The Church of England’s three national investing bodies, which manage some £8 billion in assets, have published an updated policy that seeks to reward top-level executives based on their sustainability credentials over the longer term.
The policy, by the Church Commissioners for England, the Church of England Pensions Board and the CBF Church of England Funds managed by CCLA, appears after recommendations from the Church of England Ethical Investment Advisory Group (EIAG).
A section reads, “It is vital that executive remuneration emphasises long-term performance over short-term performance, and allows for clawback of bonuses awarded for short-term behaviour that has turned out to be damaging in the long-term.”
It adds that remuneration based on performance or level of contribution is wholly aligned with Christian ethics.
EIAG chair James Featherby said, “We want to see lower annual bonuses and greater emphasis on rewarding executives who manage ethical, social and environmental issues well and so deliver enduring corporate success over periods of five to seven years.”
The policy says that in FTSE 100 companies particularly, “executive remuneration has become misaligned with revenues, profits and shareholder returns”.
The three national investing bodies claim the current culture of executive remuneration “faces unprecedented questioning”, and that it will take courage from asset owners, asset managers and the directors themselves to realise wholesale changes.
Justin Welby was confirmed as the new Archbishop of Canterbury earlier this year. He gave up a reported six-figure salary in the oil industry to become a priest in the late 80s.
Welby, who also sits on the banking commission, accused banks of hypocrisy over bonuses in February, saying, “We don’t give skin in the game to civil servants, to surgeons, to teachers” and so we shouldn’t give it to bankers either.