Eco Network meeting ~ Ethics and Money

The next Eco Network meeting in Northern Ireland will consist of a visit to Drumalis Retreat and Conference Centre, 47 Glenarm Road, Larne, County Antrim BT40 1DT on Saturday 10th October from 11am to 1pm. All welcome!

Following a tour of the buildings, Sr Margaret Rose will talk about some of the eco steps that have been taken at Drumalis and will share some reflections from Pope Francis’s recent encyclical. There will be a cup of tea too!

The theme of the last Eco-Network meeting, which took place in Belfast, was Ethics and Money. Tony Weekes of South Belfast Quaker Meeting and a former staff member of the Economics department of the University of York and a non-executive director of the Ecology Building Society, addressed the theme. The following are his notes for the talk:

Clarifications/basic points

In speaking of investments, I have in mind the use we make of ‘money’ for which we have no immediate purpose. These do not necessarily have to be large sums of money; our modest savings can usefully be an investment if properly placed.

What I do not have in mind is investment in the sense of buying/selling existing shares.  This activity does not put financial capital where it is needed – it simply allows ownership of title to be traded.  At the worst, it is part of the ‘casino economy’.

Investing provides a means to make these financial resources available to a business or other organisation which provides our needs or the needs of others. It is an activity in which we are all engaged from time to time. For many of us contact with financial service providers might begin (and end) with our decisions on banking and saving.

Because of inflation – a progressive devaluation of money as time goes by – we expect a financial return beyond what we have invested. We also expect some measure of security, a point to which I shall return in a moment.

So what I have in mind covers both our personal use of financial services and the decisions some of us make with respect to the finances of our churches?”

As a subtitle for this contribution I suggest: ‘the ethical aspects of financial services’.

What is ‘ethical’?

The ethical investment movement began with a realisation that investment in shares could lead to dividends from business activities which clashed with the investor’s principles. Thus, for such investors, investments in businesses engaged in the manufacture of military equipment, in gambling, in activities which deny human rights or damage the environment would be inappropriate. The human rights issue has widened in scope and understanding: issues such as the company’s policies with respect to remuneration (from the highest paid to the lowest, for example) could well provide a basis for unease, as might issues such as political donations and other form of lobbying.

It gained wider appeal throughout the latter half of the 20^th century, bringing in the trade union movement and environmental NGOs as well as churches. Two valuable research and advisory bodies EIRIS and the Ethical Consumer Research Association (ECRA) began work in the 1980s and have continued to develop the question of ‘What is ethical?’

There’s no simple answer to this question; there is also an oft-used argument that modern business is so complex that the typical large company will have some activities which we could consider pernicious as well as others which are benign or even positive in their outcome.  This often provides an easy excuse to walk away from the hard questions and necessary decisions.

The fossil fuel divestment issue

The last two years has seen the growth of a world-wide campaign recommending that churches and other institutions of civil society should divest their holdings of shares in companies engaged in the extraction of fossil fuel (typically oil).

The basic argument of these campaigns is that the extraction and use of the remaining fossil fuel will add significantly dangerous amounts of carbon dioxide to the atmosphere.  ‘Climate change’ is no longer something which might happen at some (vague) future date; the extraordinary weather experiences of the last few years suggest that it’s already with us.

Some of these campaigns are faith-based; some are environmental NGOs. Student activists have persuaded the governing body of the University of Glasgow to divest, over a period of 10 years, a holding of shares in fossil fuel companies presently worth about £18M.

One of these advocacy bodies – Bright Now, an ecumenical Christian campaign – writes in the opening of one of its publications[1]:

“This report provides a clear and challenging case for the need to move church investments out of fossil fuels. In doing so the Church would show its faith in a low carbon future, help reframe the debate and inspire hope. Investment in renewable energy, energy conservation and sustainable infrastructure is consistent with Christian values and would provide much-needed capital and symbolic approval for these sectors”

Towards positive investment – a Quaker view

Quaker Faith and Practice 20.57 asks us to ” …determine our choices as individuals and as a Society between saving and spending and the way in which savings are invested” and ” … to refuse to deal in products or services which are hurtful to individuals or to society as a whole“.

More focussed advice comes from a letter in The Friend (1 August 2008) in which Peter Clery observes that “The essentials for human life are water, food, housing, clothing and energy. There are a range of investments available in these sectors. Concentrating on these sectors would help to ensure that our monies were put to positive good use and could be used as a stimulus towards developing new sources of life’s essentials.”

Peter’s remarks came just less than two months before the worldwide banking crisis broke out; a crisis whose (continuing) effects have seriously – and probably irrevocably – altered the nature of finance, financial services, and the implications of ethical investment.

‘Financing the future’ can no longer ignore this imperative.

What are the obstacles?

I see several.

There is a lack of awareness about the conduct of the financial services sector, and disbelief that ‘ethical’ can be used in connection with ‘finance’. These factors create disempowerment, but I do not believe that this is an acceptable response.

At institutional level, there may be a conflict between the apparent requirement that trustees must maximise value of the funds under their care and the ethical (moral) principles of the owners of these funds.  I am not entirely sure of the basis of this conflict.  It cropped up as an issue during an enquiry into the ethical investment policies of the main churches in Ireland during 2011 by the Church and Society committee of the Irish Council of Churches. I have heard nothing more from the ICC. But – meanwhile – there’s no reason to see the ethical content of an investment portfolio as beyond improvement.

The continuing turbulence in financial markets should have altered the (conventional) view of what is ‘safe’ (or high yield) – as well as the conduct and prospects for the companies themselves[2].

The sterling area

The sterling area (which includes Northern Ireland) has access to a number of financial service providers which meet Peter Clery’s guideline. I mention here a few, without implying any recommendation:

Triodos Bank: registered and regulated in the Netherlands, with an office in Bristol; is committed to the finance of projects/initiatives in the areas of organic agriculture, renewable energy, recycling, and community development. Website www.triodos.co.uk. Triodos is a founder member of the Global Alliance for Banking on Values, website www.gabv.org.

The Ecology Building Society: committed to loans only on land or buildings which aspire to energy efficiency and community regeneration.  Supports institutions which are engaged in the development of ecologically conscious architecture and building practice. Website www.ecology.co.uk.

Oikocredit: provides support for microcredit, fairtrade and agriculture in more than 20 countries across the world. Website www.oikocredit.org.uk.

Some possibilities at a different level include:

Drumlin Wind Energy Coop: financing cooperatively owned wind energy installations by means of a dividend paying share issue, website www.drumlin.coop/home.asp.

Northern Ireland Community Energy (NICE): a recently established community-owned energy enterprise established to provide low carbon energy services across the region. It is currently inviting charitable organisations and social enterprises to consider installing solar panels on their roof and become a member of NICE.

From the website: “Minimum investment £250 up to a maximum £20k per person or organisation. Receive a fair return on your investment it is our intention is to pay 4% per annum”, www.nicommunityenergy.org/

The Ethical Property Company: raises capital by means of a share issues in order to finance the restoration of buildings for community enterprises and recreation.

Ethex: a new initiative based in Oxford whose task is to provide a ‘clearing house’ and broking service for positive investment ‘products’.  Some of the financial instruments which are presently on offer are for community owned renewable energy projects.  Website www.ethex.org.uk

Ethex is a spin-off from the Ethical Property Company, an excellent initiative which raises capital by means of share issues to rehabilitate redundant buildings and rent the spaces for community use: meeting places, small food businesses, etc. Website www.ethicalproperty.co.uk.

Are there risks with these ‘products’?

The simple answer is ‘yes’.  But the biggest source of risk appears to me to arise from the defective economic paradigm which provides the basis for making economic policy.

Are the financial returns on ethical financial ‘products’ too low?

I have heard people who, in principle, are committed to ethical economic action complain that the ‘returns’ from these kinds of financial ‘products’ are ‘too low’.

Therein lies a deeper ethical question.  You can probably find products for which the return is higher, but can you also be certain that the activities are consistent with the maintenance of human rights and the integrity of environmental services?  Quite often, someone or something is suffering in another place.

Deeper still, it brings us back to a question which has troubled humanity over centuries: in what way (if any) are we entitled to charge others for the use of ‘money’?

What are we called to do?

We need a movement in Ireland which can press for more socially and environmentally responsible financial services. We need to raise consciousness about finance: both its creative possibilities and its capabilities for doing wrong … and not just among Eco Network Churches and Eco-Congregation Ireland but in wider partnerships.

We need to encourage socially responsible financial service providers to take Ireland (both parts) seriously: one way we can do that is by using their services both for ourselves and our churches. Another way is to persuade them to promote their services more widely.

We need research and action: to identify and make known both good and bad practices by financial service providers[3].  We need to encourage the political will to re-regulate banking so as to require it to deliver the finance which is needed.  We need to be aware of the possibility that some things might be done by initiatives outside of the formal financial services sector.

We need to keep ourselves better informed, so that we can speak to others with confidence; to do this, we need perhaps to join with the work of ECCR[4] or other organisations with similar aims. ECCR has a strand of work entitled Ethical Money Churches: Your Faith Your Finance[5] website www.ethicalmoneychurches.org

Could we do something in Good Money Week (18^th – 24^th October 2015)? See website http://goodmoneyweek.com, in particular http://goodmoneyweek.com/get-involved

Can we add to the above?

Do we need more ‘structured’ meetings – or (perhaps) a short course to go through the issues (and the jargon) in more detail?