Epworth Screening, Exclusions and Engagement

Our mission

Epworth Investment Management, along with its owner, the Central Finance Board of the Methodist Church (CFB) has defined its mission as: seeking practical solutions which combine Christian ethics and investment returns.

Our aim is to:

  • provide a high quality investment service seeking above average returns
  • follow a discipline in which the ethical dimension is an integral part of all investment decisions
  • construct investment portfolios consistent with the moral stance and teachings of the Christian faith
  • encourage strategic thinking on the ethics of investment
  • be a Christian witness in the investment community

Our ethical investment approach

Epworth invests with Christian ethics. We aim to construct and manage investment portfolios which reflect this approach. We integrate ethical considerations into our investment process, evaluating ethical, environmental, social, and governance (ESG) risks and concerns in the businesses in which our portfolios invest.

We are advised on our ethical approach by the Methodist Church’s Joint Advisory Committee on the Ethics of Investment (JACEI).

When analysing a potential investment in a company, we are concerned with what a company does and how significant and serious is any exposure to issues of ethical concern. We also examine how a company is run.

Epworth ethical policies enable the identification of companies which are not consistent with our Christian ethical investment approach, as advised by JACEI. Epworth operates proprietary ethical exclusion lists derived from these policies and advice on securities in global markets.

Our ethical investment policies and quarterly Ethical Investment Reviews can be found at https://www.epworthinvestment.co.uk/news-and-library/ethical-hub.


Screening is applied both to equity and fixed income securities.

Screening for exclusions is derived from our unique ethical investment approach, as described above. We use a number of screening tools to assist us, but the criteria are determined by Epworth and reflect its policies and approach.

We apply ethical exclusions to avoid investment in companies with material or significant exposure to the following areas of business activity:

  • Alcohol and tobacco production
  • Military products and services (including defensive systems and components, platforms and weapons)
  • Gambling and gaming
  • Pornographic and violent material
  • High-interest ‘door step’ lending

Companies in the extractives sector are excluded from investment until being ‘positively’ screened as acceptable for investment, usually following a period of engagement.

Under our climate change policies companies are excluded where they have a significant exposure to carbon intensive fuels such as coal and oil sands, or where they are ‘wholly or mainly’ committed to fossil fuel exploration.

Other ad hoc exclusions are applied from time to time, for instance where there may be human rights concerns. This will normally follow a period of close engagement and dialogue.


The principal means by which we exercise ethical stewardship is through engagement with investee companies. This is sometimes known as ‘active ownership’. Engagement is applied both to stock exchange and fixed interest securities. The way we approach Stewardship is set out as part of our annual Statement under the UK Stewardship Code, to which we are a Tier I signatory.

We encourage high standards of ethical business practice and will seek to engage where we:

  • require information or seek understanding of a company’s approach to specific ethical issues
  • identify material risks where disclosure is absent or inadequate
  • seek to respond to an ethical controversy that has impacted the company

Engagement is carried out by all members of the investment team, including senior management, via written correspondence (letters and email), telephone conference calls, or face to face meetings.

We may choose to engage with investee companies collaboratively. We are involved in a number of collaborative investor initiatives in which effort is pooled.

The principal, but not sole, means of exercising such engagement is through the CFB’s membership of the ecumenical Church Investors Group (CIG), https://churchinvestorsgroup.org.uk/ where the CFB leads or supports various engagement strands. One of the core strategic goals of the CIG has been defined as:

  • to increase the emphasis on engagement and the scale of the engagement work we [the CIG] undertake

Other collaborative engagements are conducted through our memberships of the IIGCC (Institutional Investors Group on Climate Change), PRI (Principles of Responsible Investment), BBFAW (Business Benchmark on Farm Animal Welfare), and FAIRR (Farm Animal Investment Risk & Return). We use other investor tools and benchmarks such as the Access to Medicines Index and Access to Nutrition Index, in order to conduct engagement.

We routinely engage with investee companies itself on a range of material ethical and ESG issues, which have recently included:

  • The Living Wage
  • Executive remuneration
  • Climate change
  • Plastics use
  • Corporate lobbying
  • Modern Slavery and Human Trafficking
  • Health & safety in the extractives sector
  • Reported human rights violations
  • Fairtrade
  • Farm animal welfare and antibiotic use
  • Breast milk substitutes
  • Tax justice

Responses are evaluated to determine whether further intervention is required, or whether the engagement may be deemed satisfactory and therefore closed. Where a company fails to respond after a reasonable period of time, a follow up approach is made, either to the same recipient or (wherever possible) to an alternative named individual.

Company preparedness in response to climate change and board diversity have been integrated into our corporate governance voting policy, which may result in oppose votes being registered against the re-election of individual directors, or against the adoption of the Annual Report & Accounts.

Engagement is normally targeted at senior management, specifically:

  • Corporate Governance: Chairman, Senior Independent NED or Company Secretary
  • All other ethical and corporate responsibility issues: Chief Executive, Head of Sustainability or Corporate Social Responsibility or Head of Investor Relations.

Meetings are typically held with sustainability or corporate responsibility professionals or with the senior leadership team.

From time to time we are invited to consult on corporate remuneration proposals, and it is our policy to respond constructively to these consultations.

We may respond to, or participate in, public policy consultations on either corporate governance, corporate reporting or wider stewardship reviews, where these are of material interest. We may also engage with other public bodies such as regulators, government or supra-national bodies such as the OECD or EU on specific matters pertinent to ethical investment stewardship.

Reporting and communication

Our engagement activity is published quarterly in our Responsible Investment Review for clients and online at http://www.epworthinvestment.co.uk. More information on engagement activity is published in the annual JACEI Report to Conference of the Methodist Church, which is also available online.

Pooled Funds


Pooled investment funds, or collective investment schemes are assets of multiple beneficial owners aggregated into single investment vehicles. They are used to provide access to specific asset classes, thematic investments or strategies that could not otherwise be accessed cost effectively or in the appropriate size without a heightened risk of liquidity becoming unbalanced.

In 2019, the Epworth position paper, Pooled Investment Funds, considered the ethical issues related to investing in collective investment schemes. These were due to potential indirect exposure to business activities and companies that would otherwise be excluded from Epworth funds on ethical grounds.

The position paper considered the biblical and theological background to investing in pooled investment funds, the approaches taken by other churches and previous actions taken by Epworth.

Biblical and Theological Background

The Bible provides little guidance on investment in pooled funds, or diversified companies, in an ethical way, although maintaining purity was a central aspect of the Mosaic Law, (e.g. Isaiah 52 vs 11) and was identified by the Church of England’s Ethical Investment Advisory Group (EIAG) as a major biblical theme that could be applied to pooled investment funds.

However, Jesus appeared to be less concerned about purity regulations (e.g. Mark 7 vs 1- 23); an approach which was followed by the Apostles (e.g. Romans 14 vs 1-6; Acts 10 vs 28). God allows both evil and good to exist together until final judgement (Mathew 13 vs 24- 30; 36-43). Uprooting weeds was discouraged, as in so doing harm may be done to the wheat. It could be argued on this basis that it might not be inappropriate for a portfolio to have modest exposure to business activities and companies that would be avoided directly, providing it allowed far greater exposure to activities that were unequivocally considered to be ‘good’.

The Parables of the Kingdom also provide important teaching in terms of:

  • God’s risky generosity towards his world and willingness to sow seed in different soils (Mathew 13 vs 1-23 and Mark 4 vs 3-9).
  • Christian involvement in and engagement with the world as appropriate responses to the Gospel themes of salt, light and yeast (Matthew 5 vs 13-6 & 13 vs 33; Mark 9 vs 49-50).
  • The importance of transparency in a Christian approach to investment, in that nothing is hidden that will not be revealed (Luke 8 vs 16-17).
  • The sense that judgement can be seen as both provisional, based on what we know at the time, and final, when all things will be known, as evidenced in the parable of the wheat and tares (Matthew 13 vs 24-30).

John Wesley was much influenced by the view that God’s gracious offering of salvation in Christ is offered to all people. This contrasts with a ‘purity’ ethic. His commitment to going out to where people lived and worked rather than waiting for them to come into Church, is hardly a ‘purity’ ethic, but rather can be seen as fulfilling the witness of St Paul that ‘I have become all things to all people, that I might by all means save some.’ (1 Cor. 9.22).

John Wesley’s sermon, The Use of Money1 , provides useful background, reminding us that whilst we should gain all we can, it must not be at the expense of our life, health and mind or that of our neighbour. In particular it counsels against hurting our neighbour in his substance, through gaming, which would indicate that the avoidance of investment speculation, might be applied to a Pooled Investment Funds Policy. The Epworth Mission Statement2 provides some helpful insights. In particular it recognises that paradoxes and compromises are involved and accepts that our best efforts may be criticised as falling short of our ideals.

Christian ethics must walk a fine line touched by both grace and sin. Consequently, we cannot always know where the line between good and evil lies and the challenge is to find the boundaries between them.

There are parallels with investment in diversified companies, such as food producers or engineering companies, which engage in a range of activities. It is possible for one of those activities to be of ethical concern. In those cases, the nature of the activity is considered alongside its significance with respect to the overall company. Where the ethical concern is particularly serious, for example exposure to nuclear weapons, or where the proportion of revenue or profits arising from the activity in question is significant, an ethical bar to investment may be appropriate. However, in most cases the route taken will focus on
engagement and monitoring.

The debate over the Church of England’s indirect investment in Wonga in 2014, through a pooled investment fund demonstrated that it is difficult to sustain an argument that allows an indirect holding in a company in which a direct holding would be excluded on ethical grounds without risking significant reputational damage from wider society.


Investment in generalist pooled funds should in normal circumstances be avoided on the grounds that they allow exposure to activities Epworth would avoid on ethical grounds, when making direct investments.

However, pooled funds may be used to obtain specialist expertise, for example, geographical specialisations; sector specialisations; absolute return strategies; venture capital and other early stage enterprises; and private equity. This may be particularly useful in pursuing positive ethical strategies related to climate change and the environment.

When pooled investment funds are used, they should be:

  • Funds with similar ethical policies to those of Epworth;
  • If this option is unavailable, funds with managers pursing similar investment philosophies to that of Epworth;
  • If neither option is available, low cost tracker pooled funds may be used as the pragmatic solution to achieve a particular strategy, recognising that an appropriate ethical option is not always available
  • Funds that have investment policies and strategies that are transparent.

When pooled investment funds are used Epworth will explore the possibility (e.g. via a side letter) of ensuring that any investment complies fully or in part, with other CFB ethical investment policies.

Epworth will seek to influence the manager of any pooled investment fund in which it invests either through an investors’ committee or regular engagement where holdings Epworth finds ethically problematic can be discussed.

  • Any Pooled Investment Fund that has significant exposure to companies in which direct Epworth holdings would be avoided on ethical grounds, will also be avoided. The level of exposure to such excluded companies that would be considered acceptable in a Pooled Investment Fund, will be considered case by case, based on precedent and the advice of the Joint Advisory Committee on the Ethics of Investment (JACEI).

Epworth will consider prior to investment the extent to which a cost-effective and quick exit on ethical grounds could be made should it be required.

As Epworth offers pooled investment funds for other churches and charities it is important to consider their ethical policies and how they may be impacted by indirect investments through Epworth pooled investment funds.


  1. https://www.umcmission.org/Find-Resources/John-Wesley-Sermons/Sermon-50-The-Use-of-Money
  2. The Central Finance Board of the Methodist Church, Mission Statement http://www.cfbmethodistchurch.org.uk/downloads/cfb_mission_statement.pdf



The prevalence of smoking in the UK has declined rapidly over time as a result of comprehensive health education, prevention initiatives and marketing regulation. In 1948, eight in 10 adult males smoked, but with the start of Government health education programmes in the 1970s, this began to reduce steeply, but more recently has tailed off and begun to plateau. 1

The disparity in smoking by age and gender has also narrowed over time. According to Government estimates, 15.5% of adults in England over the age of 18 and 15.1% for the entire UK (male and female) were presumed to smoke regularly in 2016 compared to 46% of men in the early 1970s (41% for women). This equates to around 7.4m active smokers.

Smoking declines with age. Whereas 17.8% of UK adult males (20% adult females) smoke between the ages of 18-24, for the over 65s the equivalent is 8.1%. Smoking appears to peak between the ages of 24-35 (19.7%), and then declines rapidly for both sexes.

Smoking is the leading cause of preventable mortality, with 81,000 deaths per year from tobacco related illness, and the biggest cause of preventable cancer, particularly lung cancer, where smoking is responsible for c70% of diagnoses. It is also linked materially to bowel, bladder, mouth, upper throat and oesophagus cancer. There is no statistical difference in risk between cigarette smoking and other forms such as pipe, cigar or shisha.

The socio-economic cost of smoking is stark. Research by Oxford University put the cost to the NHS at exceeding £5.2bn per year, with approximately 485,000 (England) hospital admissions in 2016 primarily linked to tobacco related conditions.

Public Health England has concluded that vaping is 95% safer than smoking. An independent commissioned report (2015) found there to be no evidence that vaping was a route into smoking for children or non-smokers, and that it is a potentially successful route to curing addiction from smoking. E-cigarettes provide users with the nicotine rush gained from smoking, without cancer causing tar and other chemicals.

However, as the House of Commons Science and Technology Committee 2 itself acknowledges, uncertainties remain, and Cancer Research UK (CRUK) maintains that questions linger over the long-term safety of vaping as it has not been in circulation long enough for quantitative and qualitative longer term tests to have been carried out. Epworth has therefore determined to take a precautionary approach to vaping and e-cigarettes in respect of investment.


Tobacco is now among the most tightly regulated of products that are legitimately offered for sale. Advertising or marketing of tobacco was prohibited in the UK in 2002, and further restrictive legislation in 2016, mandated standardised, plain packaging for all cigarettes and loose leaf tobacco; these form among the most constraining sales and marketing restrictions for any legally sold product anywhere.

Biblical and theological background

As with so many modern ethical dilemmas, there are few direct Biblical references.

Whilst the Bible is silent on tobacco smoking, it is reasonable to draw attention to passages concerned with the body as a temple and ‘healthy or pure living’. The key text remains I Corinthians 6: 19-20; “Or do you not know that your body is a temple of the Holy Spirit within you, which you have from God, and that you are not your own? Glorify God in your body”. These Biblical traditions support the view that practices that pollute or contaminate the body are not God given and should be avoided.

John Wesley’s views on smoking are obscure. However, given his active interest with the outdoors, exercise, healthy bodies and views expressed in his well-known ‘Letter to an Alcoholic’, a presumption against the practice of smoking on ‘pollution’ grounds might be assumed. In his Sermon 50, the ‘Use of Money’, he says ‘but this it is certain we ought not to do; we ought not to gain money at the expense of life, nor (which is in effect the same thing), at the expense of our health’. This would indicate that had the health effects of tobacco been known, he may have taken a not dissimilar view to smoking as he did to alcohol.

Epworth precedents

Epworth and the Central France Board of the Methodist Church has excluded tobacco and tobacco related products from investment since at least the early 1970s, when ethical investment policy was first formalised.

Tobacco is the most common and widely observed ethical exclusion among faith investors and other secular ethical investors. The Church Investors Group (CIG) survey of members suggests 96% of its members avoid investment in major stock-exchange listed tobacco companies.


Epworth will not invest in any company that wholly or mainly manufactures tobacco or tobacco related products.

For the purposes of this Policy, this includes finished tobacco products such as cigars, cigarettes, pipes and loose tobacco, filters, tips and bands. Epworth will also seek to avoid investment in any agricultural or commodity related company where tobacco is the main crop.

Retailers will not normally be excluded from investment unless the contribution tobacco sales make to overall company revenues are significant, or where wholesale tobacco is a material component of sales.

Although NHS England views e-cigarettes and vaping as carrying a fraction of the risk of conventional tobacco products, and recognises that they can be effective in controlling and alleviating addiction, Epworth will take a precautionary approach by avoiding investment in such products until long-term quantitative and qualitative evidence emerges.

Where necessary or appropriate, Epworth will engage with retailers on tobacco sales, although it is recognised that UK law applies very strong restrictions on marketing, advertising and branded sales, as well as restricting their sale to minors.


  1. All sources (except 2) either ONS, National Health England, Cancer Research UK (CRUK), CIG or HM Government.
  2. House of Commons Science and Technology Committee Seventh Report of session 2017-19 ‘e-cigarettes’ https://publications.parliament.uk/pa/cm201719/cmselect/cmsctech/505/505.pdf

Tax Justice


The payment of tax is a contribution to the common good that enables a state to provide a range of public services for the benefit of all. It is the position of the Church that individuals and corporate bodies have an ethical obligation to obey the spirit, as well as the letter of the law on tax.

Tax justice has become a significant political and ethical issue in recent years. Scandals highlighting tax avoidance on the part of some large multinational companies in particular have raised the profile of tax justice, not least during years of restricted growth in public spending. This has contributed to growing pressure on Government and international agencies, such as the G7, G20 and OECD to improve legislation and enforcement, and on companies to organise their tax arrangements in a responsible manner that is within both the spirit and the letter of the law.

Biblical background

Tax and an obligation to pay are mentioned in the Old and New Testaments. Biblical tradition points to the important role tax plays in creating a more just society and in establishing correct relationships. When, in the New Testament, Jesus is asked whether it is lawful to pay taxes to an (oppressive) emperor his reply, “give back to Caesar what is Caesar’s and to God what is God’s” (Mark 12: 13-17), highlights that the Roman Empire has a legitimate demand on people’s incomes, but that God’s demands are even more important.

Tax facilitates complex beneficial economic relationships within society. Not all of these relationships can be reconciled through a simple contract. Tax provides for the payment of security, education, welfare and healthcare, as well as sustaining the legal framework to ensure fair transactions and property rights. In Romans, Paul writes “pay to all what is due to them – taxes to whom taxes are due, revenue to whom revenue is due… honour to whom honour is due… Love does no wrong to a neighbour; therefore, love is the fulfilling of the law” (Romans 13:7).

The Bible also makes clear that the payment of tax, when rightfully due, is legitimate; “therefore, it is necessary to submit to the authorities, not only because of possible punishment, but also as a matter of conscience” (Romans 13:6).

The position of the Methodist Church

The Methodist Conference has received reports of particular relevance to the question of tax justice, including “The Ethics of Wealth Creation” 1 (1990), and “Of Equal Value: Poverty and Inequality in the UK” 2 (2011).

In the “Ethics of Wealth Creation” (1990) the importance of structuring capitalism so as to achieve international as well as national justice was highlighted. “Christians must struggle with the fact that we have a clear idea of a global common good, but no structure that embodies our common citizenship. Capitalism must be shaped to address this problem and so must the Church.”. Thus, tax justice forms an essential part of the Church’s strong commitment to international justice.

In “Of Equal Value: Poverty and Inequality in the UK” (2011), the Methodist Church acknowledged the importance of tax in creating a just society by stating that “money paid in fair taxation is a gift freely given; a contribution to the common good. When a proportion of this money is fairly paid in benefits to the least well off, it contributes to creating the just and compassionate society that the Church would wish to see. Those who would abuse these systems by not abiding by either their letter or their spirit push the goal of a just society further from our grasp.”

Conference received a Memorial in 2012 (M32)3 on Tax Justice from the Birmingham District Synod, welcoming the 2011 report (above) and asked Conference (inter-alia) to:

  • Urge all relevant sections of the Connexional Team to give active support to the issues being raised by the Methodist Tax Justice Network (MTJN) as and when they are able.

Conference accepted the Memorial and called for tax justice to be included in relevant work-plans as resources allowed.

The 2015 Conference received a further Memorial (M30)5 from the Birmingham District. This Memorial welcomed the “progress that has been made on communicating the issue of tax justice throughout the Methodist Church by the Methodist Tax Justice Network (MTJN) especially in association with the Joint Public Issues Team (JPIT). The Memorial then asked Conference (inter alia) to call upon:

  • JACEI in conjunction with the Central Finance Board urgently to develop a Position Paper leading towards a Policy Statement on tax justice in order to address companies in which the Church invests on this issue…and to keep the Church informed on progress.

Conference accepted the Memorial and its reply also “directs the Methodist Council to ensure that the Connexional team work with JACEI and the CFB to identify when further work on these [tax justice] issues can be completed and further directs Council to review progress by January 2017.”

The Methodist Church’s position on tax can be summarised as follows:

  • The state has a legitimate expectation that people will pay the taxes they owe;
  • Such tax, fairly paid, can contribute to a more just and relational society;
  • The payment of tax is therefore legitimate and bears both a legal and a moral duty;
  • It is correct to abide not only by the letter of the law, but also within its spirit;
  • As such, the Church expects people to pay the taxes they legitimately owe;
  • There is an expectation that companies should be transparent about their corporate tax affairs and pay what they owe.

CFB and JACEI activity

The CFB and JACEI have been engaged with the subject of tax justice for sometime. This activity has included:

  • JACEI receiving a briefing on tax and ethical investment from the CFB in 2013
  • JACEI receiving a tax justice paper in March 2013 prepared by JPIT, and in turn responding to correspondence the CFB had had with the Methodist Tax Justice Network
  • CFB participating in the ‘Tax Dialogue: on responsible tax for sustainable development’ in 2015
  • CFB participating in and delivered a speech at a fringe event at 2016 Conference entitled ‘The Joy of Tax’
  • CFB noting the adoption of the fair tax mark by SSE and engaging with the company on tax
  • CFB participating in the roundtable on tax convened by JPIT in the autumn of 2017

Current Issues around Taxation

The emergence of technology and e-commerce has undoubtedly added complexity and allowed the flow of capital for tax planning purposes to be pursued with increased aggression. In 2012, a series of scandals emerged involving major multinational companies avoiding tax from the UK Government. Amazon, Starbucks and Google came in for particular criticism from the House of Commons Public Accounts Committee6.

Concerns have been raised about the implication such practices have, both for the tax revenues of the exchequer, and the reputation of businesses that benefit from their license to operate under the Rule of Law, but where they contribute very little to that society.

The Institute of Business Ethics (IBE) argues that the behaviour of a business in tax planning ‘falls into the realm of ethics because businesses have a choice about their approach to interpreting the law and hence paying taxes. Whilst remaining legal in all it does, where a business draws its ethical line regarding how to interpret the tax laws and arrange its affairs is subject to a good deal of discretion.’7 This can extend to where it pays its taxes.


Informed and meaningful engagement on tax with different companies requires a high level of technical expertise owing to the complexity of tax law and the multi-jurisdictional nature in which it is paid.

It would generally be neither feasible nor desirable for investor engagement to make technical determinations around the intentions (or otherwise) of individual financial structures by companies. Fruitful engagement should be centred on encouraging tax transparency and on how companies manage and disclose their tax arrangements.

Transparency and disclosure is viewed as the most beneficial avenue for engagement as many of the financial structures that often determine tax liabilities are occluded. Secrecy and complexity obfuscate understanding. While such structures may have legitimate use (including entirely appropriate tax planning and some use of low tax jurisdictions), secrecy raises concerns about the appetite and desire to avoid tax.

A transparent tax policy leads to greater confidence that financial engineering has a legitimate purpose and is acceptable from a societal standpoint.

Hallmarks of company best practice in this area include:

  • A meaningful published tax policy;
  • A statement that tax compliance is understood as being more than legal compliance;
  • A statement on how tax planning is arranged and managed;
  • Disclosure on how much tax is paid and in which jurisdictions, and;
  • A view of the progress the company is making towards adoption of the Fair Tax Mark.

In seeking to engage with companies this Policy recommends an approach focused on transparency and openness. For instance we note the elements of best practice thinking developed by the PRI (Principles of Responsible Investment) and also by ActionAid in its primer, “Tax Responsibility – an Investor Guide”8 around the primary areas of:

  • Tax Policy
  • Tax Management
  • Tax Reporting

A responsible tax policy would be a clearly communicated tax policy, publicly available, which aligns the company with accepted best practice, sets out the company’s approach to its tax arrangements and rules out aggressive tax planning practices.

Tax management would ensure that the responsible tax policy is implemented throughout the Group and that it is communicated effectively, accompanied by appropriate training and details relevant compliance functions. Mechanisms for identifying non-compliance should be clearly highlighted.

Reporting on tax policy and its management would include detailed information of where and how a company pays tax by jurisdiction, sufficient to ensure that practice mirrors policy. Investors should be able, clearly, to assess and gauge risks associated with the company’s practices and where they depart from policy.

Questions to enable effective CFB engagement on tax

Relevant questions to be asked as part of any engagement would include:

Tax Policy

  • Who sets the Policy and who provides input (internal and external)?
  • Who has responsibility for the Policy within the business, and how often is it reviewed?
  • Does the Policy address risk and the appropriate level of risk appetite?
  • Does the Policy specifically rule out the use of aggressive tax planning schemes?
  • What role does the Board have in overseeing the Policy as fair, appropriate and just?

Tax Management

  • What systems are in place to implement the Policy?
  • How is it communicated throughout the business
  • What formal process is there for reviewing the purpose and use of tax havens?

Tax Reporting

  • Is the full tax Policy disclosed and available
  • Does reporting include country by country reporting of how much is paid and where?


  1. http://www.methodist.org.uk/downloads/pi_ethicsofwealthcreation_90.pdf
  2. https://www.ifs.org.uk/comms/comm118.pdf
  3. http://www.methodist.org.uk/about-us/the-methodist-conference/conference-reports/conference-reports-2012/
  4. http://www.christianaid.org.uk/pressoffice/pressreleases/comment/the-price-of-tax-dodging-in-the-developing-world.aspx
  5. http://www.methodist.org.uk/about-us/the-methodist-conference/conference-reports/conference-reports-2015/
  6. http://www.bbc.co.uk/news/business-20288077
  7. https://www.ibe.org.uk/userassets/briefings/ibe_briefing_31_tax_avoidance_as_an_ethical_issue_for_business.pdf
  8. https://www.actionaid.org.uk/sites/default/files/publications/tax_guide_for_investors_final.pdf

Fixed Income


We apply our Christian approach to investing across all asset classes. This includes fixed income securities. Although ethical issues of concern apply to all asset classes, there are some differences in application to fixed income securities compared to equities.

Bonds and ethics

The holding of debt raises some ethical questions. Some maintain that interest-bearing debt itself is unethical since it is a form of usury, as originally defined. The lender receives an income that has not been earned but is merely the compensation for not using the money elsewhere.
There is an extensive literature on the ethics of interest rates and their role in a market economy. However, the Church has taken a stance against excessively high interest rates (e.g. charged by payday lenders) whilst accepting that debt has a role to play.

While share ownership implies shared responsibility and shareholders share in the profits a company makes from its activities, bond owners have no say in how a company is run, unless it is in administration when they may have a voice in any restructuring. Bond holders receive on maturity the repayment of the loan plus the cost to the company of borrowing.

Nevertheless, bonds issued by a company – or government – around which there were significant ethical concerns would not sit well in an ethical portfolio. It follows that the approach to the exclusion of potential investments on ethical grounds should be consistent across equity and corporate bond markets.

The potential level of engagement may differ from that experienced by a shareholder but the attempt should be made when an ethical issue arises. Our past engagement with bond issuers has been productive. Government bonds require a different approach, especially where the issuer is democratically elected, and worthwhile engagement may not always be possible.

Our ethical approach to holding fixed income securities

Our fixed income securities are managed in a number of funds and portfolios. At present, all holdings are sterling denominated.

Some of our fixed income portfolios may hold UK government bonds, both conventional and index (inflation) linked, known as gilts. Holdings in gilts link portfolios with the UK government in the sense that gilts are tradeable loans to the government. Such public sector debt enables government to function and provide the range of services that its citizens require.
It is not normal for responsible investment institutions to engage with governments on ethical issues and few can do so meaningfully. However, we benefit from engagement by the Methodist Church Joint Public Issues Team on a range of issues of concern.

Supranational and corporate bonds
Some of our fixed income portfolios may hold supranational or corporate bonds. The bonds are sterling denominated but can be issued by organisations or companies from other jurisdictions.
Corporate bonds (including Floating Rate Notes) are typically issued by:

  • Supranational bodies e.g. the World Bank. These are backed by governments in the international community.
  • Sub sovereign, or agency, entities e.g. Network Rail, Transport for London, KfW (German national investment bank). These are backed by their governments.
  • Financial and non financial companies

All our ethical investment policies and ethical exclusions apply to corporate bonds as well as to equities. We will also engage with issuers not held in equity portfolios. For example, in the past we have engaged with Network Rail on concerns about health and safety and executive pay.
In the case of corporate bonds, there is relatively little impact of ethical exclusions upon investment returns in practice since alternative bonds can usually be found with the same or very similar characteristics to excluded names and exclusions in total will form a relatively small portion of the relevant benchmark.
While the application of ethics to financial and non financial companies which issue bonds should be straightforward, holding supranational and sub sovereign bonds links portfolios with non-UK governments. This raises some particular issues.
When considering bonds issued by sovereign, sub sovereign, or agency entities, we will consider the reputation of the relevant country, including assessments of: human rights; corruption; involvement in conflict; development. We will also be mindful of our policies and previous stances where reference is made of specific countries. However it is extremely unlikely we would be exposed to government issuers which have raised ethical concerns in the past, except via supranational issuers such as the World Bank.

Green bonds
Green bonds are bonds which are used to raise funds to undertake activities which meet certain environmental criteria. Mainstream companies issue green bonds. We will generally favour purchasing green bonds where we can and where the terms are attractive.


We apply our Christian approach to investing across all asset classes

There are differences between owning a share and owning a bond. Exclusions from investment on ethical grounds apply across all asset classes but the level of engagement possible as a bond holder may be different, since a bond holder owns debt rather than a share of a company. However, we will endeavour to engage where issues of ethical concern arise.

Supranational, sub sovereign, and agency bonds present potentially unique challenges since they could be backed by non-UK governments. However, we will also be aware of ethical concerns that might arise.

Farm animal welfare


The CFB published a position paper on Farm Animal Welfare in 2017, which considers ethical issues as they affect farm animal welfare. Other areas in which animals can be used or exploited such as testing, entertainment, clothing, or as pets, may be covered by other areas of CFB work. This policy statement therefore concerns farm animal welfare issues as they affect cattle (dairy, beef and veal), pigs, sheep, poultry (including broiler and laying hens, ducks, turkeys and geese) and farmed and wild fish.

The position paper considers the biblical and theological background to farm animal welfare, ethical issues related to farm animal welfare and seeks to determine the appropriate response from the CFB.

Biblical and Theological Background

Genesis 1 declares the creatures made on each day good without reference to other creatures. While legitimate human use of animals seems widely assumed in the Bible, the Bible does not state that God made animals merely for human use. Genesis 1 gives humans dominion over other creatures and distinguishes them as bearing the image of God (Gen. 1:26–28), but this is understood to be a relationship of care on behalf of God, to whom the animals belong (Ps. 50:10–11).

Fish feature widely in the gospel stories: Jesus calls the disciples away from their work as fishermen to fish for people instead (Mk 1:17 || Mt 4:19), miraculously feeds vast crowds with bread and fish (Mk 6:35–44 || Mt 14:15–21), and miraculously increases the catch of the disciples and cooks fish for them in one of his resurrection appearances (Jn 21:4–9).

Many Christian stories of the saints associate Christian holiness with compassion towards animals, such as St Jerome removing a thorn from a lion who came to seek his help, St Macarius healing the blind pup of a hyena, St Godric hiding a stag from the Bishop of Durham’s hunt, or St Werburgh of Chester resurrecting a goose her steward had killed. St Francis was renowned for seeing animals as sisters and brothers. In one story he asked a boy taking trapped doves to the market to give them to him, after which he freed them, spoke sweetly to them as his sisters, and made a dovecote for them.

John Wesley was concerned about animals throughout his adult life. He wrote an undergraduate essay on the question of whether animals had souls, copied into his journal a long letter he received about the Christian duty of caring for animals, and published two different books affirming God’s care for animal creatures. In his famous sermon on Romans 8, ‘The General Deliverance’, preached in 1781, he states that Paul could not be clearer in affirming that animals will be part of God’s redeemed creation, and that this knowledge should make Christians concerned about the many cruelties inflicted on them.

The Methodist Statement on ‘The Treatment of Animals’ was adopted by Conference in 1980. It rejects unnecessary experimentation, intensive factory farming practices that do not consider the welfare of animals, and cruel blood sports.

Current issues around Farm Animal Welfare

Farm Animal Welfare is concerned with the livelihood of animals being reared, transported and slaughtered for human consumption. Animals are sentient beings, with the ability to feel both positive and negative emotions. Due to an increase in the demand for meat for an ever growing population, the farming structure has changed from rural small holdings to large concentrated feeding operations (CAFO). A CAFO is a system of rearing livestock by which animals are kept confined under strictly controlled conditions, generally for monetary gain. With the increase in factory farming and therefore yield, farm animal welfare has suffered, with confinement, mutilation, and conscious slaughter all commonplace.

Within the global farming industry the majority of animals, including fish, are kept in systems which are highly intensive. Within these systems animals are routinely kept in confined spaces where movement is severely restricted. Many animals in intensive farming systems are routinely mutilated, often without any pain relief, in ways which cause immediate and long term pain and distress. Animals are transported often during their lifetimes, and most are transported to slaughter. This can take place by rail, road, sea or air, and can often be over very long distances and durations in poor conditions.

Humane slaughter requires that animals are rendered unconscious before they are slaughtered through pre-slaughter stunning. This ensures that the animals are not exposed to stress, pain or discomfort in the slaughter process. Well designed animal facilities and equipment that is in good working condition can reduce the likelihood of poor animal welfare. The correct positioning of equipment for pre stunning is imperative to ensure pain elimination for animals prior to slaughter.

Farmed fish are reared in an intensive environment. Many farmed fish are often subjected to starvation before slaughter and in many cases are left to suffocate or are gutted and left to die causing much pain and distress. Wild fishing practices can also have negative welfare implications. Many fishing practices involve using nets to catch fish which also trap non-target organisms such as turtles and other air-breathing mammals which quickly drown. Fish and by-catch organisms caught in trawler nets can be dragged along the seabed for many miles causing pain, distress and death.

The use of growth promoting hormones or low dose antibiotics to stimulate growth has become common practice in the intensive farming industry. These are used to increase the amount of muscle or milk produced by animals but has serious implications for their welfare. The non-therapeutic use of antibiotics happens throughout the intensive farming industry. Poor conditions increase the likelihood of factors compromising the animals’ immune system, such as stress, selective breeding, and disease. The industry therefore relies on the non-therapeutic use of antibiotics to compensate for the low welfare environment. The prolonged overuse of antibiotics is said to be among the main cause of growing antibiotic resistance in humans.

Policy: Farm Animal Welfare

The CFB invests in food producers, processors, hospitality and food retail companies that use animal related goods and therefore animal welfare is an issue that the CFB will seek to respond to, through engagement with companies. The CFB recognises the complex issues surrounding the production of fish, meat and dairy products for consumption and the increased demand placed on farmers. The CFB also recognises animals as sentient beings. In terms of investment, the CFB views Farm Animal Welfare as predominately a matter for engagement.

Higher welfare farming, in which the welfare of the animal is considered first, is preferred. This aims to allow animals to live in surroundings similar to their natural habitats, while ensuring they are protected from thirst, hunger, fear and extreme weather. However, this style of farming cannot emulate the production capacity of factory farming and is generally more expensive due to the lower yield.

The CFB will favour companies with exposure to farm animals where there is a formal policy on animal welfare and a clear position on more specific farm animal welfare-related issues such as the use of antibiotics, animal mutilations, slaughter, close confinement, and live transportation.

At a governance level, the CFB will look at:

  • Whether the company assigns senior management responsibility and accountability for farm animal welfare.
  • Whether it sets farm animal welfare-related objectives and targets, and ensures that these are included in employee bonus/reward schemes.
  • The resilience of the company’s management systems and processes in place to audit and monitor animal welfare standards in its supply chain, ensuring transparent reporting to consumers.
  • Whether the company has product lines assured to higher farm animal welfare standards.
  • The company’s attitude towards engaging with key stakeholders (e.g. animal welfare NGOs such as Compassion in World Farming and World Animal Protection, the Business Benchmark on Farm Animal Welfare) to understand current practice and industry expectations.
  • Company investment in projects dedicated to advancing farm animal welfare practices and the promotion of farm animal welfare to consumers through education or awareness raising activities.

The CFB will also look at other issues such as health and safety and climate change issues as well as farm animal welfare whilst assessing companies. However, in the case where a company persistently resists engagement due to unacceptably poor standards of animal welfare, the CFB may choose ultimately to divest.

November 2017


Key issues

The state detains people through a number of institutions: for example prisons, young offender institutions and immigration detention centres. For the purpose of this statement ‘prison’ includes all such institutions.

The trend towards outsourcing in the fields of prisons and prisoner transport has led to publicly listed companies being involved in these activities both as operators and as owners.

The Methodist Church accepts the necessity of the existence of prisons while emphasising the importance of the humane treatment of prisoners.

There are approximately 180 Free Church Chaplains to prisons, and Prisons Sunday is a regular feature in the Methodist Church calendar. Many individual Methodist churches undertake work with ex- prisoners. In 2007, the Methodist Church, in response to a government consultation, argued in favour of prisoners having the right to vote.

The Methodist Church supported the campaign to abolish the death penalty in the 1950s and 1960s in Britain, and continues to oppose the death penalty.

The Epworth position paper on issues involving children recognises the acute vulnerability of children especially when they are in custody, and the need for them to be protected from harm. Responses from Action for Children to government consultations stress the importance of rehabilitating and transforming prisoners.

The Methodist Church campaigns strongly against the detention of children and families in immigration detention centres.


Investment in companies operating prisons is ethically acceptable in principle.

Investment in companies owning prisons (e.g. through PFI contracts) is ethically acceptable in principle.

Investment in companies operating or owning prisons in which the death penalty is carried out is not acceptable.

Investment in companies operating or owning prisons in jurisdictions in which the death penalty is carried out, but not in those prisons run or owned by the company is likely to be acceptable.

Children are detained in prison for offences that they have committed; due to offences committed by others (e.g. babies too young to be separated from their mothers); and due to their families facing deportation under immigration or asylum laws. Before Epworth invests in any company operating or owning prisons in which children are detained, their operating regimes will be examined with particular care.

Before investing in any company operating or owning prisons, Epworth will seek to ensure that all such facilities operate in accordance with best practice.



In October 2000, a number of themes were identified in a position paper Media Ethics, which included brief reference to pornography. An Epworth Media Policy was published in March 2001 and amended in November 2011 as the Epworth Policy Statement on Media Ethics. To complement this and to provide specific guidance on pornography from an investment perspective, the Epworth Policy Statement on Pornography has now been approved.

A decline in Judeo-Christian influence has weakened intellectual efforts in society to oppose pornographic content in the media, especially where consent is implied. This has been coupled with greater and wider availability and access via digital and electronic formats.

Methodist teaching affirms that we are made in the image of God and that before Him, men and women are equal. Material that undermines this position falls short of the ideal and is a cause for concern.

However, context is important. Accurate, and sometimes graphic, war reportage can be justified in the pursuit of truth and justice as part of conflict journalism. Content that explores a sexual or violent dimension pertaining to human experience or the human condition may also be valid in the arts and literature. The Christian must, therefore, take care in reaching informed judgements. Where produced and distributed for its own ends without appropriate legitimate context, it may not be acceptable; for example, pornographic films or magazines viewed or screened for the sexual enjoyment of consumers rather than for their dramatic or educational content.

There may also be civil liberty issues to take into account. Ultimately, Biblical teaching applies to all, although not everyone will subscribe to that view. The Church is therefore called to interact and engage where pornographic content is available and where there is an insistence on the right to view. Freedom to choose has always been part of the created order, but for the Christian, the prevalence of pornographic material deviates from the ideal, not least when the exploitation of humans is undertaken for commercial gain.


The Methodist Church recognises that definitions of pornography and the erotic can be subjective. In the context of this ethical investment policy pornography is taken to mean:

“the portrayal of sexual subject matter in words or images for the primary purpose of sexual arousal. Within this broad definition pornography can relate to less explicit forms of portrayal, often termed “soft pornography”, and which are largely unregulated and widely available in modern society and “harder” forms of pornography, which are generally regulated and often restricted to an over 18 clientele.

Other forms of pornography, such as that involving children or animals or other “extreme pornographic images” (defined in law largely as seriously violent or grossly offensive), are illegal to produce and a criminal act to possess.”


Epworth will seek to balance competing demands: to reflect in its investment policy that pornography degrades, exploits, manipulates and deviates from the ideal of God’s Kingdom, whilst noting that it is also more widely available and sometimes demanded, in ever more extreme forms. Therefore:

Companies are expected to operate wholly within the law (domestic and international) and to take swift corrective action to prohibit and proscribe any activity (such as hosting websites) that is judged illegal or criminal;

Companies, a major part of whose business activity is engaged in the production, transmission, publication or distribution of pornographic content should be avoided;

A distinction between production and distribution/transmission remains valid, except where distribution, transmission, marketing and promotion are pronounced.

Companies involved in production will be considered case by case as there are likely to be some instances where the activity, however small, will be unacceptable, in particular:

  • Publishers of pornographic print media;
  • Owner producers of pornographic television channels;
  • Owner producers of pornographic media formats such as film, video and games;
  • Owners of pornographic digital, virtual or online content such as websites.

Mobile telecommunication companies that facilitate the transmission of pornographic content will be assessed according to the strength of the controls in place to protect vulnerable groups. Mobile telecommunication companies that seek to derive material revenue from the provision of pornographic content will be subject to greater scrutiny and engagement, which may lead to disinvestment.

In keeping with our general policy, companies owning or operating premises providing pornographic experiences or live shows will be subject to investment exclusion.

Investment avoidance based on the contribution to company revenues alone is not appropriate and needs to be accompanied by qualitative ethical judgements based on the principles outlined in this Policy Statement.

In keeping with Epworth policy, engagement will often be the most appropriate response in cases of broadcast, transmission and retail of pornographic material where this is not the main business, and may, in part, be based on the protection of vulnerable groups via age or access restriction. Such instances may include:

  • The retailing and siting of pornographic magazines and print media within high-street store chains;
  • The protection of taste and decency standards including age, access and encryption restriction by broadcasters;
  • The publishing of pornographic and non-educational sexual content in teen and young persons media;
  • The protection of minors via age, access and encryption restriction by premium telephone line providers;
  • The protection of minors via age, access and encryption restriction by Internet service providers hosting web sites, chat-rooms, blogging sites and other social and interactive media.

December 2011

Mining companies and other extractive industries


The theology of creation proclaims the consistent message of Christian stewardship, of humanity’s obligation to care for the earth and its creatures.

The Connexional Team’s 1991 report Floods & Rainbows – Christian Faith Concerning the Environment calls upon Christians to create a new political will to respect nature, heal its wounds, clean up pollution, control the demands made upon it, and develop new appropriate lifestyles.

Caring for the Earth, an Environmental Policy for the Methodist Church was produced in 1999. This affirms that Christian mission includes caring for God’s earth and commits the Church to develop both theology and the practical implications of this on a continuing basis. It encourages Methodists to take into account global and local environmental considerations for present and future generations, and to look for opportunities for co-operation and joint initiatives with other Churches on environmental initiatives.

The position paper on Theology and the Environment notes that Epworth’s investment decisions have an effect on the conservation of the world’s resources, and so form part of the Church’s stewardship of the earth. This is surely a challenge that Epworth is obliged to meet.

Historically Epworth has been wary of investing in mining shares on ethical grounds. However, in 1996 the Joint Advisory Committee recognised that civilisation could not function without metals such as iron aluminium and copper that therefore contribute to a higher standard of living for millions of people. Consequently it was affirmed that mining and other extractive industries were an acceptable area for investment by Epworth.

Whilst owning shares of companies producing non-precious metals may be acceptable, the case for mining companies producing mainly precious metals and diamonds may seem less compelling. However it is important to note that precious metals such as silver and platinum are widely used in industrial applications. The distinction between ‘precious’ and ‘non-precious’ metals is therefore less clear cut than used to be the case.

In its Report to the 1997 Conference the Joint Advisory Committee stated its belief that nuclear power had certain environmental advantages, subject of course to the most stringent safety requirements. The Committee noted that the long-term disposal of nuclear waste remained an issue, but it felt that all forms of energy production had environmental drawbacks. It therefore decided that the production of uranium for peaceful purposes was not to be regarded as ethically problematic. Since that time there has been growing recognition of the benefits of nuclear power in respect of climate change, although safety requirements now include the threat of terrorism.

In 1999 the world’s largest mining companies established the Global Mining Initiative, indicating a willingness to enter into dialogue with NGOs on social and environmental questions. (This ended in may 2002, being succeeded by the International Council on Mining and Metals.) Epworth should to continue to participate in this process by engaging in discussions with individual mining companies.

The key issues

Mining and the oil and gas sector pose distinct challenges to ethical assessment by investors. Some issues of particular relevance to these sectors of the economy are set out below:

Health and safety

A clear and effective company policy to minimise accidents, and to safeguard the health and safety of local people affected by its operations is essential.

Respect for, and consultation with local communities

Consultation with local communities is required where mining may have a major impact upon the social and physical environment and upon local people. Respect for the views of local communities should be the basis on which the consultations are made.

Transparency and revenue sharing

Revenue-sharing agreements and anti-corruption measures are extremely important. Measures to increase local value-added in developing countries, and to train local staff are to be encouraged.

Human rights

The need to find reserves in developing countries also brings a heightened risk of being implicated in human rights abuses, particularly when they take place in conflict zones. Companies operating in such difficult areas should possess clear and effective policies to minimise possible human rights abuses.

Labour issues

Like all companies operating in developing countries, mining and energy companies need to be aware of the risk of the illicit use of forced labour or child labour, as well as avoiding racial or sexual discrimination.

Sustainable development

  1. The large ‘environmental footprint’ of mining and oil and gas operations means that companies need to have effective accounting and internal management control systems in order to monitor and minimise the environmental impact of their activities. Clear lines of management accountability for the environment should be visible. This might include having a main board director with environmental responsibility, or other management control mechanisms.
  2. Companies should have a policy to eliminate pollution and to facilitate remediation of polluted or spoiled sites, and publish indicators of their effectiveness in doing so. External environmental verification is also to be encouraged.
  3. Producers of fossil fuels should indicate potential contribution to global warming, and describe their company’s long-term path to the production of more sustainable fuels.
  4. Companies should be prepared to produce reports on the environmental impact of their operations.


An acceptable area for investment

Epworth believes that the mining and energy industries are ethically acceptable areas for investment in their own right.

Best in class

As with all business sectors, we must recognise that it may not be possible to find any ethically acceptable company. However, it seems appropriate to try to identify the key issues of ethical concern. These can then be used in order to be able to assess, monitor, and influence the companies involved and identify the best in class. Companies in the sector should be continually striving to improve their performance in areas like health, safety and the environment. Epworth as long term shareholders should be supportive of their efforts to improve.

Good practice

Epworth should have a preferential policy of investing in companies demonstrating good corporate practice by signing up to internationally recognised guidelines. For example the United Nations guidelines on human rights and the use of security services and provide one good example, as do the core International Labour Organisation guidelines on human rights in the workplace.


Epworth actively includes the environment in its concern for social justice. We should aim to encourage best practice by constructive dialogue with company management on the above issues.

Shareholder activism

Owning shares in mining companies will give Epworth a more powerful voice in discussion, and we should seek to use voting rights.

November 2002

Contractors supplying military and security services


Epworth policy towards Companies with Military Exposure is outlined in a separate statement. This paper applies Epworth policy to Private Military Companies (PMCs) and Private Security Companies (PSCs) which use armed personnel to provide security services.

The private security industry is estimated to be worth in the region of $100 billion and employs tens of thousands [1]. The Iraq war beginning in 2003 saw a major escalation in the industry, with perhaps 20- 30,000 personnel employed in Iraq alone [2], with considerable sums involved. For example, the Blackwater company was awarded over $832 million in contracts from the US Federal Government between 2004–2006 [3] : the UK firm Aegis Defence Services was reported to have been awarded a $430 million Pentagon contract to oversee all private security contractors in Iraq [4]. There is a number of other UK companies supplying armed personnel, though little exposure via the listed securities market.

Reporting on the use of such contractors in Iraq and Afghanistan, Human Rights First proposes the following definition:

  • “the use of private personnel with ‘a core mission to protect people (other than themselves) or things, to include guarding government (and contractors’) facilities, protecting government personnel (and other government contractors) and United Nations (U.N.) and other international organization staff as well, and providing security for convoys” [5]

The use of non-government armed personnel is often regarded as a necessity, however regrettable. For example, in addition to the UN and governments non-governmental organisations such as development charities, and on occasion church representatives, use such personnel, sometimes locally sourced. PSCs are employed by many branches of government (for example, the UK Department for International Development spent 278 million of its Iraq reconstruction budget on security services [6]). Such assistance is often deemed necessary where national armed forces are unable or refuse to provide protection.

Epworth policy recognises that weapons and systems which support their use are not morally neutral, since they are destructive of life. The employment of security contractors should be considered in the same light.

Considerable concern has been expressed about inappropriate use of force by private contractors. A Human Rights First report notes:

“The most recurrent violations involve the use of lethal force against civilians in what the private security contractors call “convoy protection”. Convoys often speed down the wrong side of the road, use gunfire to warn off civilians, and routinely fire on civilian vehicles in response to perceived threats. Although some incidents involving the questionable use of force by contractors against civilians and other alleged contractor abuse have been reported in the press or through official channels, few have been investigated and almost none have been prosecuted.” [7] There can be grave implications for relationships with the local population and the potential for spirals of violence to occur.

The most serious incident involving private security contractors may have occurred on 17th September, 2007, when guards from the US security firm Blackwater shot on Iraqi civilians in Baghdad, killing 17 people [8]. Human Rights First’s review of 610 Serious Incident Reports filed between July 2004 and April 2005 showed that 61% of the incidents concerned contractors firing on unarmed civilians [9].

The relationship between national armed forces and security contractors may not always be clear, particularly where governments have poor regard for human rights.

Areas of ethical concern

Companies involved in providing private military or security services to government, corporate, or NGO clients may be more directly involved in armed conflict than companies providing military equipment or services.

Private military contractors may prevent harm and may be more akin to police than national armies, thereby raising fewer ethical concerns. Nevertheless, private armed forces do not always have clear lines of accountability and democratic control and can be used as substitutes for national forces. The application of the Christian Just War tradition to the use of private forces is not straightforward.

Private contractors may employ personnel less well-trained than those in the armed forces, under less well-developed chains of command, and with less accountability. The use of contractors in place of military personnel may therefore increase the risk of inappropriate use of force in some areas of conflict.


Epworth policy Companies with Military Exposure must be specifically applied to the provision of private military or security services by a company. Such services may be regarded as raising more concern than the provision of offensive weapons.

For the purposes of investment, a company’s exposure to the provision of private military or security services will only be tolerated if it does not form a significant proportion of its overall activity, is clearly conducted in a well-regulated environment with clear rules of engagement subject to legal scrutiny, and is not deployed as a substitute for national armed forces.


  1. Carmola, Kateri. (2010) ‘Private Security Contractors and New Wars London’, London : Routledge
  2. Corporate Watch. ‘Bodies of Armed Men’, www.corporatewatch.org/?lid=2481
  3. Human Rights First. (2008) ‘Private Security Contractors at War: Ending the Culture of Impunity’,www.humanrightsfirst.info/pdf/08115-usls-psc-final.pdf, p 7.
  4. Corporate Watch. ‘Bodies of Armed Men’, www.corporatewatch.org/?lid=2481
  5. Human Rights First. (2008) ‘Private Security Contractors at War: Ending the Culture of Impunity’, www.humanrightsfirst.info/pdf/08115-usls-psc-final.pdf, p 1
  6. Corporate Watch. ‘Bodies of Armed Men’, www.corporatewatch.org/?lid=2481
  7. Human Rights First. (2008) ‘Private Security Contractors at War: Ending the Culture of Impunity’, www.humanrightsfirst.info/pdf/08115-usls-psc-final.pdf, p iii–iv.
  8. Guardian, ‘Blackwater guards shot Iraqis without provocation, report says’, www.guardian.co.uk/world/2007/oct/08/usa.iraq
  9. Human Rights First. (2008) ‘Private Security Contractors at War: Ending the Culture of Impunity’, www.humanrightsfirst.info/pdf/08115-usls-psc-final.pdf, p 10