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Ethical Investment - Eve's Commonplace
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Ethical Investment
As I mentioned on Radio 4 last week (starts at 38 minutes), I was highly delighted with the Archbishop of Canterbury's embarrassment over the revelation that the Church Commissioners have inadvertently invested in Wonga. Adam Smith reckoned that the origin of morality was that we feel held in the gaze of the other. It is the risk of embarrassment – or that good old-fashioned word, shame - that keeps us on the straight and narrow. The Commissioners have a large fund, now managed externally, and the recent shift away from plain old bonds and equities into more complex asset classes makes it inevitable that accidents like this will happen. Unless, of course, the Church can get much better, more detailed and more immediate management information. But the cost of this would probably outweigh the extra returns generated, begging the question about the investment strategy more generally.

I remember attending a meeting of General Synod in York in the days when the Church of England was officially boycotting Nestle. Before everyone arrived, the staff had to whizz round the bedrooms, removing sachets of Nescafe. Meanwhile, back in London, the Church Commissioners were invested in Nestle to the tune of several million pounds. Was the then Archbishop of Canterbury, George Carey – the President and Chair of both entities respectively – embarrassed? No. So this Archbishop's embarrassment is a major step forward, even if it took a newspaper expose to bring it about.

So the next step is a better conversation about the point of the Church's investments, for which there are distinct legal, moral and Christian arguments.

First, the legal point of trustee investments. In 1991, the then Bishop of Oxford, Richard Harries, took the Commissioners to court about the matter, because of their investments in Apartheid South Africa. The ruling was that, in legal terms, the Church Commissioners were ethical enough: 'trustees must act prudently. They must not use property held by them for investment purposes as a means of making moral statements at the expense of the charity of which they are trustees. Those who wish may do so with their own property, but that is not a proper function of trustees with trust assets held as an investment.' The Commissioners have always invested subject to an explicit ethical investment policy, which, it seems, is legally permissible, but highly optional in this field. The ruling acknowledges the right of cancer charities not to invest in tobacco stocks, because it would undermine the core objectives of the charity. By which token, the point of the Church's investments, in legal terms, is to maximise returns in such a way so as not to undermine the Church's core objectives. Which is why there is so much debate over investments in stocks that are inimical to many Christians but perhaps not to all. Therefore, anyone wanting to question an ecclesiastical investment had better be able to show that the Church, as a charity, would upset enough of its beneficiaries by investing so as to undermine its raison d'etre.

Next, the moral point of investing. This shades into the legal, in that it is surely moral to want to obtain the best deal for one's beneficiaries. This can be understood narrowly in financial terms, or more widely in terms of the whole 'return' on the investment. Perhaps as well as financial return the Church gains societal benefit from its involvement, in supporting an enterprise that delivers vital products or services. Or perhaps, in the case of clergy loans of various kinds, clergy are better able to perform their roles and deliver the Church's mission in the parishes. Of course, there is a dark side to this morality. Some would argue that it is a bit smug to maintain the moral high ground when useful work could also be done in the grey areas in between. In Shakespeare's Measure for Measure, Isabella refuses to save her brother's life because it would require the sacrifice of her immortal soul. That this is more important than his mortal life is a moot theological point, but her argument is essentially selfish. This is what Bonhoeffer meant when he pointed out that morality could often be more about ego than the good, so he risked his immortal soul in attempting to rid the world of Hitler.

So, the Christian point of investing? I've just been talking about this on Radio Scotland, with Richard Holloway and Sally Foster-Fulton (from about an hour in). Most ethical funds – including religious ones – have tended in the past to operate a 'banned categories' approach, avoiding 'sinful' investments in favour of more wholesome ones. This so-called 'negative' approach is now being challenged, with many funds trying to be more 'positive', seeking out good enterprises and lending them support. In the broadcast, Sally reports that the Church of Scotland has a number of 'ideals' against which they are currently trying to identify opportunities for positive investment. These include the reduction of inequality and poverty, and the promotion of sustainability and mutuality. I think this is a more theologically sound approach, because it is about co-creation and solidarity. It is also more likely to change the market for the better.

Tim Gorringe uses the metaphor of 'votes' for our financial activity. Given that the market is just a system to match supply and demand, it will become what those who have the most 'votes' want. We are lucky enough to be in the rich half of the world. So, if those of us who can afford to, 'vote' differently, we can make the market more Kingdom-shaped, by nudging it in a more positive direction. The success of fair trade is a case in point, largely driven by Christian activity, which has created a new market now worth over £1billion a year.

One way to start voting differently is to start locally. For example, you could join your local credit union, or a peer lending organisation. And I've talked before about the Cape Cod initiative where locals were asked to pick 3 enterprises they liked and spend $50 a month in each of them. The community of Fenham in Newcastle went further, and bought their local pool when it was threatened with closure. July's Delicious magazine featured some stories of similar local initiatives - pubs, fisheries, bakeries - and the UK government has just announced a £250m community assets fund to help locals buy threatened amenities.

Of course, we shouldn't stop with the local, but it is a good place to start. The New Economics Foundation reckons £1 spent with a local supplier is worth £1.76 to the local economy, whereas £1 spent in a national chainstore is worth only 36p.

And remember, if St Peter asks to see your latest bank statement at the Pearly Gates, it should be a thing of beauty!

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