UN proves sustainability pays as Church calls for fossil free policy

The United Nations Global Compact (UNGC) has long been criticised for promoting a loose definition of corporate sustainability, keeping it simple by asking compact signatories to “embrace, support and enact, within their sphere of influence, a set of core values” by agreeing to uphold ten principles and submit an annual statement on progress.

But the performance of the organisation’s new stock index appears to indicate that adherence to the UNGC is correlated with positive financial performance, bucking the trend of many existing socially responsible indices that historically show market under-performance.

At its mid-September tri-annual gathering in New York the UNGC launched the Global Compact 100 (GC 100) – a non-investable stock index of companies committed to the ten principles. The GC 100 showed a total investment return of 26.4% during the past year, surpassing the overall stock market (The FTSE World All Share index) by over 4 percentage points. The index also outperforms mainstream indices over both two- and three-year horizons.

The GC 100, released in partnership with financial research and analytics firm Sustainalytics, is composed of a representative group of GC companies selected on their adherence to the ten principles as well as evidence of executive leadership commitment and consistent base-line profitability.
“The good news is that the business case for integrating what we call non-traditional financial issues into corporate strategy and operations is very strong now”, says Georg Kell, who runs the Global Compact.

Call for fossil free investments
Ecumenical pressure group Operation Noah wants to address the gap between official church policy on climate change and church investments in fossil fuel companies.

“Church leaders are living in a fool’s paradise if they think they can meet their policy commitments to preventing catastrophic changes to the climate system whilst investing in companies seeking expansion in fossil fuel reserves,” says Mark Letcher, head of Operation Noah’s new disinvestment campaign Bright Now.

Two of the Church of England’s top five corporate investments are in BP (£22.4m) and Shell (£37.8m), companies seeking massive expansion in fossil fuel reserves.

“We believe Christians should start debating climate change with the same intensity and scrutiny they give to issues such as freedom of speech or same-sex marriage,” said Operation Noah chair Isabel Carter.

Operation Noah doesn’t quite have the support of the congregations. Almost two-thirds of Anglicans believe the Church of England should take a lead role in addressing anthropogenic climate change, but only a quarter believes the Church should divest in companies seeking expansion in fossil fuel reserves, according to Operation Noah.