The Episcopal Diocese of Massachusetts and participants in the Diocesan Investment Trust now have a new option for environmentally responsible investing. The diocesan Financial Advisory Committee and the Trustees of Donations announced at Diocesan Convention on Nov. 14 the opening of the Diocesan Fossil Fuel Free Fund.
The fund will be provided by the Aperio Group, an investment group that helps design portfolios that fit each investor’s environmental, social and corporate values and mission. The fund is being offered alongside the existing Stock Fund offered by the Trustees of Donations, and like the Stock Fund will exclude gambling, tobacco and coal companies. Unlike the existing Stock Fund, the Diocesan Fossil Fuel Free Fund will screen out companies deriving more than five percent of their revenues from fossil fuel production, and will allocate five percent of its assets to companies that produce alternative energy, green building, energy efficiency and pollution prevention technologies.
The Diocesan Fossil Fuel Free Fund represents the culmination of a three-year conversation in the diocese around environmentally responsible investing.
The call for a “clean” investment fund first went out in a resolution adopted by Diocesan Convention 2013, which urged the Trustees of Donations to design an alternative investment vehicle free of fossil fuel production companies, and to conduct a feasibility analysis of rolling out this fund to all potential investors in the diocese.
A year later, a resolution approved by the 2014 Diocesan Convention encouraged the Diocese of Massachusetts to endorse a “broad, inclusive approach to sustainable and responsible investing” and to “welcome and respect the diversity of approaches to sustainable and responsible investing.”
The current investment landscape of the diocese now has room for a range of investment philosophies, according to the Rev. George Stevens, Chair of the Financial Advisory Committee and a member of Diocesan Council. The Diocesan Council has approved an initial investment of $8 million in the Diocesan Fossil Fuel Free Fund, which will be reinvested from the funds controlled by Diocesan Council (as opposed to the trusts, controlled solely by the Trustees of Donations).
The Trustees of Donations will maintain its actively managed trusts that include some investments in fossil fuels, and engage in shareholder advocacy with energy companies.
“Participants should keep in mind that the Diocesan Fossil Fuel Free Fund has been created to address a moral concern, and that its returns will be affected (for better or worse) by the absence of investments in most of the energy sector, a sector whose stocks comprise a large segment of the investable universe,” the Trustees of Donations wrote in a letter to parish treasurers and vestries on Oct. 26.
“The flexibility of this fund as a passive, separately-managed fund enabled us to recommend a customized benchmark and investment options and will also make it possible for the trustees to represent investors’ environmental values even more broadly by voting their proxies through the trustees’ Socially Responsible Investing (SRI) Committee,” said Jane White, a member of the Financial Advisory Committee, in her remarks at Diocesan Convention. “We were guided by the desire to collaborate with the trustees, so that whatever fund emerged as our Fossil Fuel Free Fund could be offered to the parishes in the diocese, as well as the diocese itself.”
Reinvesting some diocesan funds in the Diocesan Fossil Fuel Free Fund, while keeping trusts in actively managed traditional investments, allows the diocese to take a “both/and” approach to environmentally responsible investing, as outlined in the 2014 Diocesan Convention resolution.
“We recognize these different ways of addressing this,” Stevens said in an interview. “If we leave [fossil fuels] completely, we have no voice at all. If we stay in it to a smaller degree, it’s indicative of our desire for change. In this way the trustees are going to continue their efforts on that level [of shareholder activism], believing that their voice can shape policy at these energy companies.”
While the trusts managed by the Trustees of Donations will not be invested in the Diocesan Fossil Fuel Free Fund, the trustees have partnered with the Financial Advisory Committee on this issue and will be managing the new fund.
“The diocese and the trustees have partnered in creating and finding this fund, and the trustees will continue to manage it,” Stevens said. “They’ve done this work diligently over the last few years, and they actively sought out this fund to meet the criteria the convention [resolution in 2013] provided.”
Stevens noted that all investments should be vetted through individual investment policies, or through an investment strategy with a church’s vestry.
Treasurers and vestries interested in investing in the Diocesan Fossil Fuel Free Fund should contact Richard Blakney, Investment Coordinator for the Trustees of Donations, at rblakney@diomass.org. The diocese’s Investment Policy Statement, found here, may also be a useful resource.
More information about the Trustees of Donations may be found at www.trusteesofdonations.org.
--Ellen Stuart Kittle