This article provides an update of the various actions taken by UUA staff and the Association’s Investment and Socially Responsible Investing (SRI) Committees since receiving the 2021 Responsive Resolution from the General Assembly, Creating a More Just Future Through Divesting from Pipelines and Investing in Young People.

This resolution had two main asks:

  • That UUCEF create a public, transparent process around our review of the Socially Responsible Investing (SRI) Guidelines, incorporating the participation of individuals, congregations, social justice groups, and young adults, and
  • That UUCEF divest from financial institutions funding Enbridge’s Line 3 pipeline.

Though responsive resolutions do not have the force of policy, the Investment and SRI Committees have taken this resolution seriously as an expression of the General Assembly’s commitment to the next stages of implementation of the 2020 Business Resolution on Human Rights and Investing, as well as to the principles of disentangling UUCEF investments from the harmful fossil fuel industry.

Follow Up and Review Process

After General Assembly ended last year, the UUA Board of Trustees was in immediate contact with the sponsors of the resolution.  The Board held a meeting with the sponsors on July 29, 2021, where we discussed issues such as the divestment process, the Board’s role in decision-making around UUCEF investments, the governance relationship between the Board and the Investment and Socially Responsible Investing committees, reparations in general and in light of UUCEF’s strong returns through the pandemic, and the process for submitting business resolutions to the General Assembly.

The sponsors of the resolution then met with the Investment and SRI Committees and UUA staff on November 29, 2021.  At this meeting, the committees reviewed where we stood on the responsive resolution—some of which is covered in this article—and our actions taken to date.  We spoke about the tools available to UUCEF to express our values in our investments, and next steps and commitments.

Throughout the past year, sponsors of the resolution have been invited to attend our quarterly UUCEF investor calls, and we also had guests in attendance at our August 18, 2021 Investment and SRI Committee meeting.

The Committees also pledged to create a more direct line with our organizing efforts in ways beyond our quarterly calls.  We are working with UUA’s Side With Love staff to explore ways to be more responsive and timely in ways for our UUCEF decisions to amplify the goals of our movement organizing partners.

Committee Structure and Policies

The committees are finalizing our process for SRI Guideline review and revisions, and we anticipate announcing a timeline by the Fall of 2022.  The committees have prioritized work on our Investment Policy Statement (IPS), a comprehensive document that references UU values, speaks to the integration of values with our investments, and articulates portfolio goals and strategies.  The updated SRI Guidelines will live within the IPS, along with our Community Investment Policy and other documents and beliefs that support our work in managing the endowment.

Another key focus has been finalizing the formal integration of the UUA’s Investment and Socially Responsible Investing Committees.  At its June 13, 2022 meeting, the UUA Board approved a proposal to merge the two committees under the name “Investment Committee”.  The combination of the committees further centers the UUA’s commitment to advancing our values on environmental, social, and corporate governance issues—including racial justice—through our investments, in all our portfolio decisions.  The committee is well positioned to undertake updates to the SRI Guidelines that are informed by and reflect our integrated structure and the established commitments of the UUA.

Divestment and Engagement

The call for divestment from financial institutions involved in funding Line 3 and fossil fuels raised an ongoing issue for us as a values-based investor.  This is not the tension between values and profits, since we believe in a dual bottom line; rather it is the tension between different strategies for advancing our values, namely cutting ties to protest irresponsible business practices versus continuing to be an active owner working via shareholder advocacy to advance our values in the corporate world.  The committees prioritized engagements with financial institutions, while also seeking to describe what level of financial relationship between banks and pipeline companies would prompt an exclusion and for how long.  Ultimately, we could not reach a consensus on a framework for this.  We also considered what divestment and reduced exposure to the financial sector may mean to UUCEF investors.  We modeled the expected transactions that divestment would produce, and the funds raised by the sale of bank stocks would have gone toward the purchase of utility stocks.

Working for the Rights of Indigenous Peoples

Beginning in the fall of 2021, we became a more active participant in the Investors & Indigenous Peoples Working Group (IIPWG), a leader in promoting indigenous people’s free, prior, and informed consent (FPIC) and in examining the effect of extractive industries on indigenous communities. 

We have worked with IIPWG on two major initiatives this year.  Most recently, IIPWG authored a comment letter on proposed rule changes by the Securities and Exchange Commission that would require certain climate-related disclosures from corporations in their registration statements and periodic reports.  IIPWG’s comment letter asks the SEC to add explicit references to Indigenous Peoples and the UN Declaration on the Rights of Indigenous Peoples to its proposed rules.  The letter also recommends expanding disclosure to include Indigenous rights when addressing disclosures around Scope 1, 2 and 3 emissions (direct emissions, emissions from energy purchased and used, and emissions resulting from corporate products or business activities), resource management, and offsets (whereby a corporation pays another entity to reduce or remove global warming emissions elsewhere to allow it to continue emitting.

Earlier in the year, we joined colleagues in the IIPWG group in submitting our Investor Statement on Line 3, Oil Sands Projects and FPIC to 10 banks most involved in oil sands projects and Line 3 financing.  The UUA was part of the drafting team of this statement, and we are leading the engagement with JPMorgan Chase, one of the four US banks addressed by the statement.  The Statement asks financiers of oil sands projects to document if they require the companies they finance to uphold the FPIC of Indigenous Peoples.  The statement also calls on banks to certify support for the United Nations Declaration on the Rights of Indigenous Peoples.  Overall, the 158 investors who signed onto the statement represent over $2 trillion in assets under management.  This campaign is emblematic of UUCEF’s established strategy to amplify our voice by joining in coalition with other like-minded investors.

Pressing Banks to Act on Climate

The IIPWG effort was not this year’s only engagement with JPMorgan Chase.  We also were co-filer on a shareholder resolution at JPM asking the bank to take available actions to ensure that its financing does not contribute to new fossil fuel supplies that would be inconsistent with the IEA’s Net Zero Emissions by 2050 Scenario.  Chase has been identified as the leading financer of projects expanding oil and gas production.  This practice is fundamentally incompatible with the International Energy Agency’s 1.5-degree scenario, which contemplates no new fossil fuel development.

Although this resolution did not win majority support at JPMorgan Chase’s annual meeting, our resolution, plus ones filed by other members of the Interfaith Center on Corporate Responsibility (ICCR) at other leading banks (Citi, Wells Fargo, Bank of America, Goldman Sachs and Morgan Stanley) each received 11 to 13 percent of the vote.  This result is encouraging for the first year of an engagement campaign—history has shown corporate management is likely to seek to address issues raised through shareholder proposals long before they reach the 50% threshold.

Following through on Fossil Fuel Divestment

The Responsive Resolution mentioned the UUA’s large position in ConocoPhillips and subsequent discussions named how that seemed at odds with the 2014 Business Resolution on Fossil Fuel Divestment.  This 2014 resolution called on UUA/UUCEF to divest from firms on the Carbon Underground 200 list (CT200).  This list captures public companies with the largest reserves of coal, oil, and gas.  However, the resolution allows the UUA to “retain investments in CT200 companies in which It is engaged in shareholder activism seeking environmental justice or transition to clean and renewable energy.”  As our portfolio grew, UUCEF’s holding of ConocoPhillips (COP) had grown quite large, exceeding $720K as of March 31, 2022.  The committees agreed to reduce our holdings in any CT200 firm to a maximum of $100K and continue to lead shareholder engagement efforts through initiatives such as the Climate Action 100+.  We have also committed to periodically review this limit in future years as the engagements we are leading evolve.

Racial Justice Investing

The above items represent the main work of the committees over the past year in response to the Responsive Resolution.  However, the committees have made important progress in other areas related to the resolutions’ overall goals:

  • We retained Erika Seth Davies to provide training on Racial Justice Investing and interviewed potential portfolio consultants to implement this training in the investment portfolio in 2022.  Erika is on the agenda for a GA 2022 workshop, Advancing Racial Justice through our Investments.  This session is scheduled for Thursday, June 23rd at 1:45 pm Pacific / 4:45 pm Eastern.
  • We allocated funds toward racial justice investing and impact investments.  Grosvenor Capital Management’s Advance Fund focuses on BIPOC fund managers and companies. We also approved and funded a $1 million investment in the Inclusiv Racial Equity and Resilience Fund, funding that will go towards secondary capital investments in institutions that the National Credit Union Administration has certified as minority depository institutions.

Details on the Grosvenor investment are available in the November 2021 UUCEF Investor call zoom recording, while Inclusiv presented as part of our May 2022 investor call.

Volvo Divestment

After identifying firms in our portfolio who scored as non-compliant on the Sustainalytics’ Human Rights Radar, the committee agreed to divest from Volvo AB based on their sales in the Occupied Palestinian Territory and Myanmar.

Other Progress in Implementing the 2020 Business Resolution

In the year before receiving the Responsive Resolution, we had completed important work in response to the 2020 Business Resolution, Embodying Human Rights in Our Investment Decisions:

  • In cooperation with the UU Ministry for Earth (UUMFE), the UUCEF sold its small bond holding in Enbridge. A detailed blog posting about Enbridge, UUMFE’s advocacy, and UUCEF’s divestment is available here.
  • Invited UU social justice groups to our quarterly investor calls for the past 18 months, and members have attended.
  • Subscribed to two new screening services from Sustainalytics, the Human Rights Radar and the Global Standards products, the results of which are used in the negative screening of our separately managed accounts.