The CBIS Catholic Responsible Investing (CRI) approach has been designed to exclude from investment consideration companies involved in activities that fundamentally contradict Catholic beliefs and values. One important issue identified for CBIS screening is Fossil Fuel Producers and Users.
We know the use of highly polluting fossil fuels – especially coal – needs to be progressively phased out and replaced by cleaner alternatives. Until greater progress is made on a global level, we believe it is legitimate to choose the less harmful alternative or to find short-term solutions.
In accordance with the Vatican’s call to “Promote responsible investments in social and environmental sectors,” CBIS is committed to action and evaluation of ways we can progressively divest from the fossil-fuel sector.
Lines of Action
In practice, this disinvestment process begins with a review of companies that generate more than 10% of revenue from the mining and processing of thermal coal, the extraction and processing of oil sands, or the burning of thermal coal for power generation.
Once identified, CBIS methodology then seeks to determine of each company:
1. To what extent is it part of the problem?
This determination includes an analysis of revenue from coal and oil sands, as well as carbon intensity of power generation and coal plant capacity for utilities.
2. To what extent is it part of the solution?
This determination includes an analysis of revenues from renewable energy, the existence and strength of a company-wide commitment to reduce emissions, and the extent to which a company’s carbon intensity is trending downwards.
3. Does management and strategy incorporate climate risk?
This analysis seeks to quantify whether the company has formal structures in place for managing financial risks from climate change.
4. Does the company have any egregious controversies?
This analysis considers whether the company in question has serious controversies related to any environmental, social, or governance issues.
Taken together, this informed process will exclude from portfolio consideration companies that 1) have the highest impact on carbon emissions, and 2) those companies we believe will be unable to adapt their business model and be part of the solution to climate change.
Taking on the Challenge
As an engaged shareholder, CBIS has been working with the largest companies in the oil and gas sector to address climate change for 30 years. Our efforts have sought to change the business models of certain carbon intense firms, all with an eye towards strategies that ultimately reduce demand for fossil fuels.
This “active ownership” approach is a key component of CRI.
Rooted in Catholic social teaching on human dignity, economic justice, and care for creation, active ownership seeks to influence corporate behavior around a variety of risks and behaviors. In the fossil fuels space, CBIS — even as the firm reassesses the scope of divestment through its review process — will encourage companies to do more to decarbonize their businesses and invest in climate solutions.
Like all issue categories, the Fossil Fuel Producers and Users screening is a continuous and ongoing process. CBIS regularly reassesses its investments to ensure alignment with its rigorous screening model and it will continue to monitor major corporate actions and significant shifts in fossil fuel revenues.
Important Information
The securities identified and described do not represent all of the securities purchased, sold or recommended for CRI Funds, CBIS Global Funds and separate managed accounts. The reader should not assume that an investment in the securities identified was or will be profitable. This is for informational purposes only and does not constitute an offer to sell any investment. The Funds are not available for sale in all jurisdictions. Where available for sale, an offer will only be made through the prospectus for the Funds, and the Funds may only be sold in compliance with all applicable country and local laws and regulations.