By Richard Valdmanis
BOSTON, Aug 12 (Reuters) - Pope Francis heartened
environmentalists around the world in June when he urged
immediate action to save the planet from the effects of climate
change, declaring that the use of "highly polluting fossil fuels
needs to be progressively replaced without delay."
But some of the largest American Catholic organizations have
millions of dollars invested in energy companies, from hydraulic
fracturing firms to oil sands producers, according to their own
disclosures, through many portfolios intended to fund church
operations and pay clergy salaries.
This discrepancy between the church's leadership and its
financial activities in the United States has prompted at least
one significant review of investments. The Archdiocese of
Chicago, America's third largest by Catholic population, told
Reuters it will reexamine its more than $100 million worth of
fossil fuel investments.
"We are beginning to evaluate the implications of the
encyclical across multiple areas, including investments and also
including areas such as energy usage and building materials,"
Betsy Bohlen, chief operating officer for the Archdiocese, said
in an email.
The pope's encyclical, a letter sent to all Catholic
bishops, has sharpened a debate well underway in Catholic
organizations and other churches about divestment. But many
major American dioceses have resisted the push.
"You now have this clash between Pope Francis' vision of the
world, and the world that the bishops who run the investments
live in," said Father Michael Crosby, a Capuchin friar in
Milwaukee who advocates socially responsible investing in the
church.
"The bishops are a very conservative group, and I'm not
hopeful this will be resolved anytime soon."
Dioceses covering Boston, Rockville Centre on Long Island,
Baltimore, Toledo, and much of Minnesota have all reported
millions of dollars in holdings in oil and gas stocks in recent
years, according to documents reviewed by Reuters.
The holdings tend to make up between 5 and 10 percent of the
dioceses' overall equities investments, similar to the 7.1
percent weighting of energy companies on the S&P 500 index,
according to the documents.
Factbox: ID:nL5N10I3Z2
The United States Conference of Catholic Bishops' guidelines
on ethical investing warn Catholics and Catholic institutions
against investing in companies related to abortion,
contraception, pornography, tobacco, and war, but do not suggest
avoiding energy stocks.
While several organizations of progressive Catholic nuns and
priests have been actively urging energy companies to make their
operations more socially responsible, that activist approach has
not taken hold at the level of the dioceses.
A spokesman for the USCCB declined to comment when asked if
the organization was considering adjusting its investment
guidelines after the encyclical, deemed the most controversial
papal pronouncement in half a century.
"The Pope's intent was to say to people: there is an urgency
on this issue," said Frank Coleman, who manages Catholic
Responsible Investing for the Christian Brothers Investment
Services, which has resisted calls to divest the fossil fuel
share of its $6 billion under management.
"Divestment is a good way to raise the urgency. But it is
not the be-all to end-all of solutions."
POLICY AND PAPAL VISIT
When Francis makes his first visit to the United States in
September, he is expected to press lawmakers to act on climate
change in a joint session of Congress, a move almost certain to
come under attack from conservative politicians who oppose his
intervention in the debate. ID:nL1N1020UN
Republican presidential candidate Jeb Bush, a Catholic, said
right before the encyclical's publication that he doesn't "get
economic policy from my bishops or my cardinal or my pope."
The American church remains a deeply conservative
organization led mainly by bishops appointed by Francis'
predecessors. The Archbishop of Chicago, Blase Cupich, is one of
Francis' few major appointees so far in the United States.
Regardless of where dioceses stand on the debate, their
fossil fuel holdings have likely triggered losses in recent
years due to sliding oil prices, adding to financial strain
faced by the U.S. Catholic Church from sex abuse case
settlements and declining attendance that have cost the church
billions of dollars, leading to a rash of Catholic school
closures and unfunded clergy pension obligations.
The S&P 500 Energy Index .SPNY fell nearly 9 percent in
2014, and U.S. oil prices this month slumped to their lowest
levels since mid-March to around $44 a barrel. O/R
The Archdiocese of Boston held roughly $4.6 million worth of
energy stocks in 2014, representing about 6 percent of its stock
market investments, according to its most recent financial
report. The archdiocese also offered employees a "Catholic
Values" retirement savings fund through Catholic mutual fund
firm Ave Maria that included shares of companies like Anadarko
APC.N>, Halliburton (NYSE:HAL) HAL.N , and Range Resources (NYSE:RRC) RRC.N .
A spokesman for the diocese declined comment.
The Archdiocese of Chicago had "under 8 percent" of its
$1.65 billion portfolio in fossil fuels, a spokeswoman said.
The Diocese of Rockville Centre in Long Island, meanwhile,
listed $6.3 million in energy company shares among its
investments in 2013, the year covered in its most recent report,
representing about 8 percent of its equities investments. An
official declined comment.
Dioceses in Baltimore, Toledo and much of the state of
Minnesota reported significant holdings of oil and gas stocks
mainly through mutual fund portfolios. The Diocese of Toledo
said it was considering how to react to the encyclical, while
the others did not comment. Many other dioceses, including those
of New York and Los Angeles - America's largest - did not
provide detailed information on their holdings and also declined
comment.
GEORGETOWN BENDS TO PRESSURE
The tussle over fossil fuel investments has already hit the
endowments of major Catholic universities. Last year, the
Marianist University of Dayton said it would begin divesting its
holding in fossil fuel companies. And in June, Georgetown, a
Catholic university in Washington, D.C., said it would no longer
directly invest in coal companies, handing a partial victory to
a student-led campaign for complete fossil fuel divestment.
U.S. schools that have resisted activist calls for
divestment in fossil fuels have argued that their responsibility
to ensure strong returns to fund their operations trumps any
social benefits that might be gleaned from selling off coal, oil
and gas stocks.
One of the environmental advocacy groups pushing all
universities to divest, 350.org, has also specifically asked
Francis to tell the Vatican Bank to drop fossil fuel assets.
"Now that the Pope has made his views clear, it is up to the
different forces within the Vatican and within the Catholic
Church - the conservatives versus the progressives - to figure
out the change," said Yossi Cadan, a senior divestment
campaigner at 350.org.
Cadan said, however, that he expected any moves by Catholic
dioceses to divest to happen overseas first, possibly in
countries with large Catholic populations that are more
vulnerable to climate change like the Philippines. "The United
States will probably not be the pioneer here," he said.
Coleman, of Christian Brothers Investment Services, believes
there are benefits to remaining invested.
"Our strategy has been active ownership, to get companies to
understand the impact of their emissions and to reduce them, to
look at their carbon footprint and to invest in other energy
technologies," he said.
But for Amy Domini, who runs Domini Social Investments, LLC,
a mutual fund firm that says it seeks to provide strong returns
for investors who "wish to create positive social and
environmental outcomes", the U.S. Catholic Church has no choice
but to reconcile its investments with the realities of climate
change.
"Otherwise the bishops will be saying they follow the pope
with their spirits, but not with their money," she said.