$118.8 million dollars. That’s how much money The United Methodist General Board of Pension and Health Benefits lost in one year due to its stock investments in more than 100 of the top coal, petroleum and natural gas companies. 2015 saw a more than 30 percent decline in the value of the board’s fossil fuel stocks. Some of the largest contributors to this massive loss included Anglo American, ExxonMobil and Marathon Oil—these three companies alone caused the pension board to lose more than $26.8 million.
It didn’t have to be this way. During this same period, the S&P 500 without fossil fuels declined only .64 percent, while the MSCI All Country World Index without fossil fuels rose 5.82 percent. In other words, had the pension board divested from the top fossil fuel companies at the start of 2015, its holdings could have been worth about $2000 more per clergy person in the US and central conferences.
There is a false perception that investing in fossil fuels is safe, while divesting from fossil fuels is risky. In fact, all investing is risky. When investment managers screen an objectionable industry from a portfolio, they replace the objectionable stocks with others that have a similar risk profile. This is a normal practice for managing risk for institutions with ethical exclusions.
Longer term analyses show portfolios that screen fossil fuels can perform as well or better than portfolios containing fossil fuels. The volatility of the fossil fuel industry makes it an increasingly unstable area for investment.
The United Methodist Church continues to have a deep-seated financial interest in the fossil fuel industry. The General Board of Pension and Health Benefits has half a billion dollars invested in more than 100 of the world’s largest coal, petroleum and natural gas companies—companies that undermine our ministries around the world by exacerbating climate change. It’s wrong for our church to profit from these companies and it’s wrong to continue risking our clergy pensions in these volatile investments.
Photo by Purple Slog Flickr CC by 2.0.