Faith-based investment committee revises evaluation criteria

Presbyterian Mission Responsibility Through Investment sharpens climate, environmental justice focus

by Rich Copley | Presbyterian News Service

Photo by Zbynek Burival via Unsplash

LEXINGTON, Kentucky — The Presbyterian Committee on Mission Responsibility Through Investment voted during its June meeting to update the Guideline Metrics framework it uses to evaluate companies in which church entities own stock. View the updated metrics here.

The 222^nd General Assembly (2016) of the Presbyterian Church (U.S.A.) directed the committee (MRTI) to develop a set of criteria to determine whether companies that it is engaging with are adequately moving toward environmental, social and corporate governance (ESG) goals in line with PC(USA) policy. The committee’s Guideline Metrics framework was affirmed by the 223^rd GA (2018), which also named a list of companies on which to do focused engagement using the metrics and bring back possible divestment recommendations for companies not making progress.

“The Guideline Metrics served the committee well over the last few years,” said Rob Fohr, Director of Faith-Based Investing and Corporate Engagement. “However, the world is changing — for example, the climate crisis is escalating, investors are ratcheting up pressure and the Climate Action 100+ Benchmarking was just released in March. The committee thought it was time the Metrics reflected the evolving landscape.”

At its winter meeting, MRTI empaneled a taskforce to review and recommend potential changes to the framework. The MRTI Metrics Review Taskforce met this spring and considered updates including more aggressive climate criteria; additional diversity, equity, and inclusion information (DEI); and a stronger focus on pay and labor issues.

“The taskforce was created to review and update the MRTI Guideline Metrics,” said the Rev. Dr. Lindley DeGarmo, Chair of the Banks and Financial Institutions subcommittee, vice-chair of MRTI, and chair of the Metrics Review Taskforce. “We wanted the updated document to reflect that the climate crisis is only becoming more urgent, and to include revised metrics related to DEI and Just Transition issues.”

Changes to the climate criteria included adding specific date ranges to short (by 2025), medium (2026-2035), and long-term (2036-2050) goals; adding the criteria of “Company is working to decarbonize capital expenditures”; adjusting the criterion to measure carbon intensity of reserves to make it applicable to more industries; and boosting the weight of “water risk” criteria.

In the social criteria, the weight of human rights considerations was increased to address how the company relates to its employees, the communities in which it is located, and the people it serves. It also sharpened the metrics’ language on environmental justice, an area MRTI has focused on recently, adding language that asks, “Do operations distress neighboring communities and/or historically marginalized/oppressed communities (often Black, Indigenous and communities of color)?”

Under governance, the updated criteria included language addressing the rights of employees to organize and bargain and greater evaluation of diversity in management and employees.

Overall, the updated criteria lowered the highest possible score a company could achieve in the metrics from 240 to 238. A sample rescoring of one company in an internal document showed major shifts in only a couple categories and no change in the sample company’s overall score. The metrics are still designed to primarily implement the additional policy guidance on climate change that MRTI received from the 222^nd GA.

But MRTI leadership said re-evaluating its criteria is important.

“MRTI’s ability to revise the Guideline Metrics framework to better reflect our current reality reflects the strength of the process,” said the Rev. Kerri Allen, Chair of MRTI. “We plan to review and consider updating the metrics every couple of years to ensure that we are using the most robust standards.”

In October 2019, MRTI adopted a one-time implementation policy through which the committee recommended to the 224^th GA (2020) companies that score in the lowest tier of MRTI’s guideline metrics, 0 to 100,  be added to the General Assembly’s Divestment/Proscription List. According to language in the document, being in that tier means that “Overall, company has had poor record of shareholder engagement, poor record on ESG issues. Company may or may not acknowledge importance of ESG issues.”

There are currently four companies in that category: ExxonMobil, Phillips 66, Valero Energy and Marathon Petroleum.

“This updated document will be used to score MRTI’s 13 focus companies,” Allen said. “MRTI will review revised company scores later this year and determine how they will be implemented ahead of MRTI’s report to the 225th General Assembly in 2022.”

Listen: Hear Rev. Kerri Allen and Rob Fohr talk about MRTI’s work on “A Matter of Faith: A Presby Podcast”

The Presbyterian Committee on Mission Responsibility Through Investment/Office of Faith-Based Investing and Corporate Engagement is one of the Compassion, Peace & Justice ministries of the Presbyterian Mission Agency.