In his breathtaking and magisterial encyclical on poverty and climate change, Laudato Sí, Pope Francis leaves no doubt about his intended audience. “Faced as we are with global environmental deterioration,” he writes, “I wish to address every person living on this planet.”
In the United States, one group is paying particularly close attention to the pope’s call for structural change: the vast array of parishes, orders, dioceses, schools, universities, hospitals, and other institutions with which nearly 70 million Catholics—one in five Americans—are affiliated. All these institutions proclaim fidelity to the teachings of the pope and the Roman Catholic church, and together they control billions of dollars of investments. High on the list of challenges generated by Francis’ appeal stands the awkward question of what to do with all that money.
“I expect that every Catholic institution in the country will step back and review all their practices—their teaching and preaching, their operations and investments—to determine whether they are in line with Pope Francis’ powerful call to action,” says Father Michael Crosby, a leading climate activist and Capuchin Franciscan priest from Milwaukee. “The pope’s encyclical has now elevated the concern for climate justice to a central place in the life of the church.”
Allied with visionary leaders like Sister Pat Daly, who runs the Tri-State Coalition for Responsible Investment, and Sister Barbara Aires of the Sisters of Charity of Saint Elizabeth, Crosby has been promoting socially responsible investment for more than four decades. Today he works closely with hundreds of religious investors through the Interfaith Center on Corporate Responsibility (ICCR), a coalition with combined assets totaling more than $100 billion. For more than 40 years, ICCR members have been diligently filing shareholder resolutions, speaking out at corporate annual meetings, negotiating with executives, and issuing reports. The goal of this persistent engagement has been to improve corporate policies on hundreds of social and environmental issues.
Over the last 20 years, they have focused more intensely on climate change, and their efforts have met with incremental success. They have persuaded companies to reveal their financial exposure to climate risk, set greenhouse gas reduction goals, reduce methane leakage from gas drilling, and halt the exploitation of dangerous tar sands.
For most of the negotiations, the activists and pension-fund leaders have zeroed in on the financial folly of drilling for more carbon at a time when companies already have five times more in their reserves than the world can afford to burn. If those reserves cannot be used, they will become “stranded assets,” prompting the value of fossil-fuel stocks to collapse and taking the savings of tens of millions of individual investors with them. The pope’s encyclical adds a powerful moral argument to the mix: Business models that permit the destruction of the planet must be changed or phased out. “The pope’s powerful statement will certainly become an anchor to our climate engagement with companies to emphasize the moral imperative to action,” says Tim Brennan, treasurer and chief financial officer of the 158,000-member Unitarian Universalist Association, an ICCR member organization.
In the US Catholic Church, however, investor activism has been the exception more than the rule. The majority of church investments are controlled by the bishops who govern the 195 dioceses and archdiocese in the United States, and who customarily conceal the disposition of these funds from public view. In 2003, the US Conference of Catholic Bishops laid out socially responsible investment guidelines that urged Catholic fund managers to consider the moral implications of their investments. The guidelines included a comprehensive list of topics that merited review, including abortion, contraception, embryonic stem cell research, human rights, racial discrimination, pornography, weapons (particularly land mines), affordable housing, and environmental protection.
Some institutions took heed and placed their investment funds with specialized asset-management firms that have created portfolios tailored to the Catholic guidelines and arranged negotiations with companies to ensure compliance. The goal has been to create investments that embrace the full range of necessary changes to move America to a low-carbon economy, including improving energy efficiency at all firms and shifting money away from fossil fuels and into new, clean-tech companies.
Even these forward-looking institutions maintain a high degree of confidentiality about their actions and holdings. The encyclical is thus likely to press Catholic institutions to increase the number and transparency of investments while stepping up activism on the climate. “I don’t see how any institutional leader, if challenged, will be able to remain silent in the face of the pope’s expression of urgency,” Crosby says. “In the past they may have wanted to avoid any discussion of their investments, but the encyclical should make this impossible.”
Still, there are plenty of signs that some American church leaders will drag their heels. “They don’t understand it,” Cardinal Theodore McCarrick, the retired archbishop of Washington, said of some bishops’ reluctance to address climate change. “They don’t understand the complexities.” Other church leaders are uncomfortable with the pope’s emphasis on the poor and would prefer to focus on what one priest derisively referred to as the “pelvic issues”: homosexuality, same-sex marriages, abortion, and contraception. At the same time, many American bishops realize that passion for the environment among the young—as well as Francis’ wild popularity—are important to the church’s other priorities: expanding the church and attracting young leaders to the priesthood.
Indeed, it is the young who are most actively pushing the church to act. Catholic universities, for example, are already under pressure to address their fossil-fuel investments. With support from the global grassroots organization 350.org, student groups at more than 400 colleges and universities are demanding divestment from leading fossil-fuel extraction companies. The movement has grown at lightning speed, and several dozen schools have already divested. In May 2014 Stanford University announced its decision to drop direct investments in coal-mining companies. Georgetown University, a Catholic institution with $1.46 billion in investments, followed suit on June 4, 2015, just two weeks before the pope’s encyclical appeared. Such investments represent a tiny percentage of Georgetown’s portfolio, but the decision was a positive step nonetheless.
Though student leaders at Georgetown viewed such action as too little, the university’s position is superior to that of Boston College, whose mission is to become the “world’s leading Catholic university.” President William Leahy has made it clear that he will brook no discussion of climate change or fossil-fuel investments on campus. Student climate activists who applied to create a “registered student organization” were turned down three times. When they applied to hold a rally on campus, they were denied because they were not a registered student organization. When they held a small rally anyway, Leahy’s administration slapped two students with disciplinary probation. Hundreds of protesters, including students and supporters from other schools, showed up at a subsequent rally in April, but the leaders, fearing expulsion, could only wave to the marching crowd from a second-floor dormitory window. These students and their faculty and alumni allies will be back in the fall, and when they raise the question of climate change again, they will have the pope on their side.
Though virtually every observer of Catholic investment policy believes that the encyclical will increase the stakes and prompt everyone to do more, it is not clear what form those new actions will take. The 2003 guidelines for responsible investment allows many options when it comes to “mixed investments,” where corporate policy is “questionable.” In these cases, engaged investors can refuse to buy stock in a given industry or company, they can sell the stock in existing holdings, or they can engage in dialogue. In essence, the guidelines affirm that negotiation makes sense until it becomes clear that the moral harm is so severe and change so unlikely that the correct ethical response is to divest. They give no guidance on how to determine the precise moment when dialogue ceases to be valuable, a critical question for discussions with fossil-fuel companies.
The pope’s encyclical can be read as offering encouragement to both negotiation and divestment as viable strategies. Francis writes that the purpose of the document is to open a conversation on the severity and urgency of the climate crisis, and he anchors the idea of dialogue in Catholic teaching about respect for the other. “The gravity of the ecological crisis demands that we all look to the common good,” he writes, “embarking on a path of dialogue which demands patience, self-discipline and generosity, always keeping in mind that ‘realities are greater than ideas.’” At the same time, he has clearly lost patience with decades of pious talk by politicians and corporate executives. In one of his most emphatic passages, he chides those who have been content to offer nothing but “superficial rhetoric, sporadic acts of philanthropy and perfunctory expressions of concern.”
Many religious investors still believe that the steady, hard work of engagement on particulars is the right way to produce change and feel hurt that those calling for divestment do not seem to respect their decades of commitment. Some shareholder activists have managed to build respectful relationships with fossil-fuel executives, enabling modest gains. Others have been met with derision. Crosby and Daly, for example, have diligently appeared at ExxonMobil annual meetings for years, where they have been treated by executives as a nuisance. At the most recent meeting, in May, the two of them once again publicly asked CEO Rex Tillerson to accept the severity of climate change and consider moving the company away from fossil fuels. Tillerson made a show of mocking their concerns by launching into a denialist diatribe and outright refusing to invest in renewables. In response to shareholder filings, ExxonMobil has reported that it sees no possibility of its assets being stranded and intends to keep exploring, drilling, and pumping oil and other fossil fuels until the end of time.
Divestment advocates, like 350.org co-founder Bill McKibben and a growing number of institutional investors, feel that engagement is no longer an appropriate response to the climate crisis. In their view, the unforgiving deadline for rescuing the atmosphere can no longer be met through the slow extraction of small concessions from reluctant executives. The only solution is to reject the fossil-fuel industry economically, politically, and morally through divestment and government action, and to immediately pursue the complex task of moving to a low-carbon economy. “The pope has managed to do what no global leader has done in the past,” says McKibben. “He has issued a clarion call to say that climate change is putting the entire human family and the planet we live on at risk, and that only a rapid, deep, and structural response will succeed. However well intended, the past efforts at dialogue, engagement, and diplomacy have fundamentally failed us. The pope looks at the human condition through the lens of centuries, and he has now told us unsparingly that we must make huge changes immediately.”
For a long time, fossil-fuel titans like Tillerson seemed to hold the ultimate power to shape energy and environmental policy. Now, however, a new and transcendent authority has emerged as a powerful counterweight. Pope Francis concludes his appeal with a prayer in the spirit of his namesake, St. Francis: “O God of the poor, help us to rescue the abandoned and forgotten of this earth, so precious in your eyes. Bring healing to our lives that we may protect the world and not prey on it, that we may sow beauty, not pollution and destruction.”
This message may never reach the ears of Rex Tillerson and his colleagues, but it may not need to. With more than a billion followers and the attention of all humanity, Pope Francis may be offering us a new chance to save ourselves.