The Church Commissioners for England, manager of the Church’s £8.7 billion investment fund, is pushing harder for companies to change. It will use its voting rights to promote diversity at the top of firms and to raise concerns over climate change issues in particular. “We want all of our investments to have an impact,” says Bess Joffe, the Church Commissioners’ new Head of Responsible Investments.
Joffe’s career in shareholder engagement
- Before joining the Church Commissioners in August 2020 as Head of Responsible Investment, Joffe was Director of Investor Relations – ESG at Lloyds Banking Group.
- 2014-2017 Head of Stewardship & Governance at TIAA (owners of Nuveen).
- 2010-2014 Vice president in Investor Relations at Goldman Sachs, where she led the company’s outreach to institutional investors on corporate governance policies and practices.
- 2005-2010 Associate director at Hermes Equity Ownership Services in London, leading engagement and voting for client holdings in the Americas.
It is Bess Joffe’s mission to take forward the more active role in ethical investment the Church of England has played since Justin Welby’s appointment as Archbishop of Canterbury in 2013.
The church leader understands both investments and indeed the challenges around climate change, having worked as an executive at oil company Elf Aquitaine before his ordination.
The Church’s investment mission contains the crucial commitment to “sustain and renew the life of the earth” which clearly places combating climate change front and centre in what they do.
However, Joffe says she’s committed to also “really bring out that social piece.” To this end, Joffe sat down with her team of fifteen people in responsible investment in October in a planning session to combine respect for the planet with a greater emphasis on social impact.
Joffe is keen to add in consideration of how the ‘Fourth Industrial Revolution’ will affect employment rights and to keep up pressure on diversity and inclusion. “There has been good progress on gender diversity, but more needs to be done on ethnic diversity,” she says.
Part of this focus will be better social impact reporting. A lot of the Church’s engagement reporting is currently listed as “corporate governance actions” (55% of engagement interactions), while in fact, it’s social engagement. Some 24% of governance engagements were actually on board diversity.
If we didn’t get pushback, we wouldn’t be doing our job well enough
Under Welby’s leadership, the Church Commissioners’ more active shareholder engagement is not without controversy in the UK. The left-leaning Guardian newspaper applauded moves to “step up pressure on firms to improve diversity”, while the conservative Daily Telegraph bemoaned that the “Church of England threatens to disrupt shareholder meetings”.
Joffe, who has extensive experience in corporate engagement, says she finds her new role at the Church Commissioners an ideal opportunity to “remain at the forefront” of activist investing.
Given the Church’s growing reputation for firm engagement, it is interesting to ask if there is ever any pushback. “If we didn’t get pushback, we wouldn’t be doing our job well enough,” she quips.
“Most managers are enthusiastic but genuinely lack common understanding.” But she concludes they are “open to persuasion.”
“Effective outcomes require going beyond ESG”
When it comes to impact investing, the Church of England is leading the way compared to other faith-based investors. At the 2020 IPE awards, the church was named “best for impact investing”.
While 88% of faith-based investors did engage in divestment and negative screening, only 61% had ESG screening, and a mere 11% reported allocating any assets to impact investing, according to the recent report ‘Engaging Faith-Based Investors in Impact Investing’ by the Global Impact Investing Network (GIIN).
Over half of the respondents said that they would “engage in more impact investing if they had a better measurement of impact and the chance to learn from other impact investors.” The Church of England started creating an impact framework in 2019. “Effective outcomes require going beyond ESG,” it says in its impact report.
“We want all of our investments to have an impact,” says Joffe. “We want to find that ideal nexus of win, win… where we have strong returns and environmental and social impact.”
To this end, the Church of England recently announced another key appointment: Vanessa Morphet as Head of Social Impact Investment. The Church is allocating £16 million to a Social Impact Fund. This amount may seem small in the context of their total assets, but it is a start.
The Church is already running its very considerable private assets in an impact manner. Within its real estate portfolio, it has developed an entire village in Kent offering 1,100 homes, with strong environmental and social principles.
Its central London estate includes considerable holdings in the “Connaught Village” development where the Church encouraged World Car Free Day and all new tenants are automatically signed up to green energy tariffs. Sustainability is also central to the Church’s management of its 100,000 acres (40,000 hectares) of timber land.