The prickly issue of divestment

Here at the Foundation we manage about $30 million in endowments and other long-term funds for our account holders. All of these investments are in full compliance with the Socially Responsible Investment (SRI) Guidelines of The United Methodist Church. Specifically we are forbidden in investing in any company that receives more than 10% of its income from alcohol, tobacco, adult entertainment, casino gambling, for-profit prisons or weapons systems.

This is a two-pronged approach. First, the 10% makes sense to me. Many bars sell Coke products as mixers to make a drink like a rum and Coke. So is Coke involved in alcohol sales? Of course it is. But the 10% rule recognizes that this is not its core business, as opposed to Anheuser-Busch InBev or Molson Coors Brewing. In the early days of SRI, investors were shocked that they could not own Altria, the parent company of Kraft because it also owned Phillip Morris, the cigarette company. This, of course, was before we thought that the weird orange cheese on macaroni was safer than cigarettes. Anymore I’m not so sure.

The second prong in the policy is the list of industries deemed to be outside the values of our church. While they are legal (although sometimes restricted by age) few would say that they are a positive piece of our society. When you consider their impact on our health, our communities and our families, there is little if any upside to any of them, except perhaps the lure of employment that often gets casino legislation approved. For many, perhaps even most consumers, these are neutral issues. Having a single glass of wine with dinner or a couple choosing to spend $100 at a casino on a Saturday night rather than going out to dinner and a movie is at best neutral and responsible consumption is possible. But these industries aren’t built on this behavior. It’s the recurring business, the addiction, that makes these businesses profitable.

But at General Conference this spring, delegates will be asked to consider a binder full of legislation around divestment. These are largely divided into two groups.

The first is based on the Israel-Palestine conflict and the role that Caterpillar, Hewlett-Packard and Motorola play in the conflict. At the heart is the actions of the Israeli government using Caterpillar bulldozers to destroy Palestinian homes built on, depending who you’re listening to, Israeli, Palestinian or disputed territory. Motorola and HP are important suppliers to the Israeli Army and security forces that, again depending on who you’re listening to, either help keep Israel secure or hassle and oppress Palestinians in the area.

The second group are fossil fuels. Some of the legislation is based on the environmental fears around fracking, certainly an issue in East Ohio. For others it is a human rights issue, such as exploitation of miners or destruction of the environment in coal-producing areas. For still others it goes to our role in the middle east.

I find myself hesitant to expand our divestment policies into these two additional areas.

I don’t believe that Caterpillar, Shell, Exxon Mobil or HP produce products are inherently against United Methodist values. The same bulldozers that can knock over a Palestinian home can also build a school, a road or a hospital. Domestically-produced natural gas can make us less reliant on international energy, allowing us to shift both our economics and our politics. In fact the same delegates voting on this legislation will get back in cars and airplanes and use that same fossil fuel to return home to do the work of the church. Gasoline, bulldozers, computers and radios are not bad unto themselves. The same cannot be said for adult entertainment or alcohol.

Divestment will not solve the problem. As offended as I am about the bulldozing of Palestinian homes, us divesting from Caterpillar will not stop the practice. Even if the company decides to no longer sell to the Israelis there are perhaps a dozen companies making similar products that will be happy to sell their equipment. Oil companies make no profit from the resale of their stock. Although share holders could potentially lose money if the UMC chooses to divest (but I’m not so sure we control enough shares to make a meaningful change in the stock price) the company itself will not.

Clearly this post is not long enough to fully cover the details of the divestment debate, only to give some background. I encourage you to read the coverage of both the proposed legislation and the larger issues. Find and consider both sides and decide for yourself where the United Methodist Church should stand on these issues. All of the proposed legislation for General Conference can be found here.

The General Board of Pensions video concerning divestment and news coverage about it can be found here.

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