Ethical Investment Policy
The Trustees of the Diocese of Wrexham intend to invest in companies whose products, services and practices promote or are not incompatible with Catholic social and moral teaching – including in particular the sanctity of human life, the positive advancement of society; and the integrity of the created world.
The Trustees will expect their investment managers to adhere to this policy and make decisions/recommendations for investment or disinvestment on this basis, using the guidance within the explanatory note which forms part of this policy.
This policy will be subject to annual reporting from the investment managers; and to formal review after the first year and thereafter every three years.
Date: 19th March 2019
The intention of any prudent investment policy is to protect the capital invested and, within the limits and opportunities of the market, to earn a just return.
With this intention, the Governance framework for this Diocesan Policy is set by the Diocese of Wrexham Trust Deed, Canon Law, UK Charity Law and Civil Financial Regulations.
The Charity Commission Guidance to Trustees (October 2011) states:
“Trustees of any charity can decide to invest ethically, even if the investment might provide a lower rate of return than an alternative investment. Ethical investment means investing in a way that reflects a charity’s values and ethos and does not run counter to its aims. However, a charity’s trustees must be able to justify why it is in the charity’s interest to invest in this way.”
The Commission quotes the legal permissions i.e. as possible justifications:
· A particular investment conflicts with the aims of the charity
· The charity might lose supporters or benefactors if it does not invest ethically
· There is no significant financial detriment
Catholic Social and Moral Teaching
The social and moral teaching of the Church which underpins the ethical investment policy derives from a number of sources – history and tradition, the teaching of Holy Scripture, and more formally the Code of Canon Law and the Catechism of the Catholic Church together with the teaching of the Magisterium.
Implications for the Diocesan Ethical Investment Policy
The application of this policy by the Trustees and their Investment Managers entails both positive and negative courses of action and requires in many cases value judgments in the light of Church teaching as well as market knowledge. Where investments are direct as in company shares for example, the judgment may be more straightforward. Where investments are in a fund, e.g. Unit Trusts, or in Hedge Funds for example, the judgment may be more difficult.
In either case, so far as Church teaching is concerned, the decision can be based on three tests – gravity, materiality and proximity of outcome.
· How seriously is the Church’s teaching contradicted? Certain acts are always gravely morally wrong – e.g. Murder, procured abortion etc.
· How proximate is the consequence of a course of action? If a foreseen consequence is distant and does not involve formal or material co-operation in that consequence, investment is permissible. This will apply in principle to investment in alcohol or tobacco although a Diocese may make individual decisions on these.
· How material is the investment? In a mixed portfolio for example, there may be an indirect consequence of investing. A general practice is to advise that no more than 5% of the fund’s resources and returns of the investment be allocated to this element.
Some positive discriminating factors
These will include Healthcare, the Saving and Protecting of Human Life, Environmental Protection, the Supply and Distribution of the fundamentals of life (food, clothing, housing).
This list is not exhaustive.
Some negative discriminating factors
Inappropriate exploitation and damaging of the environment and natural resources; threats to life – companies producing abortifacients, the provision of abortion services, human embryo experimentation, manufacture and distribution of contraceptive products; production and distribution of armaments; violation of human rights and individual dignity – such as by affecting freedom of association, child labour, discrimination; provision of personal loans and credit facilities to vulnerable individuals at unscrupulous interest rates.
This list is not exhaustive.
Where the Diocesan stake in an investment is marginal (under 5%) disinvestment may not be a prudent option. Where the Diocese is shareholder, the Diocese would have the right to influence corporate decision-making in a number of ways:
· With others, bringing a resolution to a public Shareholders’ meeting
· Exercising a vote if appropriate at such a meeting
· Raising questions to Directors at such a meeting
In the event of doubt
The Trustees will welcome requests from Investment Managers for clarification of any aspect of this policy in the event of any doubt arising in relation to significant investments.