The day after the archbishop of Canterbury said he would try and compete payday lenders like Wonga “out of existence”, it was revealed that the Church of England invests in the venture capital firm that helped get Wonga started in 2009.
Speaking to BBC Radio 4’s Today programme, Justin Welby said he was “irritated” and “embarrassed” at the revelation, which was brought to light by an investigation by the Financial Times.
The church’s investments are split between three national investing bodies: the Church Commissioners for England, the Church of England Pensions Board and the CBF Church of England Funds, which are managed by CCLA.
All three are covered by policies put forward by the church’s Ethical Investment Advisory Board (EIAG), and its secretary Edward Mason spoke to Blue & Green Tomorrow.
What does the fact the Church of England can invest indirectly in Wonga say about the way it screens its investments?
We have a very clear policy on payday lending and other forms of high interest rate lending, in that we don’t invest in it.
This exposure to Wonga came about through an investment in a pooled vehicle. That means it’s not a vehicle that only we invest in, but a number of different investors will invest in it. It’s an area of investment where you can’t have the same control over what goes into the fund.
We have a different policy approach there, which requires the investing bodies to make an assessment of the likely materiality of exposure to restricted areas of investment, and to monitor that in the course of the fund’s life, which is obviously what we’ve done in this case.
The investment in Wonga is very small: £75,000 which represents 0.3% of that fund. Judging that against the pooled fund’s policy, that’s not a material exposure, so although it’s not something we like – we don’t support payday or high interest rate lending – it is an investment that can be managed.
The Church of England allows investment in companies that derive up to a quarter of turnover from tobacco, gambling, alcohol and high interest rate lending, and 3% for pornography and 10% for weaponry. Wouldn’t 0% be a more sensible level of investment?
The thresholds are set individually across each policy. We look at the way in which business operates, so on an area like payday lending, for the specialised companies that’s what they do; they do payday lending. They may have one or two other activities but a 25% threshold will capture any company that is a payday lender.
A 25% threshold does the job so that’s our standard test as to whether a business is substantively involved in something that’s a major part of their activities.
You will have seen we have zero tolerance for indiscriminate weaponry – that’s cluster munitions, landmines, nuclear weapons and nuclear fissile material. That’s because it’s so contrary to our values as a church. It is possible to assess companies against that threshold, and we do it there because we think it’s in line with our values and because we are able to capture companies with any exposure in those areas.
On something like pornography, because again, we don’t want exposure to producers of pornography or people who are supplying it, we have a 3% threshold. We’ve taken advice from our screening service adviser – we use specific research providers in these areas – and they advised us that 3% was the minimum that they could screen against.
The church had a similar challenge over its investment in News Corporation, regarding the alleged hacking of phones. What is the church doing to pre-empt and prevent future embarrassments?
We have our policies; we apply them where we can. Where we have to get exposure to areas through pooled vehicles, then we have this test of materiality. So there hasn’t been a breach of policy of our ethical investment framework in this instance.
The Church Commissioners is quite a sizable institutional investor – its portfolio is £5.5 billion – and it needs to access a wide range of different investments to generate the returns, to provide the income for the church year-on-year, to fund its activities and to pay the pension liabilities that it is responsible for.
There’s a whole legal framework on that and it has to manage very carefully the number of exclusions that it operates. The archbishop of Canterbury said today that it is a complicated area, the investments are complicated and business involvements are complicated. We absolutely do our best to be ethical within the constraints of the investment vehicles that are available and the legal framework.
The EIAG, as its name suggests, is an advisory group. Therefore, could the national investing bodies choose to reject its ethical investment recommendations?
They have legal right to invest in anything they wish. They are responsible for their investments and responsible for ensuring the way they invest are appropriate for the values of their beneficiaries.
But all the policies that we publish have been adopted by them. I present the policies to the trustee bodies, and we have a process of dialogue as policies are being developed. It’s inconceivable that [they would not accept the policies].
Ethical investment among private investors seems to be gradually moving towards more positive strategies – those that maximise social impact and actively benefit the environment, for example. Has the church considered these alternative strategies?
An individual investor can do whatever they want with their money. If they want to put it all into microfinance or all into renewable power infrastructure, they have the freedom to that. They can invest exactly as they want.
An institutional investor like the Church of England investing bodies can’t do that. It’s not their money; it’s someone else’s money. That’s what fiduciary responsibility means: you’re looking after money for someone else.
That means the pensioners who are receiving the pensions, the parishes that receive money to fund their ongoing activities so there is a Church of England presence in every parish of the country. So there’s a legal framework for that, and there’s a limited extent to which you can take ethical considerations into account in managing that money. We do that to the maximum extent possible.
In the UK stock market, the Church Commissioners excludes 12% because of our ethical restrictions. That’s a lot of the stock market to exclude, but we do it because it’s the right thing to do and we think that’s what our beneficiaries want. But there are constraints.
In terms of positive investment, they have to meet the returns criteria, because again that’s what the obligations of the investing bodies are – to generate the returns the beneficiaries need – and there are some very interesting investments. The Church Commissioners invests a substantial £200m in Generation Investment Management, for example. That’s invested with full integration of sustainability considerations and that is a very positive form of ethical investment, and something that we’re doing and exploring.
There are different ways in which ethical investment is applied is applied across the portfolio. We have the exclusion as our bottom line; there’s this sustainable investment mandate, but there are constraints.
Will Self-Driving Cars Be Better for the Environment?
Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?
But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?
The Big Picture
The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.
That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.
One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.
There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.
As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.
Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.
Make and Model of Car
Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.
On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.
The Bottom Line
Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?
Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.
New Zealand to Switch to Fully Renewable Energy by 2035
New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.
New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.
Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.
Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”
The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.
Zero net emissions by 2050
Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.
Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.
She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.
Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”
A worldwide shift to renewable energy
Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.
Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.
Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.
Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.
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