Investing ethically  

Treasurer John Levick reports on the latest meeting of the Church Investors Group

The Baptist Union and our pension scheme, BMS World Mission and its pension scheme are all members of the Church Investors Group (CIG).  The Group brings together the main denominations, like minded charities and similar bodies from overseas, mainly from Europe, with the aim of using the combined value of investments to make a difference by challenging and influencing companies in their policies.
 
Recently the CIG had its annual two day conference at which a range of subjects was covered, which also speak in to the justice agenda.


Gambling

Our first session was led by the Bishop of St Albans, the Revd Dr Alan Smith, who sits on the Lords Select Gambling Industry Committee and has been vocal on the problems of gambling.  He shared with us interviews with parents whose sons had taken their lives because of building up debt from gambling.  It is estimated there are 400,000 gambling addicts in the UK with between 250 and 650 suicides each year.  The numbers are somewhat vague because it is a hidden addiction, particularly with online gambling.  It is a huge industry making £18.5bn in profits in 2018.  He also gave us insight into the sophistication of the industry with psychologists being employed to design the betting channels.  While we already exclude investment in gambling under our ethical investment policy we were reminded of the tainting into other industries, such as sport where gambling branding and adverts are prominent; the advertising industry, the gaming industry where the boundaries between games and gambling are blurred; and the wider leisure industry.
 

The Norwegian State Pension Fund

Next, we heard from Hans Christian Bugge who is vice chair of the Council of Ethics for the Norwegian State Pension Fund.  The Fund was set up to receive all oil revenues and related taxes due to Norway.  It has grown to be the largest fund in the world at £900 to £1,000bn.  It can only invest outside Norway and the government can only spend 3 per cent of the fund each year.  Nevertheless, this is still far larger than, say, all state health spending in Norway, even though Norway has amongst the highest levels of health spending per head.  The fund has been, and is still developing its ethical investment policy, and the importance to CIG is having such a large fund also pressing companies on ethical issues.


Climate change and plastics

Climate change has been on the CIG agenda for some years but this time our focus moved to plastics.  Among the panel of speakers we had the Sustainability and Communications Manager from DS Smith, a firm which produces packaging from fibres, principally recycled fibres.  The company has an ongoing strategy to produce smaller lighter weight packaging.  However we were also reminded of the supply chain for plastics and the challenge of working at different points in the chain. 

Another speaker focused on plastics in the sea and, particularly lost or abandoned fishing gear which accounts for 10 per cent of all plastics in the sea and totals 8m tons per annum.  On current trends by 2050 it has been calculated that the weight of plastics in the sea will be greater than the weight of fish.  It is difficult for investors to reach the fishing industry because of the way the fishing fleets are owned, but we were asked to focus on the retailers and ask them to challenge their supply chains. Our recent change to our ethical investment policy starts to move us away from fossil fuel extraction which is the raw material for plastic production.
 
The day ended with evensong at St Paul’s Cathedral.


The Positive Peace Index

The second day began by hearing about the Positive Peace Index.  The index takes the following factors to create the index:  Well functioning government; Equitable distribution of resources; Free flow of information; Good relations with neighbours; High levels of human capital (particularly educated people); Acceptance of the rights of others; Low levels of corruption; and Sound business environment.  While the factors are not surprising, the extent of the data makes it something to note.  The index covers 163 countries and draws on 40,000 datasets. 

Key findings are that the index has risen by 2.4 per cent over the last decade, mostly developed by Global South countries improving their ratings.  While the western developed countries are at the top of the index their ratings have deteriorated over recent years for obvious reasons, but also less obvious such as the Scandinavian countries deteriorating on the back of levels of immigration.  It has been shown that a 1 per cent rise in the index in any country collates to a 2 per cent increase in GDP.  Death rates are substantially higher in the lowest rated countries.  This is not due to natural disasters which are equally spread across all groups of countries, but almost certainly reflects varied responses to the disasters.  We were informed that 12.4 per cent of the world’s GDP is consumed by military spending, loss of property (e.g. following disasters or war) and injury and death.  There was some debate about the factors making up the peace index and where there was input for spirituality. Our ethical investment policy excludes investments in armaments companies.
 

Mental health and wellbeing

Our keynote speaker for the conference was Lord “Dennis” Stevenson who spoke on mental health reflecting his interest in this area including promoting a Private Member’s bill – the Mental Health (Discrimination) Bill and founding the charity MQ Transforming Mental Health.  He also spoke from his own experience of having mental health conditions.  He informed us that 300,000 leave the workforce each year due to mental health issues and the costs to the economy are £100bn per year. 

He pointed out that businesses had not addressed mental health issues within their businesses, but if they did, it would have a positive benefit to the business through improvements in the wellbeing of the workforce.  It is recognised that dealing with mental health issues in smaller businesses is difficult, but this can be encouraged through the larger companies including it within their supplier contracts.  Lord Stevenson told us a good way for companies to give their workforce permission to share mental health problems was to select some of the company’s top performers and give them permission to talk about any mental health issues.  If five top performers were selected it is highly likely at least one will have encountered mental health issues during their life.  One of the top firms which has embraced this issue is Legal & General, which is an important fund manager within our pension portfolios.
 
Lord Stevenson’s session was followed by another with a panel comprising the Head of Workplace Wellbeing Programmes at MIND, the UK Human Resources Director for the chemical giant Roche and  the Deputy Head of Responsible Investment at investment managers CCLA (CCLA also provide the secretarial support for CIG).  Roche has developed a programme since 2012, training managers to deal with staff who have mental health issues.  It has also employed a nurse with mental health training in their Health and Safety at Work team. 

MIND is helping to develop a Thriving at Work Council which is an industry wide grouping on mental health.  MIND is already at the second stage of its work to put processes in place and to identify good practice.  A third stage yet to be developed is to measure success.  CCLA has been benchmarking 10 companies, six in the financial sector and four in pharmaceuticals covering 300,000 employees.  The work has shown that the companies with the highest level of identified mental health in the workforce are those which have done the most work to identify it.  Four steps identified are to move the issue from stigma to support to training to transparency.  It raises the question as to whether chaplains should have more training in mental health awareness.


Modern Day Slavery 
For our final session we moved to the London Stock Exchange to join a larger group to launch an investor statement “Find it, Fix it, Prevent it” on Modern Day Slavery.  We had presentations from Marks & Spencer, which is the leading company in addressing modern day slavery in its supply chains, as well as one of its suppliers Fresco. Seventy-four per cent of companies admit to having modern day slavery in their supply chains. The remaining 26 per cent almost certainly do not understand their supply chains properly, so there is very likely to be modern day slavery hidden there. 
 
Companies are already required to include a statement in their annual reports addressing modern day slavery, but evidence indicates that companies are including appropriate wording without actions to address the problem.
 
Out of the session we have been asked to sign up to a statement in which:
 

“…we call upon UK-listed companies to:

• Increase their efforts to identify human trafficking, forced labour and modern slavery in their supply chains;
• Review, assess and disclose the effectiveness of their attempts to address these issues
• Support the provision of remedy to victims of modern slavery within their supply chains. 

"We believe that the continued presence of modern slavery in the world is abhorrent, and that companies demonstrating a real commitment to eradicating modern slavery from their supply chains will demonstrate resilience and long-term sustainability to the market.”

        

Image | Unsplash
 

John Levick is the treasurer of the Baptist Union of Great Britain. Our ethical investments policy was considered at the meeting of the March 2019 Baptist Union Council