning that it takes environmental, societal and governance factors into account in every investment. Rather than divestment, the archdiocese — which also invests funds for several smaller dioceses — has chosen shareholder engagement.
Leaning heavily on advice from the Shareholder Association for Research and Education (SHARE), it uses its position as an investor to persuade boards and senior management to do better.
“We talked about this a few years ago. Our conclusion at the time was engagement was a better approach than divestment,” Milway said.
Several Canadian religious orders, including the Jesuits, Sisters of St Joseph and Scarboro Missions, have decided to divest. Given the current price of oil, future prospects for more clean energy alternatives and more people working from home, those who have divested are better off, said Global Catholic Climate Movement Canada co-ordinator Agnes Richard.
But Richard’s real argument against fossil fuel investments isn’t financial. It’s moral.
“If you are applying Catholic social teaching to your actions, where you place your money is part of it,” she said. “If it wasn’t right to support apartheid financially, it’s not right now… I don’t think putting our money in fossil fuel industries or in intentionally damaging extractive industries in Canada or around the world is a good idea.”
Richard steered her personal and family retirement funds out of fossil fuels a few years ago. She believes the investments are now producing better returns.
SHARE chief strategy officer Shannon Rohan says divestment is just “one tool in the toolbox” for ethical investing. Through divestment, investors may want to use their influence to slow production of new sources of carbon, but they should also be thinking about demand for fossil fuels in their other investments.
“Carbon exists across portfolios,” Rohan said. “In terms of the question around what makes engagement effective, we absolutely have to take a slightly broader look,” Rohan said.
If shareholders can persuade a big company like Loblaws to incorporate low-energy technologies and alternative fuels throughout their supply chains, that might have a significant effect on Canada’s carbon footprint, she said.
The trouble with divestment is that once you’re not a shareholder, you have no influence over corporate choices, said Milway.
In Canada where the stock market is dominated by energy companies and banks, it can be difficult not to be invested in fossil fuels, Milway said. Even if you refuse to hold oil company stocks, those oil companies are financing new drilling and new mines with loans from Canadian banks.
As an active investor, Milway wants to push banks to examine and disclose the carbon footprint of their loan portfolios.
“There’s a case to be made that says, it’s just not good business to be lending to a project that is going to foul the environment,” he said. “Because it’s going to come back to bite the firm, bite their ability to pay back (loans) and bite the investors, the equity investors.”
Richard applauds the logic of shareholder engagement but still thinks divestment is the most logical response to a climate emergency.
“Even though it’s difficult, because of the way Canada’s economy is set up, we should look at the concrete, financial sense of divestment,” she said.
Richard hopes Canada’s bishops look seriously at all the recommendations in the new document — not just the investment advice. She wants to see the entire Catholic ecosystem from Catholic colleges to teachers’ unions to hospital systems asking themselves what they’re doing to align their daily practices with Laudato Si’.
“Our environment is not healthy and our society is not healthy. Pope Francis never pulls back from the duality of the cry of the Earth and the cry of the poor,” Richard said. “We want to help the bishops understand that ordinary, everyday Catholics are concerned about these things. We’re looking for, yearning for leadership.”
(With files from Carol Glatz)