Story by Reuters
Pope Francis heartened environmentalists around the world in June when he urged immediate action to save the planet from the effects of climate change, declaring that the use of “highly polluting fossil fuels needs to be progressively replaced without delay.”
But some of the largest American Catholic organizations have millions of dollars invested in energy companies, from hydraulic fracturing firms to oil sands producers, according to their own disclosures, through many portfolios intended to fund church operations and pay clergy salaries.
This discrepancy between the church’s leadership and its financial activities in the United States has prompted at least one significant review of investments. The Archdiocese of Chicago, America’s third largest by Catholic population, told Reuters it will reexamine its more than $100 million worth of fossil fuel investments.
“We are beginning to evaluate the implications of the encyclical across multiple areas, including investments and also including areas such as energy usage and building materials,” Betsy Bohlen, chief operating officer for the Archdiocese, said in an email.
The pope’s encyclical, a letter sent to all Catholic bishops, has sharpened a debate well underway in Catholic organizations and other churches about divestment. But many major American dioceses have resisted the push.
“You now have this clash between Pope Francis’ vision of the world, and the world that the bishops who run the investments live in,” said Father Michael Crosby, a Capuchin friar in Milwaukee who advocates socially responsible investing in the church.
“The bishops are a very conservative group, and I’m not hopeful this will be resolved anytime soon.”
Dioceses covering Boston, Rockville Centre on Long Island, Baltimore, Toledo, and much of Minnesota have all reported millions of dollars in holdings in oil and gas stocks in recent years, according to documents reviewed by Reuters.
The holdings tend to make up between 5 and 10 percent of the dioceses’ overall equities investments, similar to the 7.1 percent weighting of energy companies on the S&P 500 index, according to the documents.
The United States Conference of Catholic Bishops’ guidelines on ethical investing warn Catholics and Catholic institutions against investing in companies related to abortion, contraception, pornography, tobacco, and war, but do not suggest avoiding energy stocks.
While several organizations of progressive Catholic nuns and priests have been actively urging energy companies to make their operations more socially responsible, that activist approach has not taken hold at the level of the dioceses.
A spokesman for the USCCB declined to comment when asked if the organization was considering adjusting its investment guidelines after the encyclical, deemed the most controversial papal pronouncement in half a century.
“The Pope’s intent was to say to people: there is an urgency on this issue,” said Frank Coleman, who manages Catholic Responsible Investing for the Christian Brothers Investment Services, which has resisted calls to divest the fossil fuel share of its $6 billion under management.
“Divestment is a good way to raise the urgency. But it is not the be-all to end-all of solutions.”
POLICY AND PAPAL VISIT
When Francis makes his first visit to the United States in September, he is expected to press lawmakers to act on climate change in a joint session of Congress, a move almost certain to come under attack from conservative politicians who oppose his intervention in the debate.
Republican presidential candidate Jeb Bush, a Catholic, said right before the encyclical’s publication that he doesn’t “get economic policy from my bishops or my cardinal or my pope.”
The American church remains a deeply conservative organization led mainly by bishops appointed by Francis’ predecessors. The Archbishop of Chicago, Blase Cupich, is one of Francis’ few major appointees so far in the United States.
Regardless of where dioceses stand on the debate, their fossil fuel holdings have likely triggered losses in recent years due to sliding oil prices, adding to financial strain faced by the U.S. Catholic Church from sex abuse case settlements and declining attendance that have cost the church billions of dollars, leading to a rash of Catholic school closures and unfunded clergy pension obligations.
The S&P 500 Energy Index fell nearly 9 percent in 2014, and U.S. oil prices this month slumped to their lowest levels since mid-March to around $44 a barrel. [O/R]
The Archdiocese of Boston held roughly $4.6 million worth of energy stocks in 2014, representing about 6 percent of its stock market investments, according to its most recent financial report. The archdiocese also offered employees a “Catholic Values” retirement savings fund through Catholic mutual fund firm Ave Maria that included shares of companies like Anadarko APC.N>, Halliburton, and Range Resources.
A spokesman for the diocese declined comment.
The Archdiocese of Chicago had “under 8 percent” of its $1.65 billion portfolio in fossil fuels, a spokeswoman said.
The Diocese of Rockville Centre in Long Island, meanwhile, listed $6.3 million in energy company shares among its investments in 2013, the year covered in its most recent report, representing about 8 percent of its equities investments. An official declined comment.
Dioceses in Baltimore, Toledo and much of the state of Minnesota reported significant holdings of oil and gas stocks mainly through mutual fund portfolios. The Diocese of Toledo said it was considering how to react to the encyclical, while the others did not comment. Many other dioceses, including those of New York and Los Angeles – America’s largest – did not provide detailed information on their holdings and also declined comment.
GEORGETOWN BENDS TO PRESSURE
The tussle over fossil fuel investments has already hit the endowments of major Catholic universities. Last year, the Marianist University of Dayton said it would begin divesting its holding in fossil fuel companies. And in June, Georgetown, a Catholic university in Washington, D.C., said it would no longer directly invest in coal companies, handing a partial victory to a student-led campaign for complete fossil fuel divestment.
U.S. schools that have resisted activist calls for divestment in fossil fuels have argued that their responsibility to ensure strong returns to fund their operations trumps any social benefits that might be gleaned from selling off coal, oil and gas stocks.
One of the environmental advocacy groups pushing all universities to divest, 350.org, has also specifically asked Francis to tell the Vatican Bank to drop fossil fuel assets.
“Now that the Pope has made his views clear, it is up to the different forces within the Vatican and within the Catholic Church – the conservatives versus the progressives – to figure out the change,” said Yossi Cadan, a senior divestment campaigner at 350.org.
Cadan said, however, that he expected any moves by Catholic dioceses to divest to happen overseas first, possibly in countries with large Catholic populations that are more vulnerable to climate change like the Philippines. “The United States will probably not be the pioneer here,” he said.
Coleman, of Christian Brothers Investment Services, believes there are benefits to remaining invested.
“Our strategy has been active ownership, to get companies to understand the impact of their emissions and to reduce them, to look at their carbon footprint and to invest in other energy technologies,” he said.
But for Amy Domini, who runs Domini Social Investments, LLC, a mutual fund firm that says it seeks to provide strong returns for investors who “wish to create positive social and environmental outcomes”, the U.S. Catholic Church has no choice but to reconcile its investments with the realities of climate change.
“Otherwise the bishops will be saying they follow the pope with their spirits, but not with their money,” she said.