General Convention 2018 is not the first time the Church Pension Fund [CPF] has been the a subject of a convention. As he accepted the Republican Party’s nomination for President, Romney spoke of his time in private equity. Unfortunately, in his early years at Bain Capital, Romney could not secure investors,
“I had thought about asking my church’s pension fund to invest, but I didn’t. I figured it was bad enough that I might lose my investors’ money, but I didn’t want to go to hell too. Shows what I know. Another of my partners got the Episcopal Church pension fund to invest. Today there are a lot of happy retired priests who should thank him.”
Perhaps some of those happy priests—and their lay counterparts—did not appreciate their shout-out at the Republican National Convention. Nevertheless, Governor Romney’s words call to mind the complicated relationship between the Episcopal Church’s famously healthy Pension Fund, its investments, and the Church’s values.
In this year’s Blue Book report the House of Deputies Committee on the State of the Church has asked whether the investments and business methods of the Church Pension Group [CPG] reflect the values of the Church? It claims that CPF has declined to consider requests for divestment from companies and industries whose activities “may be contrary to the teachings of our faith.” The report suggests resolutions A060 and A061 that (respectively) appoint and fund two task forces commissioned to look at the Pension Fund, its holdings, and the ethics of its investments—among a litany of other things regarding the Church’s relationship to money. Yet, the report is naïve as to the reality of the nature of trading securities on the free market and the purpose of the Pension Fund.
Even the smallest mutual fund portfolio cannot be monitored to the degree that the report seems to envision. The Pension System cannot tell its fund managers what it will or will not invest in, nor does it have the resources to monitor the myriad of investment options on its own. A comprehensive list of CPF investments would be meaningless only moments after it is published because investments change momentarily. This also means that while CPF may at any given moment be unknowingly investing in a company that benefits from an Israeli Settlement, a private prison, or a sustainable community-based farm in Malawi; it may also be that these ventures are deemed too risky. Such a decision is up to the fund manager and is based on her assessment not of the ethics of the trade but its profitability to shareholders. The same goes for any private investment fund that trades on the free market.
Nevertheless, CPF has taken seriously the call to be socially as well as financially responsible. CPF has aligned a significant portion of its assets with issues of interest related to TEC. Also, CPF uses its influence as a direct shareholder of publicly traded companies to influence corporate activity around issues of climate change, corporate board diversity, and human trafficking. In other words, divestment from a given industry can hamper the Church’s ability to act for good since the Church’s voice and ethics are amplified by its participation as a shareholder in a given industry because the corporation is responsible to its investors. For example, senior staff of CPF pointed out that their investment in an airline helped convince its managers to adopt policies to help identify passengers who may be victims of human trafficking. In addition, CPF is considered an industry leader in positive impact investing.
The Pension System was not designed to be an instrument of ministry beyond its responsibility to invest the money entrusted to it by Church employees and provide them with a good quality of life through retirement options and insurance. Consequently, CPF responds to the priorities of its participants. CPF offers lay and clergy church employees the choice to participate in a socially responsible investment fund as an option within its Defined Contribution Plans. CPF notes that participation in this plan has been low as most lay employee and clergy investors prioritize strong returns over positive social impact when making investment choices. Therefore, if DFMS is looking to reform the Pension’s offerings to conform with Church teaching, it should start by educating its clergy, lay staff, and perhaps the odd fund manager in its pews on its own values, but not before it lends a compassionate ear to the challenges of retirees and the ethical ambiguities that exist when good people navigate the free market.