A committee is recommending that the Presbyterian Church (U.S.A.) divest from three companies that it says are not making sufficient progress on responding to climate change issues.
That’s the recommendation the Committee on Mission Responsibility Through Investment (MRTI) has voted to make to the 2020 General Assembly, after determining that those companies – Exxon Mobil, Marathon Petroleum and Valero Energy – have fallen into the “red” or least acceptable zone in MRTI’s system of metrics.
That system tracks progress – or lack of it – on dozens of measures, and is intended to provide a way of measuring whether MRTI’s process of corporate engagement is achieving results. MRTI uses that system, which the 2018 General Assembly approved, to measure companies’ progress in addressing concerns about global warming and environmental issues.
MRTI’s recommendation marks a shift from the rankings it released in June 2019. Both Marathon and Valero were in the red zone then, but since then Phillips 66 has moved from the red zone barely into the orange (the second-worst, indicating some progress), and Exxon went the other direction, from the orange zone into the red.
The recommendation that MRTI approved during a conference call meeting Jan. 16 also asks the assembly to add four more companies – Occidental Petroleum, American Airlines, Delta Airlines and United Airlines – to the list of firms with which MRTI would engage in conversation.
MRTI also would continue its interaction with six other firms – Chevron, ConocoPhillips, Duke Energy, Ford, General Motors and Philips 66 – that the 2018 General Assembly placed on the list for focused engagement.
Potential impact
Rob Fohr, the PC(USA)’s director of Faith-Based Investment and Corporate Engagement, said during the meeting that if the General Assembly approves this recommendation for targeted divestment, that’s likely to get public attention and could provide leverage to push other companies to improve their environmental records.
Knowing that the Presbyterian Church is willing to divest, “maybe more companies can move in the right direction,” said MRTI member Steve Webb. If not, “we should consider divestment the next time around” for those firms too, if the metrics support it.”
MRTI is acting in coordination with the Climate Action 100+ investor group, which is working to influence the behavior of 161 of the world’s largest greenhouse gas emitters and is trying to limit global warming to below 2 degrees Celsius, in accordance with the Paris climate accord. With the recent addition of the BlackRock asset management firm, the Climate Action 100+ alliance now represents $41 trillion in assets, Fohr said.
Fohr said Climate Action 100+ representatives have told him that if the General Assembly supports the MRTI recommendation, “the Presbyterian Church would be one of the first investors to divest for policy reasons only,” not strictly for economic ones. The PC(USA) “is a recognizable name,” Fohr said, so the denomination’s divestment action would add ‘additional urgency” for other companies to move towards low carbon demand.
Kerri Allen, MRTI’s vice chair, put it this way: “Companies have an opportunity to change course.”
Fohr said Climate Action 100+ has a five-year plan, ending on Dec. 31, 2023, and he’s hopeful that some of the 161 companies now on its engagement list will begin moving towards compliance with the Paris agreement and be taken off the list starting in 2020.
The earliest any PC(USA) divestment that’s climate-change related could take place – from the Board of Pensions or Presbyterian Foundation – would be in January 2021, depending on decisions from the boards of those agencies.
Next steps
Climate change activists in the church have been paying close attention to what MRTI says about Exxon. And the divestment issue is almost certain to be intensely debated again at the 2020 General Assembly, which will meet in Baltimore June 20-27.
Some Presbyterians think that the process of corporate engagement is too slow and the church is too cautious, contending the PC(USA) should act more quickly to divest all its holdings in fossil fuels.
The Presbyterian Mission Agency Board will consider the MRTI recommendations at its meeting in Baltimore Feb. 12-14. The matter then will go to the 2020 General Assembly — which also will consider an overture from the Presbytery of Monmouth calling on divestment from the fossil fuel industry, and asking the assembly to “recognize that fossil fuels have been used by humans to create a better world for many people and that the time of their usefulness is now over.”
The overture calls on the PC(USA), the Presbyterian Foundation, the Board of Pensions and the Investment and Loan Program to divest from the fossil fuel industry, and for the Board of Pensions and Presbyterian Foundation “to actively seek out and invest in securities of companies whose predominant focus is in renewable and/or energy efficiency.”
Another overture, from the Presbytery of Seattle, calls on the assembly to publicly affirm PC(USA) support for the Paris Climate agreement, from which President Trump has said the U.S. will withdraw in November 2020. The overture asks the assembly to direct the PC(USA) stated clerk to request that Congress and the president revoke that withdrawal.
The MRTI recommendation begins by asking the assembly to “recognize the need for urgent and robust responses to the existential threat of the climate crisis, including limiting global warming to well below two degrees Celsius, as outlined in the Paris agreement, as well as the need for Presbyterian entities and individuals to pursue a comprehensive set of faithful responses.”
The decision on Exxon
MRTI follows a divestment policy adopted by the General Assembly in 1984, which outlines seven steps – including corporate engagement – the PC(USA) should follow before divesting assets. The metrics the assembly approved in 2018 give MRTI more specific ways to measure the progress of individual companies.
Regarding Exxon, the MRTI report outlines some of the reasons for moving the company from the orange to the red zone. In the summer of 2019, Fohr was called as a “fact witness” in a fraud lawsuit the New York attorney general filed against Exxon Mobil in late 2018, claiming the company had misled investors. That happened because, in 2016, Fohr had asked a question at Exxon’s annual shareholder’s meeting — and the accuracy of the response given by Rex Tillerson, at the time Exxon’s chief executive officer and chair, became an issue in the trial.
On Dec. 10, a New York state judge ruled in Exxon’s favor in that case, finding after 12 days of hearings that the attorney general, Letitia James, and her staff had “failed to establish by a preponderance of evidence” that Exxon had violated a law intending to prevent shareholder fraud.
In making that ruling, Judge Barry Ostrager made it clear that the decision addressed only the question of possible fraud, not what role Exxon might play in global warming. “Nothing in this opinion is intended to absolve Exxon Mobil from responsibility for contributing to climate change in the production of its fossil fuel products,” the judge wrote. “But Exxon Mobil is in the business of producing energy, and this is a securities fraud case, not a climate change case.”
And after Fohr was publicly called as a witness in July 2019, “Exxon responses to MRTI ceased,” the report states.
Other reasons given for moving Exxon into the red: a “lack of alignment with goals and expectations” of Climate Action 100+, and information provided by PC(USA) mission partners in Cameroon about how “past operations from Chevron and Exxon decimated local fishing communities, greatly hurting local economies in the following years.”
MRTI is being intentional in addressing environmental racism, Fohr said.
“People in the poorest regions of the world are more significantly impacted and live in vulnerable and precarious circumstances because of the rapidly changing climate,” the report to the assembly states. “In the United States, this disproportionately manifests in communities of color.”
Potential impact
Deborah Meinke, who is stated clerk of Cimarron Presbytery in Oklahoma, attended the meeting as an observer and asked a question about the impact divestment in these firms might have on Presbyterians who work in the oil and gas industry or who have people in their congregations who do. She asked, essentially: How do we “care for our folks in this region?”
Fohr responded that “it’s been on MRTI’s radar for five or six years now that this day may come” — that companies might be added to the divestment list for reasons related to climate change and the environment. He and others have made trips to meet with Presbyterians in the Synod of the Sun – including a question-and-answer session in Grace Presbytery that included Exxon employees – and will continue to accept invitations to meet with Presbyterians in the region.
The decision to recommend divestment “really is about policy compliance,” Fohr said — saying that while some might take it personally, he would stress “the robustness of the process and how it is an appropriate application of General Assembly policy.”
In the 1980s, more than 20 companies ended up on the PC(USA) divestment list because of their involvement with apartheid in South Africa, Fohr said. After some of them changed their policies, they later moved off the divestment list and back to the watch list. “It’s reasonable to think that might happen again with the environmental screen,” he said.
Anita Clemons, vice president and managing director of investments with the Presbyterian Foundation, said the Foundation tells investors that the church has a policy of socially responsible investment, and “there is potential for a company to be a better corporate citizen.”
While no one wants job loss, Clemons said, “there is hope for the company to be more sustainable over the long run, for the community, for their employees, for the environment.”
To read the full recommendations MRTI approved to send to the 2020 General Assembly, click here: Final (approved) MRTI response to referral 08-08
MRTI has attempted to be involved with nine companies in corporate engagement since the 2018 General Assembly. To see how each of them scored in the most recent round of evaluations using MRTI’s metrics, click here: Appendix 1 – Approved January 2020 Aggregated MRTI Metrics
