Socially responsible investors are often faced with a difficult choice: engage with or divest from companies that are seen as problematic from an environmental, social, or governance (ESG) standpoint.

One prominent organization facing this dilemma is the Presbyterian Church, whose members have been divided over whether to clear their pension funds and other investments of oil and gas companies or to remain engaged with the management of these firms in an effort to influence more climate-friendly policies. The church’s general assembly decided the engagement versus divestment question in July 2016 by directing the church’s Mission Responsibility Through Investment (MRTI) to “continue a process of corporate engagement with energy companies for at least two more years,” rejecting calls for immediate divestment of oil company shares.

The Value of Engagement

The assembly argued that a corporate engagement policy would allow the church to combine members’ voices to leverage their influence and help bring about socially responsible corporate policies and practices. “MRTI is involved in shareholder advocacy to encourage companies to protect the most vulnerable, care for creation, and promote peace,” the church said in a statement.

The statement listed several accomplishments of the engagement policy, among them an agreement by Wells Fargo to stop issuing short-term, high-interest loans (a practice known as payday lending); convincing Hilton and Wyndham hotels to begin staff-training programs to recognize the trafficking of children for sexual exploitation; and getting oil firm ConocoPhillips to adopt a greenhouse gas emissions reduction goal.

Similarly, other faith-based groups have opted to engage in a dialogue with gun manufacturers rather than sell their shares in those companies. “[W]e chose to hold shares [in the companies] so that we could engage them in dialogue on the critical role they can play in addressing the epidemic of gun violence in our country,” Sister Judy Byron of the Sisters of the Holy Names said. “If you’re a shareholder, you do have a voice.”

Internal Debate over Engagement versus Divestment

That said, the Presbyterian Church’s decision to continue engaging energy companies was not universally popular. The church’s Synod of the Northeast voted four months later, in October 2016, to take “immediate steps” to divest from energy company shares because of the threat of climate change and the reluctance of these companies to change their policies. Rick Ufford-Chase, former moderator of the general assembly and coauthor of Synod of the Northeast’s resolution, said he believed they were leading the way to “a decision we all know must come.”

This internal debate may have its benefits. Rob Fohr, who took over as senior coordinator of the church’s MRTI efforts last year, said that having dissenting voices in the church had strengthened his hand when meeting energy executives. “The fact that the General Assembly voted not to direct the Board of Pensions and the Foundation to divest categorically from fossil fuel companies allows MRTI to stay engaged with these companies from a position of strength,” Fohr said. “However, the fact that other Presbyterian-related entities with invested capital, such as midcouncils and congregations, are electing to move funds to fossil fuel–free products gives us some leverage to encourage change.”

While a committee of the general assembly voted in June 2018 to put off divestment from the fossil fuel industry in favor of continued engagement, MRTI noted that it will consider recommending divestment in the future. But for the time being, Fohr called this “the best result that could come out of this Assembly.”

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