Petition 80400

Print this page
Submitted TextClose Window X

Investment Ethics (80400-FA-R213)

Amend and readopt current Resolution #213 - Investment Ethics as follows:
Investment Ethics
The United Methodist Church believes that social justice and social usefulness must be given consideration together with financial security and financial yield in the investment of funds by individuals, churches, agencies and institutions in the United Methodist family. When we take account of both fiduciary obligations (including financial returns) and denominational values (including social returns), we are investing in a socially responsible manner.
The Church’s investment philosophy is based on the biblical concept that all resources are God-given and can be used to promote the reign of God on earth.
Economic Witness in the Wesleyan Tradition
Churches in the Wesleyan tradition
The United Methodist Church and its predecessor denominations have a long history of witness for justice in the economic order. John Wesley and early Methodists, for instance  example, were staunchly  firmly opposed to the slave trade, to smuggling, and to what we today call conspicuous consumption. Beginning in 1908, s S ocial creeds adopted by our predecessor churches , beginning in 1908, stressed social justice in the economic world, with special attention to the exploitation of child labor and inhumanely long working hours.
Throughout this  the 20th  and into the 21st century, the our c Church has promoted decent working conditions and the right to organize and bargain collectively, and it has opposed discrimination in the workplace on the basis of race, ethnic background, gender, age, or disability. Historically our tradition has opposed church investments in companies manufacturing liquor or tobacco products or promoting gambling.
Since the 1960s, our denomination and its predecessors have built a solid record expressing our ethics in our investment decisions  based on our belief that every financial investment has ethical dimensions with consequences that are both fiscal and social. United Methodist agencies and conferences fought against the manufacture of napalm and were involved in the social-justice issues raised by religious shareholders. In the mid-1970s, the General Council on Finance and Administration (GCFA) issued began official social responsibility guidelines for general c Church investments.
While the issue of economic sanction against  Historically, apartheid in South Africa engaged us more than any other,  was the major issue for many church-related investors, but United Methodist agencies, affiliated institutions, conferences, congregations, and individual members have brought the c Church's Christian witness to business on numerous issues, including employment discrimination, environmental preservation, militarism, nuclear weapons production, reevaluation of infant formula use and the HIV/AIDS pandemic. The c Church also continues to advocate on such issues as:

  • international fair labor practice;
  • domestic and global human rights;
    • lending practices or policies for lesser developed communities and nations;
    • and issues of violence to persons;

    • firearms sales ,  and gun policies;

    • best corporate governance practices; unethical corporate practices,

    • environmental reporting;
    • public disclosure on financial risks of global warming and climate change;

    • genetically modified organisms; and

    • food safety.
        We affirm that all financial resources of the church and its members are God-given resources, to be held in trust for use or investment in ways that promote the reign of God on earth.
    Further, we recognize that every investment has ethical dimensions. Financial investments have consequences that are both fiscal and social. We believe social justice and social usefulness must be given consideration together with financial security and financial yield in the investment of funds by United Methodist Church agencies and affiliated institutions, and by congregations as well as individual United Methodists. Socially responsible investing by Christian institutions and individuals must take account of both sets of considerations.
    Socially Responsible Investing Strategies
    Our c The Church's witness through investments takes has taken four forms, each of which may be employed with the others. They are:
    1. Portfolio screening
    Because some companies and enterprises, such as those manufacturing alcoholic beverages and tobacco-related products and manufacturing, selling or distributing pornography and gambling opportunities, violate basic church teaching, they are excluded from investment. In addition, many church investors refuse to invest in major military contractors or companies with nuclear weapons contracts. Historically, many investors refused to invest in companies doing business in South Africa during the apartheid era. In some cases, they divested of such companies, making public their action as a moral statement.
    1. Avoidance by Divestment. This policy prohibits investment in enterprises that have policies or practices that are so morally reprehensible that investment in these companies is not tolerated by the church. Our denomination traditionally has avoided investments in liquor, tobacco, and gambling. Historically many church investors have refused to invest in major military contractors, companies with nuclear weapons contracts, or companies when they were doing business in South Africa under apartheid. In some cases, they have divested of such companies, making public their action as a moral statement.
    2. Social Impact Investing
    The members of The United Methodist Church expect all Church-related investments to make a positive contribution toward the goals outlined in the Social Principles and The Book of Resolutions. Investment strategy, therefore, is based on careful consideration of not only financial returns, but also of social returns across a wide range of issues and concerns. Some investments, however, are undertaken to achieve very specific social outcomes, such as the construction of affordable housing, the renewal of a particular neighborhood or the expansion of business ownership among those traditionally excluded from such ownership.
    2. Affirmative Choice. This strategy is to choose intentionally enterprises for investment based on careful consideration of return, both in social values and in social justice, as well as financial security and monetary profit. For United Methodist investors, the Social Principles and The Book of Resolutions delineate the social goals to which we expect all our investments to make a positive contribution. But with certain affirmative investments we may seek a very specific social outcome, such as the construction of affordable housing, the renewal of a particular neighborhood, or the expansion of business ownership to those traditionally excluded.
    3. Shareholder Advocacy
    Companies may meet the broad investing guidelines of the Church but still fall short of the standards expressed in the Social Principles and The Book of Resolutions. Responsible Christian investing includes seeking to change company policies and practices to match more closely articulated Church values. As shareholders of corporations, Church investors may engage corporate management in a variety of ways – from gentle persuasion to public pressure, from dialogue to voting proxies, from filing shareholder resolutions to building coalitions. In many cases, such advocacy has resulted in important policy changes at the corporate level.
    3. Shareholder Advocacy. The practices of corporations in which the church invests may fall short of the moral standards expressed in the Social Principles and The Book of Resolutions. Responsible Christian investing includes seeking to change company policies and practices for the better. Church investors have, as shareholders of corporations, engaged corporate management in a great variety of ways—from gentle persuasion to public pressure, from dialogue to voting proxies to filing shareholder resolutions, and building coalitions. In many cases, corporate policies have changed as a result.
    4. Strategic Partnerships
    Working in collaboration with others strengthens the socially responsible witness and allows the synergy of strategies more forcefully to engage corporations on issues of governance, and environmental and social importance. Strategic partners may include United Methodist boards, agencies, foundations and universities, other faith-based investors, domestic and global non-governmental organizations and other concerned socially responsible investors.
    4. Strategic Partnerships. This is the practice of working in collaboration with others to utilize synergy of strategies and resources to engage corporations on issues of governance, environmental and social importance. Such partnerships may include: United Methodist boards, agencies, foundations, universities, concerned socially responsible investors, domestic and global faith-based and non-governmental organizations.
    Investment Policy and Implementation of Policy
    The policy goals of the General Conference of The United Methodist Church, its general agencies, and the entities under its control shall be:
    1. to invest as much as possible in entities  in corporations, companies, institutions or funds that are making a positive contribution to the communities, societies, and world on which they have impact and realization of the goals outlined in the Social Principles and The Book of Resolutions of our church,  especially those pursuing such specific targeted social goals as:
      
  • recycling and the use of recycled products;
      
  • working within legally imposed discharge limits for toxic chemicals, noise, and water temperature;
  • the refusal to sell chemicals that would be banned in the company's country of origin;
  • the use of power supplies from renewable resources that do not have undue adverse environmental, socioeconomic and human rights impacts upon indigenous peoples;
  • the reduction of greenhouse gas emissions in order to minimize impact on climate change;
      
  • the provision of low-income housing, affordable housing and community development projects in urban and rural areas;
      
  • the hiring and promoting of women and racial and ethnic persons;
  • programs, benefits and wages that assure quality of life for employees and their families;  
  • policies and practices that preclude predatory or harmful lending practices; and
  • maintaining a commitment to sustainability so that current business practices do not detract from future viable business operations.
        2. to employ this combination of socially responsible approaches that contribute to economic justice and corporate responsibility:
    Avoidance by nonpurchase or divestment of holdings in companies that:
    2. to exclude from investment companies that:
    a. produce tobacco products or alcoholic beverages, or manage or own gambling enterprises, or have as their primary business the production, distribution, or sale of pornographic material;
      
  • manufacture alcoholic beverages or tobacco-related products;
      
  • manage or own gambling enterprises;
  • produce, distribute, or sell, as their primary business, pornographic material;
  • rank among the top 100 Department of Defense (DOD) contractors (those receiving the largest volume of prime contract awards) for the past three years; and have DOD contracts larger than 10 percent of sales for voting securities and 5 percent of sales for
      
  • nonvoting securities; the GCFA shall publish the listing of the top 100 DOD contractors annually; provided, however, health care providers and humanitarian relief providers are not intended to be excluded even if they rank in the top 100 DOD contractors.  unless such contractors are supplying health care or humanitarian relief (the General Council on Finance and Administration [GCFA] shall publish the listing of the top 100 DOD contractors annually);
    • make components for nuclear explosive devices;
      
  • manufacture chemical or biological warfare materials;
    • make components for anti-personnel weapons;

    • have as their primary business the production, distribution or sale of handguns and assault-type weapons or ammunition for such weapons; or

    • manufacture, or purchase through subcontracting, a significant number of products made with sweatshop, forced or child labor.
        Affirmative investing in companies, banks, funds, or ventures that are seeing specific targeted social goals upon which the church places high value, such as those that:
    a. encourage recycling and use recycled products;
    b. work within legally imposed discharge limits for toxic chemicals, noise, and water temperature;
    c. do not sell chemicals that would be banned in the company's country of origin;
    d. obtain future power supplies from renewable resources that do not have undue adverse environmental, socioeconomic and human rights impacts upon indigenous peoples;
    e. invest in low-income housing, affordable housing, and community development in urban and rural areas;
    f. invest in companies that have positive records in hiring and promoting women and racial and ethnic persons;
    g. are companies owned by women and by racial and ethnic persons;
    h. have programs, benefits and wages that assure quality of life for employees and their families; and
    3. to persuade corporations to integrate responsible business practices on environmental, social and governance issues into their operations and to be transparent in documenting these endeavors in public reports by using any combination of the following shareholder advocacy activities:
      
  • letters directed to company management;
      
  • dialogue or discussions with company management;
  • voting proxies;
  • soliciting votes from other investors for a particular reason;
  • sponsoring resolutions for consideration at stockholder meetings;
  • speaking at stockholder meetings;
  • legal action;
      
  • press releases;
      
  • working in coalitions with other concerned shareholders; and
  • petitioning the Securities and Exchange Commission or Congress for changes in the proxy rules.
        Shareholder advocacy through which the agency exercises its rights as shareholder to persuade corporations to end irresponsible behavior or live up to high ethical standards by using any combination of the following approaches:
  • letter of inquiry or expression of its position to management;
  • dialogue with management;
  • voting proxies;
  • soliciting votes from other investors for a particular reason;
  • sponsoring resolutions for votes at stockholder meetings;
  • speaking at stockholder meetings;
  • legal action;
  • publicity;
  • working in coalitions with other concerned shareholders;
  • petitioning the SEC or Congress for changes in the proxy rules;
    4. to seek opportunities to invest in companies, banks, funds, or ventures owned by women and by racial and ethnic persons or that invest or have operations in African and other poor countries, provided that those countries respect human and labor rights and have a record of trying to raise living standards of their people and work to maintain ecological integrity.
      
  • Native American communities;
      
  • Africa; and
  • Developing countries, provided that those countries respect human and labor rights and have a record of trying to raise national living standards while working to maintain ecological integrity.
        5. to encourage companies to adopt, implement and then monitor for compliance a supplier code of conduct that is consistent with the International Labor Organization's core labor standards and designed to that will prevent the manufacture, or purchase through subcontracting, of products made with sweatshop, or forced or child labor.
    5. to seek opportunities to commend corporations publicly for greater transparency, and disclosure, socially responsible behavior and for endeavors  efforts to raise industry standards on environmental, social and governance issues that are of major concern s  to of The United Methodist Church.
    6. to consider using investment-portfolio managers and funds that specialize in corporate social responsibility screening or are owned by women and persons of color.
    The GCFA The General Council on Finance and Administration is assigned responsibility by The Book of Discipline  responsible for preparing and distributing the socially responsible investment guidelines that are to be used by all general agencies receiving general c Church  
    funds. The council shall periodically review and update these guidelines as needed  periodically, inviting the input counsel of the agencies and other interested sectors of the c Church. GCFA the council encourages the active involvement of investing agencies to be actively involved in the overview of socially responsible investing as described in this policy.
    Each general agency All general agencies receiving general c Church funds shall file provide GCFA with a copy of its investment policy with General Council on Finance and Administration . The policy It shall be made available upon request to any interested member of the C c hurch.
    These policy goals  investing guidelines are strongly recommended to all the institutions  organizations affiliated with The United Methodist Church, and any of their entities, and to the  including annual conferences and local churches and any funds of  the foundations related to them.  It is also  strongly recommended that a copy of their social responsibility  the investment guidelines of any United Methodist-related organization be available upon request by  any United Mrthodist Church member .
    Where financial considerations preclude immediate divestment of securities held in violation of the above policies policy goals , the affected boards, agencies, and institutions of The United Methodist Church shall develop a plan for meeting the criteria that will bring them into vompliance  complying with the guidelines no later than the 2008  2012 General Conference.
    These policy goals are also strongly recommended to  a All United Methodist investors and users of financial services, whether institutional or individual, are strongly encouraged to use these guidelines.
    ADOPTED 1992, AMENDED AND READOPTED 2000, AMENDED AND READOPTED 2004
    See Social Principles, ΒΆ 163D.

    Rationale

    The General Board of Pension and Health Benefits proposed significant revisions to this resolution to improve its readability.  The UMC Foundation members and the GCFA Investment Committee members recommended several editorial changes to retain the current limitations on investments related to tobacco-related and alcoholic products in the Social Principles rather...