Executive Council learns about moral, legal responsibilities as managers of church finances

By Egan Millard
Posted Oct 18, 2022
Smith & Wesson

Episcopalians join an interfaith group of demonstrators outside a Smith & Wesson gun factory in Springfield, Massachusetts, on March 14, 2018. Photo: Victoria Ix/Diocese of Western Massachusetts

[Episcopal News Service – Phoenix, Arizona] On the second day of its fall meeting, Executive Council learned about the church’s role in pursuing justice in its financial dealings, through the kinds of investments it makes and the way it handles the returns.

Members of the 40-seat council – half of whom are newly elected – have been receiving orientation and training during this first meeting of the shortened two-year term at the Hilton Phoenix Airport Oct. 17-20. On Oct. 18, members heard presentations on how the church’s assets are managed, the duty they have to manage them prudently and socially responsible investing efforts across the church.

Member Diane Pollard of the Diocese of New York gave an overview of the Committee on Corporate Social Responsibility and introduced a documentary film — viewable here — on its past and present work toward using the church’s investments for social change.

The committee’s mission is to “make sure that the church’s financial investments align with the values of Jesus Christ,” the Rev. Brian Grieves, vice chair, said in the film commissioned by the committee.

Terms like corporate social responsibility, or how corporations can include ethical considerations in their decision-making, and socially responsible investing are common across the business world now, but The Episcopal Church pioneered these concepts 50 years ago, council members learned.

The Committee on Corporate Social Responsibility was formed in 1970, when Presiding Bishop John Hines challenged General Motors to close its manufacturing plants in South Africa due to the country’s apartheid laws. Leveraging the church’s ownership of GM shares, Hines went to the shareholders meeting in Detroit, Michigan, in clerical garb, to urge the board to withdraw from South Africa.

It was another 15 years before enough pressure mounted for GM to withdraw, but Hines’ appearance at the meeting was “a unique thing in business history,” said Tim Smith, founding director of the Interfaith Center on Corporate Responsibility, who was featured in the video. It made The Episcopal Church the first religious organization ever to submit a shareholder resolution, the Rev. Gay Clark Jennings, former president of the House of Deputies, said also in the video.

The Committee on Corporate Social Responsibility’s support for divestment in corporations doing business in South Africa opened the door to its engagement with a host of other national and international issues, through negotiation with corporate boards and – when that fails – submitting a shareholder resolution proposing a specific action. Its actions are driven by mission priorities expressed by General Convention, with shareholder resolutions approved by Executive Council, which governs the church between conventions.

One such resolution that succeeded earlier this year was co-filed by The Episcopal Church and other shareholders in gun manufacturer Sturm Ruger & Co. The resolution directed Ruger to study its products’ lethality and include the findings in a human rights impact report. The 79th General Convention in 2018 authorized the purchase of Ruger shares for the purpose of pressuring the company to adopt greater safety measures in how it manufactures and sells guns.

Along with shareholder advocacy, other socially responsible investing strategies practiced by the committee and other Episcopal entities include affirmative investments in companies that benefit society, such as clean energy firms, and divestment from companies that exploit people and the environment. The Episcopal Church’s current no-buy list includes fossil fuel companies, for-profit prisons, tobacco manufacturers and military contractors.

“Boards sometimes say, ‘We can’t do this because it is not a prudent action and that we are harming … people that we owe our responsibilities to.’ What this journey has taught us all is that they’re not mutually exclusive. You can divest and make money,” Pollard told members of council.

As custodians of The Episcopal Church’s investments, Executive Council must balance the church’s moral stances with the imperative to produce positive, sustainable returns. Executive Council is effectively the board of trustees of the Domestic and Foreign Missionary Society, the New York-based nonprofit entity through which the church conducts business. Under New York state law, nonprofit boards have a fiduciary responsibility to the organizations they serve. That term has certain legal implications, but the basic idea is ancient and aligns with the church’s moral teachings, said Kent Anker, the church’s chief legal officer.

Anker told council members that they are mandated to manage church finances “in good faith” with “duty of care, duty of loyalty, and duty of obedience.” In their decision processes, they must perform due diligence, act in the best interest of the church and avoid any appearance of self-interest. Members must recuse themselves from votes in which there is a potential conflict of interest.

Anker offered a biblical analogy for the role of Executive Council: Paul’s description of an underage heir who is guided by trustees in his letter to the Galatians.

“So there is a scriptural basis for what we do here, and that’s why I think this is broader than just your standard corporate lawyer orientation,” he said.

Council will be asked to approve the Committee on Corporate Social Responsibility’s work plan for the new biennium later in the meeting.

– Egan Millard is an assistant editor and reporter for Episcopal News Service. He can be reached at emillard@episcopalchurch.org.