Church Investors Want to Speed Up ESG Reforms for FTSE 350 Companies

The Church Investors Group wants to hasten FTSE 350 companies’ adoption of environmental, social, and governance (ESG) investing principles, which they feel is coming along too slowly.

The coalition consists of the investment arms of church organizations, including the Church of England and the Methodist Church. Group members represent $27.7 billion in assets under management.

There are six areas that the asset owner unit is concerned with: corporate tax transparency, climate change, gender diversity, executive pay, living wage expectations, and board responsiveness. It says it wants to fix these problems to ensure shareholder and employee fairness as well as mitigate these risks in companies.

“As asset owners, we will continue to press with our votes the need for companies to act responsibly and work not only for the benefit of shareholders but also contribute to the wider common good in both the short and long term,” said Reverend Canon Edward Carter, who chairs the Church Investors Group.

For more stories like this, sign up for the CIO Alert newsletter. 

Corporate tax transparency is a new initiative for the church investors’ voting agenda. It will vote against the FTSE 350 and Russell 50 companies that are scored at zero for transparency in the FTSE ESG Ratings in hopes that the companies will more openly disclose their activities.

Edward Mason, head of responsible investment for the Church Commissioners for England, said that tax transparency has “improved a lot in the UK but the picture is very different in the US,” when it comes to society’s ESG concerns. He called transparent corporate tax reporting a “well-established requirement” for humanity and shareholders alike.

Climate change is another area of concern. The team wants chairs of companies with one or zero ratings from the Transition Pathway Initiative and electric utilities businesses to lower their greenhouse gas emissions in line with the goals of the Paris Agreement.

Boards are under fire on other fronts. The churches also want companies in the main Europe, US, Australian, and New Zealand indexes to have at least one female director. The group also says UK boards that have seen 20% or higher votes against management should be more responsive to investors’ concerns by “showing commitment to shareholder engagement and rectifying areas of high concern.”

Carlota Garcia-Manas, a senior analyst for the Church Commissioners for England, said there is “clear evidence that companies with good corporate governance and diverse boards demonstrate stronger performance and have better reputations.”

As for pay, the coalition demands FTSE 350 members should disclose pay gaps between the CEO and the average employee. It also won’t endorse FTSE 100 telecom companies that are not Living Wage accredited, a requirement previously applied to just financial and pharmaceutical companies.

“Ultimately, a business is shooting itself in the foot if it does not get this right,” said Stephen Beer, chief investment officer at the Central Finance Board of the Methodist Church and vice chair of the Church Investors Group.

Church of England Pensions Board to Slash 50% of Its Public Equity

Church of England Votes to Divest from Fossil Fuels

Tags: Church Investors Group, Church of England, ESG, FTSE 350

Rhode Island’s pension fund investments returned a robust 4.14% in January, outpacing its investment benchmark, which returned 3.60%, and earning the fund $323 million.

The strong returns were fueled by the fund’s investments in the global stock market, which were mostly low-fee index funds, according to state Treasurer Seth Magaziner.

“Our investment strategy is designed to provide long-term growth over time and stability when markets are challenging,” said Magaziner.

The fund also outperformed its benchmark over the past three years, returning 8.7% in annualized returns over that time compared to 8.5% for the benchmark, and 7.8% for a traditional portfolio comprised of 60% in stocks and 40% in bonds. It also matched its benchmark with 5.7% annualized returns over the past five years, and beat a 60-40 blended portfolio’s return of 5.2% over that period.

For more stories like this, sign up for the CIO Alert newsletter. 

But the fund underperformed its benchmark over the 10-year period, returning 8.9% compared to 9.1% for the benchmark. This was, however, above a 60-40 portfolio that would have returned an average of 8.5% a year over the past 10 years.

Under Rhode Island’s “Back to Basics” asset allocation policy, which was adopted in the fall of 2016, the fund is dividend into three broad asset classes: growth, income, and stability, with corresponding allocations of approximately 54%, 7.2%, and 37.8%, respectively, with the remaining 1% in a category described as “other.”

Within the growth asset class, 25.1% of fund is invested in US equities, 14.7% in international developed equities, 6.5% in private equities, 5.3% in emerging market equities, and 1.9% in non-core real estate. Within the income asset class, the fund has 3.9% invested in liquid credit, 1.9% in high-yield infrastructure, and 1.4% in private credit.

Within the stability asset class, the fund has 11.4% in investment-grade fixed income, 6.9% in absolute return, 4.4% in core real estate, 3.9% in long-duration Treasuries, 3.6% in systematic trend following, 2.5% in Treasury inflation-protected securities, and 1.8% in private infrastructure.

Rhode Island Pension Returns 1.51% in July, 7.8% for Year

Google Sued over Data Breach by Rhode Island

Tags: Pension, Returns, Rhode Island, Seth Magaziner