By Rev. Jenny Phillips
The General Board of Pension and Health Benefits says that when it invests in oil, The United Methodist Church can address climate change by influencing the ways in which these companies do business. This argument is deceptive and wrong. Scientists say that the only way to avert the worst impacts of climate change is to leave at least 30% of known oil reserves in the ground. But the pension board is unlikely to try influence oil companies to leave their assets in the ground because the companies' share prices are based on known reserves. If reserves stay in the ground, share prices plummet.
Instead, the board does beside-the-point advocacy, calling for improved sustainability practices within the oil industry rather than acknowledging that the product itself is unsustainable. One recent example is what the board hails as a “success” in its advocacy with an announcement that it is withdrawing a shareholder resolution at Exxon Mobil. Wespath filed a resolution asking the company to include sustainability-related metrics in setting executive compensation. The oil company agreed. Wespath withdrew the resolution and put out a press release.
So now Exxon Mobil will mention sustainability when justifying its exorbitant executive pay. But of course, an oil executive’s pay has much more to do with increasing oil profits than with reducing carbon emissions. How could it not, especially when oil profits are plummeting? The pension board's Exxon holdings alone have dropped dramatically in the last six months, from more than $53.5 million to just over $43 million.
The General Board of Pension and Health Benefits standards for oil companies are way too low. If the board truly believes its advocacy can have a meaningful impact on climate change, and if it is serious about protecting the retirement accounts of young clergy, it will stop investing in companies that cannot answer “Yes” to the following questions (developed by Columbia University economists Jeffrey and Lisa Sachs):
• Has the company publicly and clearly subscribed to the internationally agreed goal of limiting global warming to 2º Celsius above pre-industrial levels, and to the limits on global carbon-dioxide emissions needed to meet that goal?
• Will the company pledge to leave business groups that lobby against effective climate policies to achieve the 2º limit?
• Will the company agree to end any exploration and development of unconventional reserves (for example, in the Arctic and much of the Canadian oil sands) that science has shown to be inconsistent with the 2º limit?
• Can the company demonstrate that it remains a good investment, despite the transition to low-carbon energy sources and technologies (for example, by demonstrating its own plans to make such a transition or highlighting its contributions to poverty reduction)?
The oil companies in which the board invests are engaging in irrational economic behavior — they continue to plunge hundreds of billions of dollars into finding fossil fuel reserves that they ultimately won’t be able to exploit. But if shareholders call them out on their bad behavior, it will put their profits at risk. This is bad for the church’s retirees, bad for the church’s ability to be a prophetic voice on climate, and bad for God’s creation and God’s people. We can do better. It's time to stop investing in fossil fuels.
Photo taken in 2010 of icy oil remains at the shores of Green Island in Prince William Sound from the 1990 Exxon Valdez oil spill. From Flickr Creative Commons.