Pooled investment funds, or collective investment schemes, are assets of multiple beneficial owners aggregated into single investment vehicles.
Such funds 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.
Examples of pooled investment funds include: investment trusts; investment companies; mutual funds; real estate investment trusts (REITs); unit trusts; open ended investment companies (OEICs); exchange traded funds (ETFs); private equity funds; venture capital funds; property funds; infrastructure funds; hedge funds; funds of funds; common investment funds (CIFs); charity authorised investment funds (CAIFs); and limited partnerships.
When Epworth invests through pooled investment funds there may be indirect exposure to business activities and companies that would otherwise be excluded on ethical grounds. This is comparable with an investment in a large diversified company, which may not merit exclusion on ethical grounds but which, nonetheless, may have some exposure to activities which would result in an exclusion if they were the sole activity of the company.
Epworth has established pooled investment funds for the use of churches and charities. Consequently, those investing through these funds may have indirect exposure to business activities and companies that they wish to avoid on ethical grounds.
The Bible provides little guidance on investment in pooled funds or diversified companies, although maintaining purity was a central aspect of the Mosaic Law, (eg Isaiah 52 vs 11).
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:
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 distinguishing the ‘elect’ from the ‘rest of the world.’ In his Journal for 2 April 1739 he wrote, “At four in the afternoon, I submitted to be more vile, and proclaimed in the highways the glad tidings of salvation’. 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 (he is willing to become ‘more vile’) 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).
Wesley’s sermon, The Use of Money1, also 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.
Examining the Epworth Mission Statement2 provides some helpful insights.
“Epworth seeks to implement its aims:
Epworth is committed to wrestling with the tensions of seeking both superior returns and improving ethical standards within the portfolios we manage. However, we recognise the paradoxes and compromises which are involved and accept that our best efforts may justly be criticised as falling short of our ideals”.
There are few relevant precedents resulting from advice issued by JACEI. However, two issues were considered at the June 2018 meeting:
Epworth has from time to time considered ethical issues related to pooled funds and a number of decisions have been made, which continue to guide its actions.
In the 1990s, Epworth disinvested from generalist pooled funds on the grounds that these incurred an additional cost without offering an investment expertise that the CFB could not provide, whilst allowing exposure to activities that on ethical grounds the CFB avoided through direct investments.
At the same time it was agreed that pooled funds would continue to be used to obtain specialist expertise which Epworth lacked, for example: geographical specialisations; sector specialisations; absolute return strategies; venture capital and other early stage enterprises; and private equity. This was seen as particularly useful in pursuing positive ethical strategies related to climate change and the environment.
Where pooled investment funds were chosen, it was agreed to seek:
Opportunities to influence the managers of pooled funds have been taken when possible, most notably in relation to property investment. The CFB Property Fund was a founding investor in the Property Income Trust for Charities. Its fund manager, Mayfair Capital Investment Management Limited, now part of Swiss Life Asset Managers, wished to develop a socially responsible policy and exclude tenants involved in businesses that many of its potential investors would find difficult. Consequently, Epworth was invited to join the Investors’ Committee, which reviews all properties and their tenants before purchase. Epworth also assisted in drafting the Fund’s ethical policy3. On the one occasion when a property was held with a tenant which did not comply with the ethical policy, Epworth was able to point out the discrepancy and an exit from the property was subsequently achieved.
Where a pooled fund does not have an Environmental, Social or Governance policy, and the relationship is purely that of an investor, every opportunity is taken to meet the manager to discuss the portfolio in depth and highlight any holdings Epworth finds ethically problematic. Historically, such engagement has been very successful in developing a relationship of trust.
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 Church of England’s Ethical Investment Advisory Group (EIAG) published its Pooled Funds Policy in 20144. In its theological reflection, purity was identified as a major Biblical theme that can be applied to pooled investment funds. It also pointed out that the Reformed and other Free Church traditions had tended to have a stronger emphasis than the Anglican Church on the difference between the ‘elect’ and the ‘rest of the world’ with ‘purer’ boundaries and admission criteria. This highlights an element of debate between denominations as to where lines on purity should be drawn, which could be relevant in the context of pooled investment vehicles.
The EIAG policy notes that we live in the theological interim between the coming of the Holy Spirit at Pentecost and the final judgement when Jesus returns and God draws all things unto himself. “In this interim age, the life of the Christian is touched by both grace and sin, and Christian ethics must walk a fine line between a naïve trust in an innate human goodness, which will always be frustrated by sin, and a crude ‘realism’ which leaves no room for altruism, virtue and the work of the Spirit. We cannot always know where the line between good and evil lies and may often have to risk sin if we are ever to rise above it”. Therefore, “the challenge is to find the boundaries which rule out known and easily predictable unethical practices, to weigh any remaining risks with care and accept that no action can guarantee purity”.
The debate over the Church of England’s indirect investment in Wonga in 2014, through a pooled investment fund, demonstrated that it can be 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.
The EIAG policy also suggested that solidarity is an important consideration, indicating that it has been a significant theme within post-war Roman Catholic social thought and referencing two encyclicals:
The EIAG used Romans 15 vs 2-3 to remind us that: “the solidarity with the human race that Christ has demonstrated should directly influence the way in which we must build up our neighbour (not just our fellow Christians). While this ‘building up’ and solidarity is often expressed in terms of friendship and charity, it seems possible to understand a proper collaboration through co-investing as an act of solidarity, so long as all concerned are able to share in the true flourishing which results. If so, use of appropriate pooled funds should be understood as playing a part in honouring the ‘building up’ of neighbour that Christians are called to pursue”.
The EIAG recommended that: direct investment is more advisable; that investment should be avoided in pooled funds that focus on excluded activities; any underlying holdings in a pooled vehicle should be able to be monitored, and that any aggregated exposure to excluded activities should be no more than 1% of the portfolio.
In addition it was noted that continued investment in a pooled fund would be inappropriate if exposure was “particularly damaging to the credibility, effectiveness and unity of the Church’s witness”.
Epworth provides pooled investment funds for churches and charities, which have their own ethical requirements, as well being a potential investor in pooled investment funds managed by others.
The Biblical and theological reflections of most relevance to pooled investment funds relate to purity, speculation, transparency and solidarity.
Investment in pooled investment funds may result in indirect exposure to business activities and companies that would be avoided on ethical grounds if direct investment was considered. There is a parallel with investing in large diversified companies.
The credibility, effectiveness, and unity of the Church’s witness could be damaged by investment in pooled funds with exposure to inappropriate business activities and companies.
There is little to indicate that a distinctive Methodist approach is necessary.
JACEI has provided advice in the past that may serve as a precedent to inform a more detailed Policy approach.
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 (Fig 1). 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. Regional differences remain stubbornly acute, with the prevalence of active smoking remaining higher in Scotland (16.1%) and Northern Ireland (16.3%) than in other parts of the UK.
The Office For National Statistics paper, ‘Adult Smoking Habits in the UK, 2017’ notes a ‘significant’ one-year fall in the prevalence of smoking across all age groups, and in total from 15.8% of the adult population in 2016, to 15.1% in 2017. It is, however, too early to determine if this represents a new longer-term downward trend, although the UK and devolved Governments have all smoking reduction prevalence targets – 12% in England by 2022.
Active smoking is more prevalent in socio-economically deprived areas, with evidence that it underpins the socio-economic variation in incidence and mortality for a number of cancer types. The prevalence of smoking is also more marked in manual or low-paid occupations (25.9%), compared to professional and managerial occupations (10.2%). Evidence of this can be seen for example, between smoking prevalence in Blackpool – registering one of the highest, and Cheltenham, among the lowest (Fig 2).
Smoking declines with age. Whereas 17.8% of UK adult males (20% adult females) smoke between the ages of 18-24, the equivalent for the over 65 age group 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 (see below). This does not include complications arising from passive smoking, nor conditions found in babies, of whom 10% are born to a mother who smokes.
The socio-economic cost of smoking is stark. Research by Oxford University put the cost to the NHS as exceeding £5.2bn per year, with approximately 485,000 (England) hospital admissions in 2016 linked primarily to tobacco related conditions (by way of comparison, there were 617,000 admissions linked to obesity and over 16m hospital admissions in England in total in 2016-17).
Vaping is the inhalation of nicotine vapour produced from an electronic or e-cigarette. The device comprises battery, housing, vapour cartridge and atomizer. By generating heat in the atomizer, vapour liquid is transformed into gas for inhalation. Modern vaping originated in China in 2003; exponential growth in the UK has seen the number of users increase from 700,000 in 2012 to over 6 million by 2015.
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.
The House of Commons Science & Technology Committee published its report ‘e-cigarettes’ in July 2018, in which Parliamentarians concluded that ‘e-cigarettes present an opportunity to significantly (sic.) accelerate already declining smoking rates’ and on balance advised that smokers should be ‘encouraged to give up, but if that is not possible, they should switch to e-cigarettes as a considerably less harmful alternative’. More controversially, the Committee advised a public debate on whether vaping should be allowed in spaces where smoking is now prohibited on health and safety grounds (offices, public transport etc.) stating there is no ‘public health rationale for treating use of the two products (i.e. cigarettes and e-cigarettes) the same’.
However, as the Committee 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. CRUK states that vaping should be more closely seen as nicotine replacement therapy (NRT), which has long been seen as a safer alternative to smoking. E-cigarettes are also believed to be low risk in respect of conditions such as ‘popcorn lung’ as the liquid believed to be the cause is banned from use in e-liquids.
Given the longer-term uncertainties, a precautionary approach has been assumed so that investing in vaping and e-cigarette products are avoided until quantitative and qualitative evidence regarding their safety emerges.
Smoking is the biggest preventable cause of cancer, and is responsible for 25% of all cancer deaths and three in 20 of all cancer cases. There is no statistical difference in risk between cigarette smoking and other forms such as pipe, cigar or shisha.
Chemicals in cigarette smoke enter the bloodstream and affect the entire body, being held responsible for at least 15 types of cancer as well as heart and lung disease.
Smoking is primarily linked to lung cancer where it is responsible for around 70% of diagnoses. Lung cancer currently has among the lowest survivability rates of any cancer. Smoking is also linked materially to bowel, bladder, mouth, upper throat and oesophagus cancer.
Cancer develops as a result of DNA damage caused by the chemicals in cigarette smoke attacking the body, in particular benzene, polonium-210, benzo (a) pyrene and nitrosamines. Each cigarette is a cocktail of around 5,000 chemicals of which 70 are cancer causing e.g. cadmium, arsenic, formaldehyde and chromium.
Passive smoking increases the risk of contracting cancer by 25% and is particularly dangerous for children and young people. Second hand smoke exposure most often occurs in the home or in private transport. Smoking in a car with a person under 18 was made illegal in 2015, however, infringement is limited to a £50 fine and does not apply to drivers who are 17, or to convertible vehicles where the roof is (fully) down!
Establishing a causal link between smoking and cancer took sometime, but gathered pace during the 1950s as medical practitioners monitored and observed the prevalence of lung cancer cases. By 1956 evidence had mounted sufficiently for the British Medical Journal to publish, and this was followed by a recommendation in 1962 by the Royal College of Physicians providing incontrovertible evidence of the link between smoking and cancer.
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. The UK became a party to the WHO Framework Convention on Tobacco Control in 2005, which outlawed the practice of smoking in indoor work or public spaces and on public transport. Display of tobacco products in retail outlets was prohibited at the same time, restricting ‘display’ to behind closed non-viewable cabinets.
The final piece of highly restrictive legislation arrived in 2016 with the Tobacco and Related Products Regulations 2016, and Standardised Packaging of Tobacco Products Regulations 2015. These mandate standardised, plain packaging for all cigarettes and loose leaf tobacco, and cannot contain any text, trademark, brand or symbols other than health warnings, brand name (in standardised font), quantity and producer. These form among the most constraining sales and marketing restrictions for any legally sold product anywhere.
The law, however, remains somewhat quaint in its application: The legal age for buying tobacco was raised to 18 in 1987, but this applies only to cigarettes and not to other tobacco products. The legal age for smoking in public remains 16 in England & Wales. Vendors may be fined up to £2,500 for illegally selling cigarettes to minors, but there is no penalty for actually smoking as a minor, apart from confiscation.
Government, whilst motivated to promote health given the causal link of smoking with a range of diseases, nevertheless continues to benefit financially from the sale of tobacco products. UK excise duty and VAT is among the highest in the world on tobacco products, accounting for around 82% of the recommended retail price (RRP) of a packet of 20 cigarettes (c£9.91). Within the EU, the UK applies the most stringent duty rates followed by Ireland and France (by comparison a packet of 20 cigarettes in France will cost £5.67, and in Bulgaria – the lowest – £2.32).
The Treasury received c£8.9bn in tobacco excise duty in 2016/17 made up of a standard levy of 16.5% of the retail price plus a specific duty applied per 1,000 cigarettes sold (currently £207.99). Between 2000 and 2016, HM Government received over £146bn in tobacco related duty.
As with so many modern ethical dilemmas, there are few direct Biblical references. Whilst tobacco has been smoked for many centuries by indigenous populations, it was only ‘discovered’ and developed as a cash crop for recreational purposes in the 16th century.
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 ‘Letter’ he was concerned at the harm caused by alcohol to the body and the soul that debased self-respect and worth. The intensity of his views on alcohol may not, of course, have extended to tobacco and smoking, given the effects were not so obvious, debilitating or well-known in the 18th century as were the all too obvious effects of alcohol addiction.
However, in 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, and would certainly have opposed taking profit from business activities that involved tobacco.
Tobacco is the most common and widely observed ethical exclusion among faith investors and other secular ethical investors. The Church of England has excluded tobacco since 1962; this was confirmed in 1964, and the position was re-affirmed in 1983 when the Church investment bodies stated; ‘the case for retaining this category [of exclusion] is clear cut’.
The Church Investors Group (CIG) regularly surveys its members on companies excluded from investment. The last survey suggested 96% of its members avoid investment in major stock-exchange listed tobacco companies. Denominations stating they avoid ‘tobacco products’ include the Baptist Union, Church of Ireland, Church in Wales, Church of Scotland, Roman Catholic Dioceses and the United Reformed Church.
The first reference to a policy relating to investment in tobacco dates back to 1963, but there is no record of what this entailed. However, despite later comments that the CFB had always avoided investment in tobacco, there are indications that there was some exposure prior to the establishment of the Investment Unit in 1972.
From 1972 onwards, tolerance towards exposure to tobacco has been extremely low and has rarely been questioned. Consequently, there is little record of any debate on the subject. However, there has been an untested assumption that if tobacco accounted for 5% or more of profits or sales of any company, it would be excluded from investment on ethical grounds, whilst exposure approaching 5% would be referred to the Joint Advisory Committee on the Ethics of Investment (JACEI) for advice. An early precedent was the sale of a company that manufactured machinery for the tobacco industry.
There are precedents for decisions taken on companies with exposure to both tobacco and alcohol. The major food retailers sell alcohol and tobacco, but combined sales were not considered sufficiently material to warrant disinvestment on ethical grounds. However, in the 1980’s, KwikSave bought an off-licence chain that took its combined alcohol and tobacco sales above 20%, and as a result the holding was sold on ethical grounds.
In 1999, British Airports Authority (BAA) was considered by JACEI following its purchase of a ‘duty free’ retailer in 1998. The company’s exposure to alcohol and tobacco temporarily rose close to 20%, but had then fallen back to around 15%; JACEI considered, at the time, that this “was not a cause of major concern”.
The long serving investment exclusion of tobacco and tobacco related products on grounds of health is clearly accepted and well established and therefore no change to this approach is proposed. Given the longer-term uncertainties, a precautionary approach has been assumed so that investing in vaping and e-cigarette products will be avoided until quantitative and qualitative evidence regarding their safety emerges.
Epworth has published an accompanying Policy Statement on Tobacco in which its investment approach to tobacco is set out.
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.
Tax is a complex, technical issue; it is not for the individual investor necessarily to engage with the detail, but on general principles of transparency and disclosure. This Position Paper sets out the biblical background, the position of the Methodist and other Churches, and scopes how the CFB may seek to engage with companies on tax justice.
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. Deuteronomy 26:12-13 has a clear expectation that a tithe (one tenth of annual produce or earnings), should be used to support “the Levite, the foreigner, the fatherless and the widow, so that they may eat in your towns and be satisfied”. 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 reminds us 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. Income or profit is generated using labour, skills, services and infrastructure, some of which it does not directly pay for. Tax provides for the payment of security, education, welfare and healthcare, as well as the legal framework to ensure fair transactions and property rights. Tax is therefore part of the complex and interconnected web of human relationships. 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. This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing. Give to everyone what you owe them: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honour, then honour” (Romans 13:6).
Biblical tradition highlights the importance of taxation, and the legitimate demands the State may make. This interdependent relationship suggests that tax must be demanded in a way that is fair and proportionate. In return, tax that is legitimately demanded should be paid. Methodist Conference in its reply to Memorial 30 at the 2015 Conference also recognised that in seeking to build a just society, institutions and individuals have a responsibility to respond not just to the letter, but to the spirit of the law on tax. This responsibility applies with particular gravity to the Church itself, given its role in building a more just society.
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).
Conference also 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:
In reply, it was noted that ‘The Joint Public Issues Team (JPIT) is already working with Christian Aid, Church Action on Poverty and the embryonic Methodist Tax Justice Network to explore how these issues might be further promoted. The Conference therefore accepts the Memorial, asks the Methodist Council to ensure that these issues are included within the work-plans of the Connexional Team as resources allow, and recommends that churches and individuals use the study resource material from both the ‘Trace the Tax’ and the ‘Close the Gap’ campaigns 4 to aid understanding of the issues raised in the Memorial.
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.”
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.” In 2014, Christian Aid estimated that $160bn a-year is lost to the developing world as a result of tax evasion/avoidance by multinational companies. 5 Thus, tax justice forms an essential part of the Church’s strong commitment to international justice.
In “Of Equal Value”, the Methodist Church recognised the importance integrity has in its own financial affairs when responding to government cuts. “Many of the new difficulties facing the poorest and most vulnerable are due to decreases in government expenditure. In order to speak about these cuts with integrity we must ensure that we corporately and individually contribute to government funds by paying all the taxes owed. These contributions are both a moral and legal duty; therefore it is not sufficient to obey merely the letter of the law, but also the spirit.” This point can be seen to apply more broadly to questions of social justice and inequality. If the Church fails to fulfil its moral and legal duty to pay tax then its ability to speak out in support of the poorest in society will be compromised.
The 2015 Conference received a further Memorial (M30) 6 from the Birmingham District which has led directly to the preparation of further work by JACEI and the CFB. 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:
The Memorial response also stated that
At a fringe event at the 2016 Conference, the then Chief Executive of the CFB, Bill Seddon, contributed to an event on tax, the transcript of which has been published on the CFB website 7.
The Methodist Church’s position on tax might thus be summarised as follows:
One of the primary difficulties arising from any discussion around tax is definitions.
According to the OECD glossary of tax terms:8
For the purposes of this Position Paper the term “tax avoidance” will mean actions which reduce tax liability using tax planning mechanisms that are legal but outside the spirit or intent of the law.
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 Committee. 9 More recently, data leaks (such as the Paradise and Panama Papers exposé’s) have thrown light on the methods used for tax avoidance and the identities of individuals and companies involved in such practices.
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. One obvious example is Amazon booking UK revenues and profits in Luxembourg so as to benefit from a much lower rate of marginal tax.
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.’10 This can extend to where it pays its taxes.
Public opinion has become increasingly intolerant of tax avoidance on the part of companies and has generally been ahead of national and international authorities, such as the OECD, in wanting it addressed.
One issue that raises concern is the use of ‘tax havens’. A haven may typically be a jurisdiction which exerts a small, nominal or nil tax rates as part of its regime. Historically, tax havens have been associated with secrecy. Tax has become something of a ‘competitive sport’ for some companies, moving domicile to benefit from a lower overall tax rate (Shire’s move to Ireland, and Ferguson’s move to Switzerland are just two examples). Other companies may have subsidiary ‘shell’ or holding’ companies through which monies may be channelled, and whose purpose is, at least in part, obscure (e.g. subsidiaries registered in Grand Cayman, Luxembourg or other well-known havens such as Gibraltar and the Channel Islands). In both cases these arrangements may be legitimate, but transparency remains key in order to retain confidence that corporate policies are fair, appropriate and just. In recent times, there have been international efforts to bring greater transparency to the use of havens and by jurisdictions themselves. The OECD has identified three factors as part of any assessment in identifying whether a jurisdiction is a ‘tax haven’ 11:
The CFB and JACEI have been engaged with the subject of tax justice for sometime and have received frequent notes and updates. This activity has included:
It is in the context of increased reputational risk and a greater understanding of the issues around tax justice, that a number of organisations, including the Church of England, the Quakers and the Church Investors Group have begun to scope how they might engage with companies on tax. Other organisations such as charities and non-governmental organisations, including Christian Aid, ActionAid and Oxfam have well-established public campaigns on tax. They have been engaging with companies that have suffered significant reputational damage as a result of their tax affairs and are helpfully constructing frameworks for what a ‘good tax policy’ might look like.
Tax remains a novel and under-reported issue for faith investors.
The Church of England Ethical Investment Advisory Group (EIAG) outlined some thinking on tax and investment in July 2013 in which the EIAG recommended ‘that tax ethics should be a subject for investor engagement where it appears that a company’s approach is blatantly aggressive or abusive’ 12. The note set out some background, the business and ethical dimensions (‘the way in which a company approaches tax is part of its relationship with the societies in which it operates’), and rejected the view that corporate tax planning is only a matter of legal compliance.
The Church of England’s policy recommendations included:
The Church Investors Group has also been engaged in the subject of tax justice and tax transparency with presentations at its 2015 Conference by Christian Aid (‘Corporate Tax and Morality: Lessons for Responsible Investors’ and the Tax Justice Network (‘Responsible Investment and Corporate tax’).
The CIG commissioned collaborative investor engagement on tax in 2017, led by the Church of England, will be focused on the global IT and pharmaceutical sectors.
Both Christian Aid and ActionAid have been vocal in the debate on corporate tax avoidance and have published briefings and primers for investors on how to engage with companies.13
The Joseph Rowntree Charitable Trust 14 has produced ‘a Statement of Expectations’ in respect of its Fund Managers. The Statement acknowledges that ‘most companies face a competitive and uneven tax playing field, and calculating what the ‘right’ amount of tax they should be paying is not always clear cut’. Whilst JCRT recognises the importance of inter-governmental agency in reforming the tax regime, it notes that ‘we as investors…should not remain passive about this issue’. To that end, its Statement provides a series of actions expected of Fund Managers including:
The Fair Tax Mark 15 was launched in 2014 and is an independent not-for-profit community benefit society (an industrial and provident society supported by the Joseph Rowntree Charitable Trust). Its rationale is to accredit companies with a kite-mark by seeking “to encourage and recognise organisation that pay the right amount of corporation tax at the right time and in the right place”.
Take up has been predominately among smaller, co-operative or private businesses. Just one FTSE100 company (energy utility SSE) and two FTSE250 companies (Go Ahead Group and Marshalls) have become ‘fair tax compliant’.
Informed and meaningful engagement on tax policy 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 havens), secrecy raises concerns about the appetite and desire ultimately 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.
JACEI contends that a Policy Statement on tax would enable CFB to engage effectively with companies on tax, and that such a Policy would primarily be used in routine discussions with companies where clarity or greater understanding of approaches to tax planning is required.
Primers published and developed by Christian Aid and ActionAid, and in turn built around tax policy and transparency are helpful guides in developing a tax engagement policy for the CFB. Extracts from key guidance is provided at Appendix I.
Hallmarks of best practice in this area might therefore include:
JACEI also supports CFB efforts to work collaboratively with others, such as the CIG on tax by engaging with companies of concern: Tax represents a challenging issue for engagement and lends itself well to more active collaboration.
Towards a Responsible Investment Policy on Tax
This position paper is limited to a consideration of 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 Position Paper 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 goodness of creation is a fundamental biblical and theological principle. It is repeatedly affirmed in the creation story of Genesis 1, and in other biblical creation material, such as the great psalm of creation Psalm 104, and the closing chapters of the Book of Job (38–41). Early Christian theologians such as Augustine defended the goodness of creation against their heretical opponents.
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. Job 38–41 suggests that God delights in many creatures that have nothing to do with human wellbeing, and the psalms frequently picture all creatures giving praise back to God (e.g. Ps. 148:7, 10).
While Genesis 1:29-30 indicates a plant-based diet both for humans and other animals, after the flood in Genesis 9, God permits humans to kill animals for food. For most of the Old Testament, the killing of animals is permissible only under the tight edicts of the sacrificial system, and some prophetic texts suggest that animal sacrifices should be brought to an end (e.g. Is. 1.11; 66:3). Wild animals belong to God and are not generally available to Israel for food.
God’s providential care for animals is affirmed in both the Old and New Testaments. God has compassion for every creature and satisfies the desires of every living thing (Ps. 145:9, 16). Jesus affirms that not a single sparrow is forgotten by God (Mt. 10:29 || Lk. 12:6).
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). The Sabbath rest required by the Mosaic Law applies to domestic animals as well as humans (Exod. 20:8–10), and in the Sabbath year even wild animals should be allowed to feed on the fallow land (Lev. 25.4:-7).
Isaiah, among other prophets in the Old Testament, looks forward to the time when the Messiah will come, when ‘the wolf will lie down with the lamb’ and peace will be re-established between all creatures (Is. 11.6–9). In the New Testament, Paul writes of the time when creation will be liberated from its bondage to decay (Rom. 8:19–23) and the opening chapters of the letters to the Ephesians and Colossians envisage the reconciling work of Christ as gathering up and making peace between all things in heaven and earth (Eph. 1:10; Col. 1:20).
Fish feature widely in the gospel stories: Jesus calls some of 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).
Earlier in John’s gospel, Jesus refers to himself as the good shepherd who protects his sheep, even to the point of laying down his life for them (Jn 10:11–15). He relates the parable of the prodigal son, in which the father kills the fattened calf in celebration (Lk 15:23). Jesus’s own death is narrated in John’s gospel in terms that recall animal sacrifices (Jn 19, see discussion in Clough, On Animals vol. I Systematic Theology (London: T&T Clark/Bloomsbury, 2012), pp. 127–8,) and his death is identified as a replacement for Israelite understandings of animal sacrifice in the letter to the Hebrews (Heb. 9:12).
Peter’s vision in Acts 10:9–16 of all animals being declared clean by God is often given as a reason Christians should not be concerned about eating animals. This seems a poor interpretation of the text, as the text itself twice says that the vision is not giving Peter instruction about food, but about the admission of the Gentiles into the church (Acts 10:28; 11:1–12). As a result of the vision, Peter changed his practice towards the Gentiles, rather than changing his diet. Both Peter and the author of Luke-Acts therefore interpret the vision metaphorically, so it would be strange instead to interpret the text literally at odds with both of them.
Another often-cited verse in this context is Paul’s question in 1 Corinthians 9:9. After citing the Israelite law that an ox should not be muzzled while treading out grain (Deut. 25:4), Paul asks rhetorically ‘Is it for oxen that God is concerned?’ Paul’s question has often been interpreted as meaning that God cares nothing for animals, but since this contradicts a vast range of teaching in the Old and New Testaments (see 2.1–2.6 above) and contemporary Jewish understandings of God’s care for animals, it is very unlikely that this is what Paul intended. In his sermon ‘The General Deliverance’, discussed below, John Wesley replies to Paul’s question that without doubt God cares for oxen, and says we cannot deny it without flatly contradicting the Bible. Instead, it is likely that Paul meant that the text was written to instruct humans, rather than cattle (Instone-Brewer, D., ‘1 Corinthians 9:9–11: A Literal Interpretation of ‘Do Not Muzzle the Ox’’, New Test. Stud. 38:4 (1992), 554).
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.
Some Christian theologians, such as Augustine and Thomas Aquinas, adopted the Greek and Roman idea that rationality separated humans from other animals, and argued that this meant that humans did not have direct moral obligations towards animals (e.g. Augustine, City of God, bk. I, ch. 20; Aquinas, Summa theologica II-II, q. 64, a. 1).
This does not mean they did not think there were other reasons to avoid cruelty towards animals, however. For example, Aquinas quotes Proverbs 12:10 ‘the righteous know the needs of their animals’ with approval and recognises the connections between showing compassion for animals and showing compassion to fellow humans (Summa theologica II-I, q. 102, a.6).
From the 15th to the 19th centuries, the historian Keith Thomas argues that the Christian attitude towards animals was remarkably consistent: that it was permitted to make use of animals where necessary, but that animals should not be subjected to unnecessary cruelty (Man and the Natural World: Changing Attitudes in England 1500–1800 (London; New York: Penguin, 1984), p. 153).
At the beginning of the 19th century, Christians, including the evangelical William Wilberforce, were prominent in lobbying for the first legislation against cruelty towards animals, and in establishing the organization that became the Royal Society for the Prevention of Cruelty to Animals (RSPCA). At the end of the 19th century, Christians led the campaign against the cruelties of vivisection.
The 2015 papal encyclical Laudato Si took up St Francis’s attitude towards animals and stated that ‘Every creature is thus the object of the Father’s tenderness, who gives it its place in the world. Even the fleeting life of the least of beings is the object of his love, and in its few seconds of existence, God enfolds it with his affection’ (§77).
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 stated 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.
Methodists followed Wesley’s concern for animals. In 1760 Horace Walpole is said to have remarked that a man was ‘turning Methodist; for, in the middle of conversation, he rose, and opened the window to let out a moth’. Sermons against animal cruelty featured regularly in The Methodist Magazine and The Wesleyan Methodist Magazine in the early 19th century, discussing and rejecting hunting, other blood sports, and cruelties towards animals used for food and labour.
The Methodist Statement on ‘The Treatment of Animals’ was adopted by Conference in 1980. It states that the ‘theological basis for an attitude to the animal creation must rest on the concept of stewardship rather than lordship, must accept the implications of the reality of the interdependence of life on our planet, and must express the conviction that creation is good’. It rejects unnecessary experimentation, intensive factory farming practices that do not consider the welfare of animals, and cruel blood sports.
The 2009 Methodist Statement ‘Hope in God’s Future: Christian Discipleship in the Context of Climate Change’ includes a section on responsibilities towards ‘other-than-human neighbours’, concluding that ‘biblical texts testifying to God’s concern for creatures beyond the human, together with Israelite law defending them, demand that we should be motivated by love and justice to protect non-human neighbours threatened by climate change alongside the human ones’ (§2.5).
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 animal feeding operations (CAFOs). 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 CAFOs and therefore yield, farm animal welfare has suffered, with confinement, mutilation, and conscious slaughter all commonplace. According to Compassion in World Farming, two in every three animals are currently factory raised, or over 50 billion a year.
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. Such conditions cause stress and discomfort for the animals and increase the risk of illness and disease. Confinement of this type is common in caged systems, and also where animals are kept in pens or sheds, including intensive chicken and pig farming facilities. Sow-stalls are particularly inhumane and have been banned in the EU since 2013.
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. Examples are beak-trimming, castration, de-horning and fin-clipping. Some mutilation is intended to prevent animals injuring themselves out of boredom or distress, and could be avoided if measures were taken such as improving conditions and administering appropriate vaccinations.
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. Transporting animals, particularly over long distances, can have a serious impact on their welfare in terms of stress, discomfort, hunger and thirst, and can lead to injury, sickness and sometimes death.
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. Whilst pre-slaughter stunning is now a legal requirement in most countries, exemptions exist for authorised religious slaughter such as for Halal and Kosher meat, including in the EU. Halal preparation allows for pre-slaughter stunning as long as the animal is still alive to be blessed and killed in a specific way, but Kosher preparation prohibits pre-slaughter stunning.
Farmed fish are reared in an intensive environment. Many fish suffer from overcrowding – limiting swimming space and decreasing available oxygen in the water. 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.
Selective breeding in order to produce breeds which are particularly fast growing or high yielding is becoming an increasingly common practice in the intensive farming industry. Engineering in this sense to serve the purpose of increasing yield often has adverse effects which are detrimental to the welfare of the animal, including causing deformities. One example of this is broiler chicken production, where intensively reared chickens are chosen for their very fast growth rate. This can cause leg deformities and lameness as their bodies grow faster than their legs and they cannot support themselves.
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 use of hormones or antibiotics for growth promotion is not permitted in the EU and the import of products treated with hormones for growth promotion is also not permitted. However, products treated with antibiotics for growth promotion are still permitted for import into the EU.
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 causes of growing antibiotic resistance in humans. Since it’s estimated that almost half of all antibiotics produced globally are used for farm animals, this presents a significant threat to human health. As the antibiotics used for animals can be the same class as those used for humans, this can render disease untreatable for both animals and humans.
Correct labelling of goods can increase consumer choice to promote farm animal welfare, such as the introduction of categories for eggs in 2004 into ‘free-range’, ‘eggs from caged hens’, and ‘barn eggs’. Labelling systems such as the Soil Association Organic Standard, the Red Tractor, RSPCA assured, and Lion Quality assure consumers that certain animal welfare and food safety standards have been adhered to. According to Compassion in World Farming (CiWF), the Soil Association ensure organic guidelines and standards
that are much higher than standard industrial practice, specifically on key areas such as pre-slaughter stunning and confinement systems. RSPCA Assured labelling scheme covers both indoor and outdoor rearing systems, as well as health and welfare monitoring for animals. CiWF reports that the Red Tractor label assures that the food was produced in Britain although it does not go above the expectations of the law in regard to confinement of sows during farrowing among other things. Lion Quality labels are only present on eggs and only assure consumers the eggs were laid in Britain.
There is a growing concern that the increased demand for meat driving CAFO usage is not sustainable, with some organisations calling for protein diversification, in response to the complexity of sourcing food for seven billion people. Farm Animal Investment Risk and Return (FAIRR) are calling for a change in diet by diversifying the protein sources on offer. Forum for the Future, an organisation that looks for solutions to long term sustainability problems, launched The Protein Challenge 2040. It advocates plant based proteins as an alternative to meat, a greater awareness of livestock feed to ensure protein that humans can eat are not being used for feed, and to reduce wasted protein.
Although cattle usually graze on grasses they are being bred to graze on soya and cereal feeds as well, meaning that grains and nutrient rich foods that humans can eat are being fed to animals. According to the United Nations Environment Programme, for 100 calories worth of grain feed that a cow consumes, only 17 calories are returned through cattle and dairy products.
There is also published research that the current consumption of meat is not healthy for humans and can cause a variety of heath issues. According to the Food and Agriculture Organisation of the United Nations, cattle are the most GHG intensive animal to rear, representing 65% of sector emissions.
The CFB has previously written a food policy statement that highlights particular areas of concern that overlap with farm animal welfare including:
CFB is a supporting investor of Business Benchmark on Farm Animal Welfare (BBFAW), a global measure of company performance of farm animal welfare. It was set up in 2012 to index companies on their animal welfare policies and practices, in order to promote change. It assesses company management in four core areas: management commitment policy, governance and management, leadership and innovation, and performance management. In the 2016 report, 99 companies were rated by BBFAW across the three subsectors of food retailers and wholesalers; restaurants and bars; and food producers. Since 2015, 12 new companies have been added, continuing the trend of increased scope since the benchmark was created in 2012 with 68 companies reporting. Since the benchmark began, it can be seen that there have been improvements across every tier, with six companies considered leaders in this area. BBFAW presented to JACEI in 2014 on the work that it does, and regularly updates CFB with its engagements with other companies.
The CFB have engaged with multiple companies consistently over the last three years based on the work of the BBFAW, particularly targeting laggards in order to improve standards at the company and therefore improve their ranking in the benchmark.
Farm Animal Investment Risk and Return (FAIRR) is an organisation that works to raise awareness of poor animal welfare and the impact – through both risk and opportunity – that it can have on investors. It states that through shareholder resolutions and joint letters and briefings it aims to encourage companies with exposure to farm animals to improve their practice and policies.
It is currently in partnership with ShareAction (see 6.2).
In collaboration with FAIRR, the CFB has engaged with over nine companies around the use of antibiotics as a preventative method against disease in animals, and has received encouraging responses from most of these prohibiting the use of non-therapeutic antibiotics in their supply chains.
No other faith investors have a policy on Farm Animal Welfare as yet, however many denominations have a statement on the treatment of animals, including farm animal welfare:
ShareAction is a responsible investment organisation. It works to enable engagement between investors and investees on a variety of issues, through research and policy recommendations. ShareAction are currently researching the area of ‘developing sustainable food systems’ through greater scrutiny of CAFOs and ESG impacts of farm animal welfare, focusing on antibiotic usage and sustainable food systems.
Compassion in World Farming (CiWF) has a mission to end CAFOs. CiWF peacefully campaign for ethical and sustainable farming, through undercover investigations, political lobbying and campaigning, and incentivises large companies with its Good Farm Animal Welfare Awards.
World Animal Protection works to raise awareness of animal welfare worldwide. It works with wild animals, animals in the community, animals in disaster and farm animals.
For farm animals, the organisation works to increase awareness of conditions, influence international trade agreements and lobbying national governments.
Defra – the Departments for Environment, Food & Rural Affairs – publishes information for those involved in farming and provides regulations to follow. It has legislation relating to the five freedoms that should be allowed to animals:
The Farm Animal Welfare Committee (FAWC) is in place to advice Defra on farm animal welfare issues, improvements to be made and changes it would recommend to current policy. It provides scientific advice on the welfare of animals near the time of slaughter and publishes its advice.
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.
On the basis of a Christian concern for the wellbeing of farm animals, it is clearly desirable that moves are made towards higher welfare methods of raising farm animals, which allow them to live in surroundings more similar to their natural habitats and express species-typical behaviours, while ensuring they are protected from thirst, hunger, fear and extreme weather. Such higher welfare farming places a higher priority on the health and wellbeing of the animals, and reduces the number of antibiotics used. Such systems would have lower production capacities and the animal products derived from them would be generally more expensive in comparison with industrial systems for raising farm animals. Companies sourcing animal products from higher welfare sources or planning to do so are therefore preferred by the CFB.
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:
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.
The marketing of Breast Milk Substitutes (BMS), particularly in developing countries, has been an ethical concern since the 1970s with dubious marketing practices being widely viewed as having an impact on, or contributing to, infant mortality where water impurities may have led to illness and early death.
The preamble to the World Health Organisation International Code of Marketing of Breast Milk Substitutes (1981) states: “For many years [the WHO and UNICEF have] emphasized the importance of maintaining the practice of breast-feeding—and of reviving the practice where it is in decline—as a way to improve the health and nutrition of infants and young children. Efforts to promote breast-feeding and to overcome problems that might discourage it are a part of the overall nutrition and maternal and child health programmes of both organizations and are a key element of primary health care as a means of achieving health for all by the year 2000”.
As a result of the WHO commitment, priority was given to preventing malnutrition in infants and young children by supporting and promoting breast feeding, by inter alia regulating inappropriate sales promotion of infant foods that can be used to replace breast feeding.
The CFB fully subscribes to the principles contained within the International Code of Marketing of Breast Milk Substitutes, and that wherever possible priority should be given to natural feeding.
The main points contained within the Code are that:
Whilst the Code is designed to be implemented globally, in certain circumstances, the use of breast milk substitutes may be deemed necessary, desirable or a matter of choice, the key principle being that the Code is nevertheless applied and upheld in the host country. Breast milk substitutes are therefore viewed as legitimate products, and that their sale is not viewed as inherently unethical. An investment exclusion policy based on their manufacture and sale is therefore not appropriate. The Code defines a range of products that constitute ‘breast milk substitutes’. BMS applies to infants of 0-4 months, and also includes complementary breast milk substitutes for young children normally between 4-6 months.
There have been regular allegations of violations of the WHO Code over a number of years, and CFB has regularly engaged with manufacturers and NGOs on allegations regarding breaches to the Code, as well as its interpretation.
Following a period of due diligence, and based on considerable constructive engagement, JACEI advised CFB that it found no ethical impediment to allowing investment in Nestlé (BMS constitutes c2% of global sales), and an investment was subsequently made.
Since that time JACEI has been regularly briefed on the issue of BMS and ongoing engagement with Nestlé. JACEI was careful to advise that the CFB should not apply different standards to Nestlé than it would to other companies. The same principles therefore apply in the selection, retention or disposal of any investment with exposure to BMS products. The issue has regularly exercised the attention and concern of Conference and in 2015 a paper on Nestlé and BMS was debated and the existing position affirmed, but with a significant vote against.
Part of the due diligence framework CFB applies in reviewing BMS companies is the FTSE4Good BMS process, which it publicly supports. As part of the process to gain entry to the family of FTSE4Good indices, BMS manufacturers are required to undergo further performance hurdles, especially in ‘high-risk’ countries (defined as high child mortality or malnutrition and where applying the Code is viewed as potentially weak). Companies fulfilling the requirements for inclusion are then required to submit to external verification via country audits. The results of these audits are shared with the company and made public. An annual workshop brings the company together with investors and NGOs to discuss the results. CFB views this as adding considerable integrity and robustness to an area that continues to incite controversy and dissent.
Overall the CFB has articulated its approach and position on BMS manufacturers thus:
In order to make ethical decisions about companies exposed to the food and beverages industry, it will be important to ask questions about their policies and performance both generally and more specifically with regard to health and nutrition. A list of possible questions that might be relevant to companies in the food and beverage production, processing, distribution or retail sectors is set out below.
Recent Methodist Church teaching and statements on defence matters are reviewed (see Appendix A). These indicate that the Methodist Church:
The ways in which the CFB has attempted to minimise exposure to the defence industry are examined. These involve:
The ethical investment policies of other church organisations have been examined (Appendix C).
Earlier discussions by CFB/JACEI on this subject have been used to identify the key issues in order to draft a formal policy. It is suggested that when assessing companies:
John Wesley’s famous sermon, often used by the CFB as a building block for ethical investment policy, does not address the issue of armaments. However, some of the principles may be considered to be relevant.
In encouraging his readers to ‘gain all you can’, Wesley states that ‘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’. Wesley appears to be referring to the lives of his audience rather than those of others affected by their activities. However, it is clear that life is to be valued when considering financial transactions.
Later in the sermon, Wesley states that ‘Neither may we hurt our neighbour in his body. Therefore we may not sell anything which tends to impair health’. Although, Wesley has ‘spirituous liquor’ primarily in mind, the sentiments expressed could be translated to the production of weapons.
Methodist Conference 2006 considered a report produced by a joint working group of the United Reformed Church and the Methodist Church entitled ‘Peacemaking: A Christian Vocation’. The report arose from a desire of both churches to re-examine the ethics of war in the current geopolitical context.
The report is designed to stimulate reflection on the issue within and outside the church and ‘provide an ethical analysis to help support the judgment of the church and church leaders in complex and uncertain situations where British military intervention is proposed’. A summary is attached in Appendix A.
Conference 2006 commended the report ‘to the Methodist people for reflection, study and guidance on action’ and as a resource to be used when considering the ethics of modern warfare.
Biblical and church teaching
The report surveys Biblical passages in both the Old and New Testaments that relate to the subject. Old Testament passages that advocate total war should be understood in context and not taken as justifying such acts in the present day. New Testament teaching raises some difficult questions but the authors conclude that God’s will for peace is unequivocal.
‘From the beginnings of salvation history in the Garden of Eden, to its end in the New Jerusalem, the Bible witnesses to the profound value of life and peace.’
Since Biblical times there has been a variety of Christian attitudes towards warfare, including pacifism, the Just War Tradition, justification for total war and means to combat terrorism.
The medieval church, to the profound regret of Christians today, endorsed wars for the cause of religion in the Crusades.
Jesus calls everyone to be peacemakers but this call is not easy to discern or follow and applies to all settings, from the personal to the global. The (universal) Church has a major responsibility to assist Christians in following this calling as Christ’s witnesses but it too often ‘retreats within comfort zones of familiar debates and mild protests, or confines its engagement to the most obvious “headline hitting” issues’. In addition, ‘only the witness of Scripture, the peace and social justice of Christ himself, enable us to see the evil of war and violence for what it truly is’. However, ‘Christian political judgement can be naïve – and not in the Christ-like sense…Too often we react too late, jump onto the nearest bandwagon, or satisfy ourselves with less than fully-informed comment’.
The use of force
Peacemakers: A Christian Vocation addresses the use of force, having first examined non violent strategies to assist peacemaking.
The report states that ‘God’s will is for peace… [and there is an implication that]…war, violence, and coercion will always be alien to God’s reign’. Moreover, ‘All human exercise of violence and coercive force is ontologically abnormal in the sense that it does not characterise the being of the world as God created it and wants it to be; it falls short of his purposes for it. Yet, sin and corruption are so much part of our existence, and have so many expressions, that we must reckon with their effects’.
The report notes that earthly governance is part of divine providence, functioning as an authority under God. It considers circumstances where the interpretation of the role of this authority has been in error (churches under Hitler; the response to the Rwanda genocide). The power to pursue war should only be held by the appropriate authority and in consideration of the Just War Tradition. The report argues that this authority has some wider judicial function. Governments ‘…provide judgement on wrongdoing and punish the offender’. Paul in Romans 13:4 describes them as ‘God’s agents working for your good’ in this capacity. The report argues that the United Nations Security Council has ‘…unparalleled capacity to exercise judicial authority’, but does not maintain that it is the only source of such authority.
The relevant judicial authority also has a requirement to protect citizens. In most cases, this will be by the avoidance of military conflict but military action may be required in some circumstances. The report notes a UN Secretary General panel report that states that ‘…action taken unilaterally without the consent of the wider international community remains morally and politically hazardous’.
Peacemaking: A Christian Vocation argues that ‘…efforts by the United Nations Security Council to authorise military force against threats that are not imminent should also be opposed…’ since at present the national interests of powerful nations have not been isolated in its current form. While calling for Christians (both pacifist and otherwise) to prevent any watering down of the Just War Tradition, the report accepts that Christians will disagree for various reasons over specific conflicts.
It also states that there are times when Christians should ask for troops to be deployed to prevent a humanitarian disaster or to ask for ‘…military force to restore law and order to situations of extreme lawlessness, such as in the situation of Sierra Leone in 2000…’. In that conflict of course, the intervention of well-equipped and professional British troops – including Special Forces – that used armed force beyond a policing role, was required to bring stability to the country. Those troops required a helicopter carrier and other naval assistance.
It is clear that the report accepts that it may be right to use military force in some circumstances, though it should be restricted by rigorous and demanding ethical considerations.
Nuclear, biological, and chemical weapons
Peacemaking: A Christian Vocation considers nuclear weapons and the Nuclear Non-Proliferation treaty. It notes that the treaty permitted those nations that had already developed nuclear weapons to keep them. However this asymmetry ‘…is only sustainable if the nuclear weapons states make good on their commitment to pursue efforts towards disarmament; their failure to do so is one reason for the increasing desire of other nations not to be comparatively disadvantaged’. The report maintains that ‘A crucial contribution that the UK could make to this process in the next few years would be to decide not to renew its nuclear deterrent, which is currently under review’.
No assessment is made of the likely success of unilateral UK nuclear disarmament in promoting worldwide disarmament. There is no analysis of the workings of global diplomacy and the roles played by fear and sin within and between nations.
The report notes concerns about the potential for proliferation of biological and chemical weapons.
The report considers the use of conventional weapons. It notes that most people who die in conflicts are killed by use of small arms such as revolvers, pistols, rifles, and light machine guns. It quotes the Small Arms Survey project, which finds that small arms kill 300,000 people annually. Sales of larger conventional weapons were worth around $40 billion in 2003. The major arms exporters are listed as: US ($14 billion in 2003); the UK ($6.9 billion); Russia ($5.5 billion); France ($4.9 billion), and Israel ($2.4 billion).
The report notes that international arms embargoes are rare (the ban on anti-personnel landmines is one example, though not ratified by some major exporters) and that the efficacy of multilateral agreements is limited. It recognises that ‘Some states have restrictive controls on the export of weapons, but in the absence of an international treaty restricting the arms trade such as many have called for, nations are forced to balance the potential profits from selling weapons against the desire to adopt an ethical policy concerning what should be sold to whom’.
The report also notes the environmental damage weapons can cause and the possibility that depleted uranium can have long term health effects.
The reflections in Peacemaking: A Christian Vocation can assist the development of an investment policy relating to military equipment and services. Some logical conclusions can be drawn from its arguments, which are not explicitly stated in the report:
There have been a number of statements by the Methodist Church over the past couple of years opposing the replacement of the Trident nuclear weapons system in the UK, when its life ends in 2025. Methodist spokespeople have stated that if the UK did not replace Trident, ‘…the cause of non- proliferation would be advanced’, due in part to the example such policy would provide. There has been reference to the enormous destructive power of nuclear weapons and the fact that deterrent is based on fear of use. In addition, the Methodist Church has judged that threats facing the UK ‘…are not deterred by our nuclear weapons because they come from groups, individuals or ideologies, rather than nations’.
Conference 2006 passed the following resolution:
‘The Conference opposes replacement of the Trident nuclear weapons system and urges the UK Government to take leadership in disarmament negotiations in order to bring about the intention of the Non-Proliferation Treaty for the elimination of all nuclear weapons.’
Conference 2003 called on the UK to support an international ban on the use of cluster bombs. A resolution stated:
‘During the recent conflicts in Iraq and Afghanistan, USA and UK forces resorted to the use of cluster bombs. These lethal weapons weigh about 950lbs and, when dropped to the ground, separate into 200 bomblets. They look like brightly coloured drinks cans; many do not detonate on impact. In consequence children in Iraq and Afghanistan continue to be killed or maimed when they pick up these “toys”. Conference calls on HM Government to institute a unilateral ban on their use by UK forces and to initiate an international campaign to ban their future use.’
The Methodist Church repeated the call in 2006 to coincide with a meeting by the UN Review Conference on Conventional Weapons.
The Methodist Church website highlights a statement from Conference 1997 that the Church has
‘…been active in calling on HM Government to stop producing arms sales and to make investment available for the conversion of arms-producing industries to other, non-lethal forms of production’.
The Methodist Church website states that the Church is ‘strongly critical of the arms trade’. Church leaders, including the President of Methodist Conference, called in autumn 2006 for the closure of the Defence Export Services Organisation (DESO), a unit of the UK Ministry of Defence helping UK companies to sell military equipment and services overseas.
Ethics and defence electronics
Responses to Ethics and defence electronics from the Ethics of Investment Advisory Committee
Should the Methodist Church invest in arms manufacture and trade?
This short paper was presented to JACEI by the Revd John Kennedy in March 1999. It aimed to stimulate debate on the question. It stated that ‘…the Methodist tradition clearly recognises the profession of arms as an honourable one’. However, ‘…it is clear that the indiscriminate search either for profits or for military alliances can be extremely destructive’. Just War tradition was summarised and criticised for being highly dependent upon the situation at hand. The move to Total War was reviewed, along with war and democracy and the role of human rights. The paper summarised the European code of conduct on the arms trade and suggested Methodist investment in arms manufacture, safeguarded by the code, ‘might lead to a constructive debate on the issue’.
There was some discussion but no conclusions were recorded.
JACEI and the CFB have considered a number of companies since discussing Ethics and defence electronics in 1988. A summary of the companies and issues considered is contained in Appendix B.
JACEI and the CFB have also been aware of the relevant investment policies of other church organisations. A summary is contained in Appendix C.
Despite never being formally adopted, Ethics and defence electronics provided a framework for assessing companies with military exposure that has been applied with some variance over the past nineteen years. During that period, Western defence spending growth fell with the end of the Cold War but has since risen in response to localised conflicts and the global terror threat.
Extent of military exposure
JACEI and CFB discussions about companies with military exposure have intrinsically recognised that weapons are not simply morally neutral tools. Weapons and related systems are designed to harm or destroy life and therefore there should be restrictions on their production and sale.
While the measure of a company’s military exposure has never been prescribed, it has usually been the proportion of total revenue and, where the information is available, the proportion of total profits.
Concern has tended to be expressed when military exposure reaches or exceeds approximately 20% of a company’s revenue. LucasVarity may be considered an exception. Since the decisions on GEC and Plessey, the CFB has not had to consider companies with significant exposure to what has been regarded as offensive weapons. It is likely that if such a company had been considered, it would have caused concern with military-related revenue much less than 20% of total revenue. CFB and JACEI tolerance of military exposure appears to have declined since 1988.
Type of military exposure
The requirement to identify the type of military exposure has been useful and important, though it has not always been easy to identify into exactly what category military products and services fall.
Facilities management services (e.g. a company managing a defence base) has led to consideration of exclusion on ethical grounds, but no definitive approach has been agreed so far.
JACEI has been spared the practical test of evolving an approach to Reed Elsevier’s defence exhibitions business. However, as it represented a small proportion of the business, the CFB was following an engagement policy at the time the company announced its withdrawal from the business. The company’s earlier growing commitment to an area so connected with the promotion of the arms trade raised serious ethical concerns.
To date, no company has been considered which offered specific products or services for paramilitary or oppressive policing.
While it has been acknowledged that offensive weapons are necessary, this has not been reflected in CFB/JACEI deliberations, which have tended to regard production of such weapons negatively.
CFB policy should distinguish between different categories of military exposure, as outlined in Ethics and defence electronics. It should nevertheless reflect the acceptance by the Methodist Church that in this fallen world offensive weapons are required, often for peacemaking purposes.
Developing a policy on companies with military exposure – Position paper 9 of 19
To date, all trade in arms has been regarded negatively with little attention paid to the destination of weapons sales.
Methodists have campaigned for effective limits on the arms trade and investment policy should reflect the position that it is unacceptable for military products to be sold:
where that might increase the probability of unjustifiable conflict
to oppressive regimes;
to countries with poor human rights records; or
that would contribute to nuclear proliferation.
However, the implication of Methodist statements is that countries such as the UK should have well- equipped armed forces (including for peacekeeping) and that some form of arms trade is therefore required.
Investment policy should therefore pay attention to the destination of any military sales. A company with a high proportion of revenue from offensive weaponry might be tolerated if the products were only sold to acceptable countries.
Where the destination of sales cannot be clearly identified, the CFB should adopt a conservative approach and assume some sales may be to countries where the Methodist Church would not wish military sales to be made. In these cases, attention would be paid to the type of military product or service offered with offensive weaponry causing particular concern.
It should be acknowledged that some may feel uncomfortable about the possibility of CFB portfolios gaining from the profits of companies with significant exposures to offensive weapons sales, although the proposed change of approach would ensure CFB policy is consistent with Methodist Church statements.
Environmental impacts of weapons
These are referred to in Peacemaking: A Christian Vocation and it is appropriate to include them in CFB policy.
There has been no discussion since Ethics and defence electronics of the offsetting nature of non- defence business within a company.
The ethical dimensions of investment in media activities are becoming increasingly important especially as use of electronic media pervades our lives. Until recently it has made sense to consider different types of media more or less independently. Now however, the lines are blurred and the worlds of television, newspapers and the Internet overlap considerably. Similar ethical issues apply across the types of media activity. In such a changing environment, it is important that the church in general develop a methodology to apply to media-related ethical issues. It is particularly important for the CFB to do this as media related companies account for at least 20% of the whole market. (See Appendix 1).
This paper surveys the media-related sectors and identifies some common and particular themes. Past CFB decisions are reviewed. A methodology is suggested for examining media issues from an ethical investment perspective.
The television industry is undergoing a transformation. Only recently viewers in the UK had a choice of four terrestrial channels. The advent of satellite and cable broadcasting has increased the channels available to viewers. Until a couple of years ago it was legitimate to differentiate between terrestrial and satellite and cable television. The development of digital broadcasting will increasingly blur that distinction.
Eventually, the analogue signal will be discontinued. It will be replaced by digital signals picked up via aerial or cable. Apart from the existing five terrestrial channels a subscription fee will be charged for most other channels. ONdigital is the additional terrestrial digital broadcaster. BSkyB also transmits digital signals, and the cable companies will follow suit. The increase in the number of channels will enable new services to be offered, such as “season tickets” to enable football supporters to watch all their team’s games.
Revenues in this industry are raised via the licence fee (BBC), subscription (satellite, cable and commercial digital) and advertising (all except the BBC).
To obtain advertising revenue a TV company has to demonstrate it has programming that will attract a sufficient number of viewers. The aim is to raise the price of advertising and validate this by obtaining the requisite audience figures. The terrestrial TV companies can do this because they have the maximum coverage of the country. Very high premiums can be charged for advertising around peak viewing programmes (eg Coronation Street), but off-peak rates have fallen. Channel 5 broke into the terrestrial market by offering low budget, populist programming. While audience share remains low, the yield from advertising is reasonably profitable.
There are some broad ethical issues which include:
Regulatory authorities have been prepared to act on various occasions For example, BSkyB was required to withdraw from ONdigital to encourage competition.
This “dumbing down” fuelled by the preponderance of channels, has led to programme content preoccupied with money and image.
Specific examples can be found in programming for children, where some programmes are essentially extended advertisements for toy merchandise.
This can only be justified when it is in the public interest. The Broadcasting Standards Commission has strict guidelines relating to this sort of programming. Such methods do appear to be more prevalent in newspapers.
Of particular importance to ethical investors is the extent to which sex and violence are shown on television in a voyeuristic manner. This issue involves most producers and distributors. Since television began in 1936, standards of decency in programming have declined along with those of society at large.
The nub of the issue is access. Television increases the number of people exposed to ideas and images. These can be harmful or beneficial and the personal ethics and morals of producers, writers and directors can be influential.
Occasionally channels break regulatory guidelines regarding programme content. Following complaints, the relevant authority usually intervenes.
Programme content for “target audiences” is a matter of concern. This may occur on terrestrial television, such as BBC2 and Channel 4’s late night output to people of distinct sexual preferences. Since the introduction of satellite and cable television, viewers have had access to adult entertainment channels. Such channels include the Fantasy Channel, TVX, the Playboy Channel and the Adult Channel. The Fantasy Channel screens soft porn of a downmarket nature and TVX also carries explicit content. The Playboy Channel was originally part owned by BSkyB and Flextech. Those companies have since sold their stakes in the Playboy Channel and the channel itself has merged with the Adult Channel. The Playboy Channel was suffering in competition with the more “laddish” output from channels such as the Adult Channel, which are more orientated towards “single men living in shared accommodation”. Playboy believe the merged service will allow it to play to its own brand of soft pornography, while the Adult Channel output is reserved for late evening.
The adult entertainment channels use Videocrypt technology owned by News International, a 40% shareholder in BSkyB. The Fantasy Channel and TVX access this technology via BskyB, to which they pay a fee. The Adult Channel has a separate agreement with News International.
Television producers often argue that programming simply reflects public demand. To some extent this is true, though there does seem to be some feedback evident, whereby programming can generate its own demand.
The issues relating to quality of output for film and video are similar to those for television. In particular, they are close to pay-per-view cable channels, in that a specific choice has to be made to watch them. Production or distribution companies that relied upon a significant proportion of films/videos containing sex or violence would be a cause of concern. The sale of videos would concern the CFB in the same manner as the sale of pornographic magazines in newsagents.
Much of the recorded music available describes or promotes lifestyles and ethics at variance with the Christian message. Radio stations ensure most people have access to a variety of styles of music. Radio also has similar ethical issues to television. The number of radio stations is increasing. Explicit content appears to be somewhat limited, perhaps because people prefer visual stimulation.
The development of technology has also transformed the telecom market. Telecommunications companies are able to offer data transmission (including Internet connections), video on demand, and chat lines. Later additions could include television signals.
The ethical issues are of a slightly different nature to television. Where the telephone company is providing specific services, the responsibility for the ethical nature of those services is clear. However, for the most part, the telephone company is merely providing the connecting service; it is a common carrier. Obviously, there is no restriction on what one may say or hear over the phone, except in the case of persistent abuse. Where a company wishes to establish a service that will charge customers for the time of the call, it will have to deal with a network company. British Telecom is one such company that has been able to work with the regulator to prevent some companies from operating sexually explicit lines. However, it is still possible for a company operating abroad to run such a service: it would earn money from playing advertisements or offering other services. It is also possible that some companies may identify niche markets such as chat lines, and seek to offer a specialist service (eg United Utilities).
The Internet has risen in popularity over the past few years. Originally established as a secure form of communication for the US military, the network is distinguished by the fact that it has no centre. It is therefore extremely difficult to regulate. As the number of users has increased, so have the variety of “sites” that can be visited. The Internet has been likened to a new “Wild West” and therefore it is perhaps not surprising that the lack of regulatory control has resulted in sites of a sexually explicit and violent nature being established.
It is important to recognise that the only people responsible for such sites are the people who make them available. No organisation has overall control, and there are no controls on who may access the information. In only a few cases may a listed company be involved: one thinks here of Playboy, which has a website. The Internet Service Providers (ISPs) – the gateways to the Internet – often claim they are simply “common carriers” similar to telecommunications companies and are not responsible for the content contained on their servers. These claims have not often been tested in court however, as in practice ISPs are keen to avoid trouble with the police and often take steps to discourage inappropriate material. This perhaps has especially been the case since the German managing director of OSP Compuserve was convicted following police raids on ISPs. It is worth noting that illegal material continues to be illegal when in electronic form. Convictions are not always easy, as usually the offending material has been published in another jurisdiction.
The Internet does raise a number of ethical issues. Many see the absence of regulation as a positive: it prevents government censorship. Indeed, it is one way in which human rights groups publicise their case. The oppressive regime in Burma has had to restrict access to computers and modems to prevent its people from exchanging human rights information. On the other hand, many are worried about the possibilities for the transmission of information that in other media would be considered libellous or defamatory.
The Department of Trade and Industry supports the work of the Internet Watch Foundation (IWF). This was originally founded to highlight cases of child pornography and paedophile activity on the Internet, but it has been recognised that its remit can be wider. It is concerned not only with websites, but with other Internet characteristics such as “chat rooms”. A “chat room” is a forum whereby users can talk to each other. This usually occurs in a public arena observable by others, but users can agree to retreat to a “private” room, not observable by a third party. There is concern that paedophiles are using some of these facilities where they pretend to be fellow children and lead conversations onto sexual matters. There is even concern (arising from an actual case) that arrangements could be made on the Internet to meet children who believe they are meeting a similarly aged Internet friend (similar to meeting a pen friend).
Internet browsers often contain security software that can screen certain material (if properly labelled or containing key words). This helps to prevent children from accessing inappropriate material. In practice, they will probably know how to circumvent such controls. ISPs often offer a similar service to parents.
Some computer software may promote worldviews somewhat removed from that of the church. Many computer games involve some degree of violent action on screen and may also include sexually provocative images. Games are different to other visual media currently available in that they require the player to actively participate. When this involves simulating a violent action (with consequent images) this must be some cause for concern.
In the past, the relatively low resolution of computer graphics and poor sound quality has insulated the industry from ethical concerns. However the technology has much improved. Some games have parental guidance labels attached. Before long computer games will have near cinematic imagery. Where this is used for violent scenes there should be some ethical concern, especially where children can have access to such games.
The newspaper industry has seen some consolidation since media ownership regulations were changed, though restrictions still apply. The CFB will continue to have some concerns with some of the output of the tabloid press. Not only are “top shelf” pornographic magazines of concern, but some of the more mainstream publications should also be considered. Titles such as Loaded, Maxim and FHM promote certain images of women and certain lifestyles, as do Cosmopolitan. The ethos behind some of the club culture magazines may be distinct from a Christian ethic. Christian commentators have regarded The Face as the ultimate example of a post-modern periodical. Overall, these magazines promote a sexual and lifestyle ethic removed from the Christian orthodoxy.
The newspaper industry is also guilty of displaying soft porn images (eg The Sun). In addition, newspapers are often criticised for invasion of privacy where no public interest is concerned.
The images used in advertising can raise ethical issues, particularly the sexual imagery used. Of more interest to the CFB may be the publications in which respectable companies choose to advertise. If we regard a publication as – on balance – unethical, we should also be concerned if a company part-owned by the CFB advertises in that publication.
Publicly reproduced images depicting sex and violence have increased over the years in all media forms. It is worthwhile rehearsing the reasons and circumstances why these images might be considered “unethical”. The subject was addressed in February 1999 in a report presented to Methodist Council, entitled “Levels of Sex and Violence in the Media”. (Produced by Church and Society).
Current sexual imagery has antecedents that can be traced back thousands of years. In some contexts, such imagery (at least in written/verbal form) can celebrate God’s gift of sexuality (eg Song of Songs). Often however, the imagery used is inappropriate.
As “Levels of Sex and Violence in the Media” highlights:
“The British public seems to be moving the boundaries of taste and decency…” [paragraph 12]
This appears to be in the direction of more explicit material, but material does not include sexual images with animals or children, with violence, or of non-consensual sex. The report states that:
“…there is, for instance, little problem in convicting purveyors of paedophile material.”
However, both the declining average age of models and the movements in support of “child rights” (which could imply that children could have consensual sex with adults) may be early indications that the boundaries are by no means fixed. They may be slow to move, but they are moving all the same.
Opposition in society to pornography (especially where consent is implied) and violent images may come from people’s general sense of moral absolutes. However, the decline of Judeo-Christian influence in society has weakened intellectual efforts to oppose it. Opposition tends to be in the form of an emotional response (not necessarily bad), without rigorous arguments to support it. The result has been the steady decline in standards over the years. Arguably this has been accelerated by the programme makers and commissioners, who often openly push the boundaries.
Naturally, the context is important. Accurate war reporting for example, may justify the reproduction of violent images. Sex and violence may be justified in any of the arts and the Christian must make careful judgements. Where it is portrayed (or distributed) for its own ends or for the enjoyment of others it may not be acceptable. For example, pornographic television programmes are screened not for their dramatic content, but for the sexual enjoyment of viewers which in turn leads to higher ratings and higher advertising revenues.
The Economist makes the case that:
“…adult entertainment is often in the vanguard of new technology.”
The Economist, Survey of Technology and Entertainment, 21 November 1998
It maintains that the popularity of the novel, the video rental business and the Internet can be traced to the desire for erotica. Interactive virtual reality seems set to be the next arena to be popularised by the pornography industry. One company in the United States is developing an interactive body suit, for example.
The Christian position is that we are made in the image of God and that before Him men and women are equal. Any material that seeks to undermine this position should be a cause for concern.
Equally, we are instructed that:
“…anyone who looks at a woman lustfully has already committed adultery with her in his heart.” Matthew 5:28
Paul mentions sexual immorality and lust when he instructs the Colossians to:
“Put to death…whatever belongs to your earthly nature” Colossians 3:5
There are civil liberty issues that are relevant to this issue. Ultimately these Biblical instructions apply to everyone, although, not everyone will subscribe to that view. Some way has to be found for the Church to interact with society and companies, where the right to view explicit material (sexual or violent) is demanded.
It should be remembered that freedom to choose has always been part of the created order:
“You are free to eat of any tree in the garden…” Genesis 2:16
but self-discipline must also be exercised
“…but you must not eat from the tree of the knowledge of good and evil, for when you eat of it you will surely die.” Genesis 2:17
Paul argues that:
“’Everything is permissible’ – but not everything is beneficial. ‘Everything is permissible’ – but not everything is constructive. Nobody should seek his own good, but the good of others.” 1 Corinthians 10:23-24
Surely this also applies to companies. They should seek the good of their customers (and other stakeholders). Producing – or even transmitting – pornography for example, is not seeking the good of their customers, even if it is meeting a demand.
It is freedom of choice, in democratic societies, which enables Christians to proselytise. This fact should cause us to be wise in our judgements. We should recognise however, that no society is morally neutral. Without purification it can tend towards corruption and immorality. If we are to be “salt and light” in the world, we need to be prepared to resist trends to more explicit images of sex and violence, while recognising freedom of choice. In the case of church investment, this means that we may be unhappy with a holding in a company that promotes pornography (of whatever type) or violent imagery.
In 1989 the Church Investors Group held a lengthy discussion on the question of the impact of pornography following a House of Lords seminar organised by Christian Action Research and Education. There was particular concern over the role played by newsagents. The CFB entered into correspondence with WH Smith over their policy on the stocking of “soft porn” magazines. Though concern over the stocking of six titles was expressed, it was not felt appropriate to sell our holding on ethical grounds. The justification was that the proportion of sales in this area was small and that choice was in the hands of the consumer.
In October 1987 the CFB Investment Committee discussed the proposed connection between United Newspapers and the David Sullivan “soft porn” organisation to boost the flagging fortunes of the Daily Star. The committee did not feel it was appropriate to sell a holding of United Newspapers at that stage. The connection was in fact quickly severed.
We declined to become involved in the launch of the two cable companies Telewest and Nynex due to their decision to include so called “adult channels” in their programming.
There have been objections from time to time with any association with companies which sell The Sun newspaper due to its page three pin-ups. No action has ever been felt appropriate.
In 1995 the CFB became concerned at reports that BSkyB had established a joint venture with Flextech and Playboy Enterprises to launch the Playboy Channel via BSkyB transmissions. A report was prepared, and the issue discussed by the Investment Committee. A particular feature of the deal was that BSkyB would be investing in the production of programming. In doing so, the company was clearly aligning itself with the organisation. This was regarded as being more significant than simply selling the channel “air space”. The decision was taken to sell our holding in BSkyB. Church and Society publicised the decision by announcing the sale of the CFB holding when the channel was launched. The subsequent publicity enabled spokespeople to put forward the church’s position on pornography.
The distinction between producer and distributor is important to make. When assessing a company providing a service that causes some ethical concern, it is important to note if that service originated with the company, or whether the company is only distributing the service.
This producer/distributor distinction runs through most CFB investment policy. That is not to say that one is better or worse than the other. However, in the case of BSkyB, the company was clearly moving from being a distributor of adult channels, to being a partner in the production of adult programming. In the case of WH Smith, we were concerned over the sale of soft porn magazines, but recognised the company’s role as a distributor of these titles. Had WH Smith actually published such magazines, our investment policy may have been different. A current example can also be cited. We have always been concerned that supermarkets feel it necessary to sell tobacco products. If it transpires that these companies have been producing such products themselves, we would regard this as a significant negative development.
In many ethical investment assessments, we examine the size of the offending activity in relation to the total operations of the company, and relative to the sector and relevant markets. The approach with regard to media stocks should be the same. We would regard a continuous service, such as a pornographic channel, as of greater concern than a one-off broadcast of a soft porn movie, though we might wish to ask why it was necessary to broadcast such a film.
It should be noted that the size of the operation is not always important. In the case of BSkyB, although the importance to the company of the activity was small, its nature – the fact that it was dedicated pornography – made it unacceptable. In all cases we also make a qualitative judgement.
Important questions to ask are:
Our answers to these questions should assist in developing a rigorous response to the issue under discussion.
Human rights can be defined as inalienable fundamental rights to which every person is entitled simply by virtue of being human. Many would claim that the concept of rights is strong within the scriptures. rights.  It can be discerned from the biblical narrative that God is wronged by injustice and has the right to hold humans accountable for injustice. Thus, for example, in Isaiah 1:17, the prophet says:
“Seek justice, rescue the oppressed, defend the orphan, and plead for the widow”
We can see that the poor and those left helpless or abandoned are wronged by their destitution implying that certain protections pertain to all human beings. Therefore Wolterstorff  among others insists there isan essential ‘recipient-dimension’ (as opposed to an ‘agent-dimension’) in the scriptural perspective the moral order. 
However we cannot read from the Bible an unequivocal endorsement for human rights as the scriptures originate from a time long before the development of a concept of intrinsic individual rights. Indeed it is suggested that there are no means of expression in Hebrew, Greek, Latin or Arabic for a subjective right until about 1400 AD. Some would argue essentially secular and owes little to a biblical or religious heritage. A French interpretation of human rights can be explained as stemming from rationalistic anti-clericalism, where human rights are opposed . While the concept of rights may well be a modern concept, there are diverse influences on rights discourse over the ages. Natural law reasoning (binding rules of morality contributing to the common good that can be determined by a study of human nature be traced originates from natural law reasoning.
The emphasis in Jewish and Christian traditions on the unique significance of the individual before God was a significant foundation for the development of modern formulation of human rights theory.  Diverse Christian influences before and during the 1940s played a prominent role as the institution of the United Nations was being created and the Universal Declaration of Human Rights (UNDHR) drafted.  Since 1948, Roman Catholic teaching has remained consistent in holding that natural law has inspired and continues to give vitality to rights-talk especially the UNDHR.  Protestant theologians including Bonheoffer have frequently appealed to a more immediate Christological basis , yet Reed notes that different doctrinal routes frequently converge on shared conceptions on human rights. 
The recognition of natural human rights from contemporary Christian statements in declarations in the twentieth century can be traced back to the political philosophy of the secular Enlightenment in the thought in the early fourteenth century, through the canon lawyers of the twelfth century and Church Fathers of the first millennium. 
Of concern to some Christian theologians is a modern discourse of human rights emerging from the enlightenment period that, at its extreme, might offer an over-optimistic vision whereby through legally enforced protection, each person would relate to others as a self-sufficient individual. In contrast the Jewish/Christian tradition offers a distinctive although not unique imperative that rejects the notion that each individual exists apart from God. Human freedom does not imply that I am free to define my rights . Rather, it is argued, the deepest mystery of human dignity is not achieved by human intellect, but that we treat with caution ideologies that place emphasis on an inherent social value of individual freedom such as may be evident within neo-liberal economic theory or liberal political thought. The challenge is to work with human rights as useful moral concepts capable of informing legal or quasi-legal instruments in such a way that is not integral to a particular political ideology.
Partly with this in mind, we might note that significant divergence of opinion can be found in many aspects of both secular and religious human rights discourse notably with respect to: –
While Methodist Conference has been vocal on matters of justice and abuse of rights, the theological basis underpinning human rights is rather brief. The last significant report on this subject came to Conference in 198512. This report acknowledges a Christian basis for a concern for human rights (as set 13 14.
In Methodist discourse, rights language becomes particularly meaningful and useful in the context of the strengthening of relationships in community. For example, in March 2012, Methodist Council received a draft theological Statement that underpins the work of the Church in the area of Equalities and Diversity15. The Statement finds a good basis in Arminian theology16 for addressing issues of discrimination, abuse and marginalisation. The intrinsic worth of every human being is affirmed through y and Diversities Statement does not use a language of individual rights to examine issues of racism or abuse, nor does it make judicial or human resource policy remedies a primary focus (although the Methodist Church in Britain has implemented such policies in recent years). Instead the Statement describes a journey to which we are all called to commit together17.
While official documents of the Methodist Church in Britain might suggest a nuanced position on the theological underpinnings for intrinsic human rights, we can detect from the actions and statements of the Methodist Church a consistent desire for strengthened human rights protections. For example we might note statements relating to the rights of Palestinians and Jewish Israelis in the Middle East, detainees at Guantanamo Bay and water as a basic human right. In the UK context the Church has been vocal on the right to employment for asylum seekers, campaigned against the detention of children of asylum seekers, responded to proposals for extensive new anti-terror legislation proposed by the Cabinet Office in the immediate aftermath of the London 7 July 2005 bombings,18 appealed for housing and other benefits to continue to be determined on the basis of need19 and advocated the right to vote for prisoners serving sentence for criminal offences. In 2008, the Joint Public Issues Team of the Methodist, Baptist and United Reformed Church, published a study/prayer resource to celebrate the 60th anniversary of the UN Universal Declaration of Human Rights.
In common with some other Christian traditions in Britain the Methodist Church has sought to be a strong witness to peace. In 2006, the Methodist Church in conjunction with the United Reformed Church published Peacemaking: A Christian Vocation. Written during the aftermath of the Iraq intervention this study urged members of churches to be active peacemakers in their varied contexts, working to overcome discord and conflict. This is often difficult, even costly but we note that peacemaking is at the heart of the teaching of Jesus, not an optional extra. The report proposes that our responsibility as Christian people is always to find non-violent solutions to conflict wherever possible. But this perspective has a significant implication. The challenge to find non-violent solutions that assist in establishing security is not then confined to politicians, police and military commanders but faces us all and extends potentially to company executives. The report acknowledges that some church members may be called to fulfil particular roles in conflict transformation, for example in overcoming industrial disputes or in mediating between tense and divided communities threatened by violence at home or abroad. Techniques for conflict transformation are increasingly sophisticated and specialist agencies offer training to resource practitioners in this work.
Although an international human rights framework has been in place for decades, most companies do not have systems in place that would enable them to demonstrate their support of human rights with any degree of confidence.  Meanwhile governance gaps leave those whose rights have been violated with no means of redress. The International Bill of Human Rights outlines civil and political rights as well as social, economic and cultural rights. These cover rights in relation to: –
Economic development and the promotion of human rights can be mutually reinforcing. Business has been a major source of investment and employment for local communities in the developing world. The formal business sector generates tax revenue which in turn provides the State with resources to help realise the social and economic rights of its citizens. Citizens entering formal employment develop a greater stake and capacity (through their payment of income tax and membership of trade unions, for example) to hold governments to account in the provision of basic services and social provision.
But the dramatic expansion of capital investment in new markets in recent decades also poses many challenges. There is widespread acknowledgement that in many instances State legislation and institutional capacity for protecting human rights are ineffective. In his report to the UN Human Rights Council, Special Representative to the UN Secretary General, John Ruggie warns that we are living in challenging times: –
“History teaches us that markets pose the greatest risks – to society and business itself – when their scope and power far exceed the reach of the institutional underpinnings that allow them to function smoothly and ensure their political sustainability. This is such a time and escalating charges of corporate-related human rights abuses are the canary in the coal mine, signalling that all is not well”
How the international and business community might best address the governance gaps is a key and contentious issue in the current debate.
The UN Global Compact www.unglobalcompact.org is a voluntary mechanism which came into being against the backdrop of an international community that was unwilling to agree to international measures for arbitration around specific instances of human rights abuse. It judged this to be the preserve of the national sovereign State. The Ruggie framework www.business-human rights.org comprises the three -asserts that the primary protection role lies with nation States. Companies have an obligation to respect human rights (the second pillar) and are expected to abide by international standards and to uphold these standards even when national law or government capacity for the protection of rights is ineffective. With respect to the third pillar, remedy, Ruggie outlines the joint responsibilities of States and business. Building on this framework the Ruggie report outlines 29 guiding principles on human rights. This was endorsed by the United Nations Human Rights Council in June 2011 and is now referred to as the UN Guiding Principles.  They are likely to become the norm by which investors and others will examine the management of human rights issues by companies. 
There has been much debate around the extent to which it is feasible to oblige businesses to conform to common standards with respect and remedy. Voluntary adherence to international standards is fraught with difficulties, not least as there has often been a tendency to deny any contest between the interests permeates corporate culture companies might quite naturally guard their own privileges above the rights of local communities in resorted to the State as the only arbiter in disputes, even in instances where the national legislation is weak or non-existent or where State authorities are conflicted interested parties in a dispute.
Consequently human rights groups and NGOs continue to appeal for companies to be obliged to in some aspects do not go as far as standards already adopted at an international level. In the absence of a stronger obligation for companies to assess the wider impact of their operations on human rights Amnesty International (while welcoming many of the Ruggie recommendations) has suggested that the
Gross human rights abuses are not limited to conflict zones. However in the context of conflict, civil and political rights are particularly threatened. Belligerent parties to conflict (whether State parties or militia) frequently develop business interests or seek to control private enterprise in order to fund their political or military campaign. Conflict today all too frequently envelops local communities and innocent parties through conscription, as hostages, direct targets or as a result of the activities of criminal gangs. When violent conflict comes to an end the parties to conflict may well retain significant influence in their communities. Companies need to be aware of conflict dynamics even after peace has been declared.
Conflict sensitive areas: Sri Lanka
One example of this difficult dynamic can be seen in the context of Sri Lanka following the defeat of the Tamil Tigers (LTTE) in 2009. National elections have returned President Rajapaksa who has since declared that he will be President for life. Meanwhile Tamil politicians have been won over to the ruling party (faced with the choice of a role in government or exile in a political wilderness). Tamil areas of the depressed north and east of the country have seen dramatic increase in new private sector investment. The communities in the north now experience a heavy army presence which has taken over land and resources. Much of the new capital investment in the area is backed by powerful Sinhalese interests, including those of the family and friends of the President. The killing of an estimated 30,000 civilians in in 2009 goes barely acknowledged, while political violence is still rife and the politically marginalised Tamil population have struggled to make their grievances heard. In this context private enterprise has the potential to promote economic development, raise incomes and contribute to reconciliation but equally has the potential to perpetuate dispute, conflict and marginalisation. There is much optimism within Sri Lanka over the potential for the economy to continue to expand. Whether this will offer a peace dividend remains to be seen and may depend much on the implementation by companies of conflict sensitive practices particularly with respect to new investment in the north and east of the country. 
The intention to ‘do no harm’, has sometimes been interpreted in the passive sense i.e. that business ture of the way it operates, remain neutral to conflict. Experience has demonstrated that even apparently benign investment activities are likely to have both positive and negative influences on the varied aspects of a conflict. This is a lesson that was learned some time ago by the humanitarian relief sector; it is certainly no less relevant to business enterprise. In conflict sensitive areas significant private sector investments should be subject to a broad assessment of their impact on conflict.
Conflict impact analysis: Nigeria
The Movement for the Survival of the Ogoni People (MOSOP) State that the root cause for Shell’s loss of social licence to operate in Ogoniland stems from the fact that in the early stages of the project in the 1960s, Shell did not strive to understand the customs of the Delta communities  . Shell was perceived as imposing , and failed to show respect for community leaders and indigenous customs and practices. When communities lost control of their environment they protested leading to the arrest of community leaders, with which Shell appeared to have colluded. The trial and hanging of Ken Sarowiva and his colleagues prompted international outrage and, after a court case was brought in the US in 1996, Shell settled out of court with the families of those killed with a sum of $15.5 million. In 2005, the parent company Royal Dutch Shell commissioned a conflict impact analysis to examine how its relationships with communities, and a complex web of other stakeholders across the Niger Delta, could be improved. The study was undertaken by WAC Global Services and sought to examine corporate policies, practices and culture and made specific recommendations for Peace and Security Strategies that the company might undertake. The report identified the need for reconciliation:
It observed that most causes of conflict between the company and communities could be addressed not by providing more money and resources to communities (which were often in themselves a source of conflict) but by doing things differently. The report made recommendations for a multi-stakeholder approach bringing together Shell, local government NGOs and community leaders. 
Enterprise based around the utilisation of local resources such as land, water, minerals, oil or gas have significant potential to impact conflict or indeed may be a primary source of conflict. Conflict impact analysis enables a company to understand better the direct and indirect impacts of its activities on the dynamics of conflict and helps inform strategies that will maximise the potential for positive outcomes and reduce the risk of direct or indirect negative influences on conflict. Such assessment is valuable not only in the context of conflict but also in the context of post-conflict or in situations of contested governance where grievances have the potential to become violent. In conflict sensitive areas there is a strong argument for utilising conflict impact analysis in the context of a due diligence process, undertaking such analysis before proposals for investment are agreed.
The Universal Declaration of Human Rights defines the right to freedom of thought, conscience and religion, yet Christian responsibility must go well beyond promotion of tolerance as enshrined in the Universal Declaration of Human Rights. We recognise that people of faith have a responsibility to promote opportunities for encounter and understanding across faiths and actively to oppose all forms of discrimination. A right to freedom of practice and worship offers only a minimal ethical standard.
Denials of the right to freedom of thought, conscience and religion can take on a disturbing dynamic in the context of conflict where minority groups may find themselves subject to persecution. The exodus of Christians from parts of the Middle East (especially Iraq, Lebanon, Egypt, Pakistan and Palestine) is painful for all communities in the Middle East as well as for the Christian community beyond. We also observe regions where Muslim, Jews and people of other faiths are subject to persecution. Persecution may be manif ethnic identity rather than being seen a threat in its own right.
Companies operating in the context of ethnic or religious tension might be encouraged to reflect on issues of religious or ethnic discrimination beyond the area of employment practice. As a faith-based conflict or contested rights, drawing on the experience of our local partner churches and other faith groups. Companies might examine whether their investors and other influential stakeholders within the national context draw strength from a dominant cultural, religious or ethnic group. If so, an assessment might be made to determine whether business activities might indirectly support the marginalisation or even persecution of minorities (for example, through encouraging or forcing the displacement and resettlement of communities). Such assessment might also be used to highlight opportunities for commercial activity to build relationships across faith groups or ethnic divisions in society.
In addition to the manifest moral repugnance, complicity with human rights abuses entails both reputational and legal risks for companies. A charge of complicity need not rest on demonstrating that a company or its management knew about abuses to which its operations are linked but only that it ‘should have known’ about such abuses or risks. John Ruggie suggests that the test here is ‘that which a company could reasonably be expected to know under the circumstances’.
Responsibility to assess risk: Guatemala
In 2010, consultants were commissioned by Goldcorp to carry out a human rights impact assessment of the Marlin mine in Guatemala.  (Goldcorp had been encouraged by a group of responsible investors to commission a Human Rights Impact Assessment.) The Marline mine operates in a context of endemic violence in which the security forces have a record of human rights abuses. Community members in dispute with the mine operators had been killed and injured following disputes with mine operators. In this high risk context (and because the company does not have the ability to control the actions of public security forces) the company has an additional responsibility to subject operational decisions to an assessment of human rights risk. It failed to do so in 2009 when drilling on a property in which there was a known dispute related to entitlement to land through inheritance. By not allowing time for community members to resolve the dispute the company failed to de-escalate tension and this led to the take-over of the site, burning of a drill rig and truck, leading to the risky involvement of public security forces. The dangers should have been known. Interviews suggested that senior managers may have intended to deal with protests through legal means and that responsibility for managing human rights risks were not sufficiently high on the agendas of those undertaking operational decisions. The assessment judged that given the poor human rights record of the security forces, Montana the operating company, could be considered to have been complicit in human right abuses by not having in place adequate procedures to Subsequently investors have called for the suspension of land acquisition given the local opposition to mining operations and the risk of further conflict. 
There is now an expectation, reinforced by Ruggie that companies will be pro-active in assessing the potential human rights risk of their operations and key business relationships, rather than waiting for problems to occur and responding reactively. Companies cannot be expected to assume responsibility for every entity over which they have some influence. However, in relationships where companies have leverage there is an expectation that the company will have knowledge as to how that leverage can be used to prevent human rights abuses. The OECD Guideline for Multinational Enterprises www.oecd.org offers some guidance in this respect. Leverage is considered to exist where the enterprise has the ability to effect change in the wrongful practices of the entity that causes the harm.
Failure to exercise leverage will increasingly be considered an act of omission. This requires that human rights risk assessment is extended to supply chains, or at least to those entities in the supply chain where companies either operating independently or in conjunction with others can exercise leverage.
It has been argued that there is a clear relationship between the enjoyment of human rights and transparency of revenue payments to foreign governments. If payments are undeclared, the income from those payments is less likely to end up contributing to the satisfaction of economic, social and cultural rights such as the right to an adequate standard of living.28 Secrecy around payments to local and national government entities breeds mistrust potentially contributing to conflict. The Bribery Act www.legislation.gov.uk/ukpga/2010/23/contents is a significant development in UK legislation enabling allegations of bribery involving UK companies or UK nationals operating abroad to be pursued in the UK courts.
But even disclosure of legitimate financial payments or other information may be resisted by companies on the basis that such information is commercially sensitive. There is clearly a balance to be achieved between the reasonable expectations of companies and the interests of wider stakeholders. In general however we should be concerned if commercial Kollapen of the South African Human Rights Commission observes: –
“In the context in which power is distributed we cannot simply say that the State has the role of protecting Human Rights and that companies only have a role to comply with national standards. For example, if you say that the intellectual property rights will always be upheld then you give in to the rights of power over the power of rights”.29
Disclosure of legal payments to host governments has been encouraged through the Extractive Industries Transparency Initiative (EITI), www.eiti.org to which the CFB is an investor signatory, and the Dodd Frank Wall Street Reform and Consumer Protection Act, enacted in the United States in July 2010, www.cftc.gov/LawRegulation/DoddFrankAct requires that extractive industry companies publicly report payments to foreign governments on a country and project specific basis. Disclosure on a project basis (enabling local communities to better understand the relationships between companies and local government entities) is highly controversial. Intensive lobbying by oil and gas companies has so far prevented the issuing of disclosure guidelines that would define the level of detail required. Nevertheless the trend is towards more detailed disclosure with, in April 2012, the European Council debating the implementation of legislation to require country by country reporting by business entities based within the EU30.
How to address the governance gaps referred to earlier is perhaps the most pressing challenge in improving human rights observance. The role of voluntary initiatives verses legislation remains a source of controversy. The UN Global Compact has been instrumental in encouraging companies voluntarily to put more resource and effort into improving human rights policy and practice. The encouragement of voluntary initiatives on the part of companies is maybe the surest path to achieving widespread buy-in and changes to the culture and practice of a corporate entity. However voluntary standards will inevitably be applied by some and resisted by others.
Ruggie states that current guidance from international human rights bodies suggests that States are not required to regulate the extraterritorial activities of businesses incorporated in their jurisdiction, nor are they generally prohibited from doing so provided there is a recognized jurisdictional basis and that an overall test of reasonableness is met
Amnesty International and five other human rights organisations publically disagreed arguing that this interpretation of international law is regressive and that there is indeed a sound basis in international law that encourages States to carry out extraterritorial jurisdiction of corporate entities. They point out that human rights treaties and other instruments exist to oblige States in areas such as complicity in torture, enforced disappearance, the sale of children, child prostitution, child pornography, or apartheid, wherever in the world the abuse (and the act constituting complicity) are committed.
The Ruggie recommendations state that in order for a company to know whether or not it is complying with human rights standards a due diligence process is necessary. Therefore, Amnesty argues, there is a sufficient basis in internationally agreed human rights instruments for States to legislate a requirement for due diligence on the part of companies rather than simply encourage due diligence as Ruggie proposes.
Another facet of the disagreement around extra-territorial jurisdiction surrounds access to remedy. It is argued by human rights groups that international human rights norms require that home states (i.e. in which the corporate entity is domiciled) should ensure access to remedies for those who have been subject to human rights abuses. If barriers have prevented access to remedies in the state in which abuses have taken place then home states, should make such remedies available. These could be either mediation/adjudication (as is offered by OECD National Control Points) or through judicial processes.
OECD National Contact ol Points (NCPs) enable complaints against a compan non-compliance with OECD Guidelines for Multinational Enterprises. The NCP in the state in which the company is incorporated will carry out an initial evaluation of the complaint to determine whether it falls within the remit of the NCP and then seek agreement on terms of a mediation process from both the complainant and the company. The aim is for both parties to agree a resolution. In the event that the company declines the offer of mediation, or that a resolution is not achievable, the NCP will issue a final Statement with their judgement on the alleged breach of OECD Guidelines.
In several instances mediation through an OECD NCP has not been achievable as the complainant (or third party) has filed a lawsuit against the company for the incident in question. Arguably facilitated mediation is the preferable route to resolution. However in the instances when one or both parties have no confidence in intentions of the other and therefore decline mediation complainants need access to judicial remedies. It is widely acknowledged that barriers to access to judicial remedies are commonplace. These barriers include companies influence on governments and legislative change to prevent potential claims against them; lack of access by victims to information held by companies or governments; disparity of resources available to victims to pursue a case; direct influence of companies on judiciary. Investors should expect integrity on the part of companies contesting allegations of human rights abuses with the overall objective being to uphold and support a fair judicial process.
Only a handful of countries have established legislation that enables prosecution of companies for abuse, including human rights abuse, carried out elsewhere31. However Ruggie also proposes that States should strengthen the judicial capacity to hear complaints from foreign plaintiffs against corporations based in their territory and to enforce remedies.
Court proceedings in the ‘home’ country: Nigeria
The Nigerian court system is perceived as pliant and easily influenced by elites and major companies. In 2009 a massive oil spill (equivalent to around one quarter of the oil spilt in the Deepwater Horizon disaster) devastated communities in the Bodo area of Ogoniland. Claims for compensation in Nigerian courts can take years, even decades to reach a conclusion. Representatives of 12,000 people affected by the spill took out a class action against Royal Dutch Shell (RDS) in the High Court in London. RDS had admitted liability for the spill. While Shell Petroleum Development Corporation (SPDC) has a reputation for contesting and delaying claims brought through Nigerian Courts, RDS agreed not to contest the adjudication of this case by a UK court. Action in the High Court in London should result in a swifter resolution, to the benefit of both the company and the communities involved. If compensation is awarded by the court it is likely to run to hundreds of millions of pounds, much more than might be expected of a Nigerian court award for compensation. Recourse to the UK High Court could set a useful precedent for the future but exposes the deficiencies of the Nigerian judicial processes.
As this topic is broad it is not easy to arrive at very specific expectations of companies with respect to their performance on human rights. However we have the following reasonable expectations of companies, particularly those operating in conflict zones, with respect to their performance on human rights.
The company should identify the international human rights instruments to which it subscribes and should be able to demonstrate how these are reflected in its policies and practice. (A list of applicable multilateral human rights instruments are provided as an Appendix).
Guidelines for human rights due diligence procedures should be made publically available by companies.
Information should be made available by companies risk requiring disclosure to shareholders in financial reports.
Specific attention should be paid to conflict sensitive areas (or nations) where there is a consistent record of egregious human rights abuse and special measures should be considered in such circumstances. These should include ensuring conformity with any home s commercial activity in the specific conflict. An independently facilitated human right impact assessment or conflict impact assessment should be commissioned when appropriate, and undertaken at an early stage of project development. Such appraisals should be undertaken with the intention of informing the approval, or otherwise, of projects and to define the approach to communities and other stakeholders.
There should be a willingness to learn from past experience and to share that learning with shareholders. The learning should inform corporate policy and practice, such that companies should be able to enter into dialogue in general or hypothetical terms around future contracts, business relationships or practices that they would consider ethical or unethical in a specific context and in the light of past experience.
Joint Venture partners or subsidiaries are expected to conform to a comparable standard of human rights policy and practice. Business relationships should be reviewed, and potentially suspended, when this is not the case.
The human rights policies of a company should detail the expectations of partners within the supply chain or other strategic business partners (including state owned enterprises).
Contexts in which human rights are particularly challenging, and where it is deemed to be too difficult to avoid complicity in human rights abuses, the company should suspend its operations. Exceptionally an alternative course could be justified if a company can demonstrate that through its presence it is influential in bringing about change.
In the context of conflict, if it is assessed that the business is having an overall adverse impact on the dynamics of the conflict and that this cannot be remedied, the company should suspend its operations.
Policies should be in place for providing access to remedies. Prompt action should be taken to hear and consider complaints of human rights abuses and to involve external mediation where necessary.
There should be legislative matters in relation to human rights. Companies should endeavour to support reasonable legislation designed to help close the governance gaps that prevent many from achieving a full realisation of their human rights.
As concerned investors the CFB and the Methodist Church would seek open dialogue and engagement with companies on human rights policy and performance; the Joint Advisory Committee on the Ethics of Investment (JACEI) might consider how maintaining a distinctly Christian view of human rights can be brought to bear when engaging with companies on human rights.
In instances where there are concern,s we might wish to evaluate the extent to which the specific concern is indicative of a systemic failure on the part of the corporation concerned, the extent to which the company is able to mitigate and improve, and the quality of risk management when entering or continuing operations in territories with acute human rights challenges.
Engagement would seek to bring about an improvement in company was unwilling to enter into serious dialogue, or to address concerns, then JACEI might be asked to take a view on the acceptability of the investment.
This might depend on the severity of the concerns in question. Failure to be responsive to a significant issue falling within points 11.5, 6, 8 or 9 above, could give sufficient cause for concern to lead to a decision to recommend dis-investment.
Key Human Rights Principles
The CFB published a Policy Statement in 2005 entitled ‘Ethical Issues relating to the food industry’, which sought to look at general principles and expand on issues of particular concern and relevance to the CFB. A review of this policy highlighted a need for revision, particularly in light of growing concerns over poor health, nutritional wellbeing and the global rise in obesity led clinical illness. A basis from which to engage with companies on these issues was also recognised.
This paper will therefore:
The opening chapters of Genesis teach that food is given by God, but that post-fall it will not always serve its intended purpose of nourishing the body for God’s service. Both the availability of food and humankind’s attitude to it are affected by the fall as relationships with the Creator and Creation are affected, and this good gift is often abused. When food is not used in the way it was intended it can have a detrimental effect on the body and the ability to use it to honour God.
Despite the fall, throughout the Bible food is still considered as a gracious provision and blessing from God. In Genesis chapter 9, as God blesses Noah a new covenant is made with him and the diet of humankind is broadened to include animals. In the wilderness of Exodus chapter 16 the Israelites are provided with manna each day to teach them to trust that God is able to provide for them. In the New Testament Jesus teaches his disciples not to worry about food, but to trust that their Father in heaven knows their needs and will provide for them (Matthew 6:31-33).
In Deuteronomy chapter 14 God sets out food laws which mark out certain foods as ‘unclean’ and therefore forbidden for consumption. Whilst these laws seem to limit God’s blessings they actually mark out the Israelites as the chosen ‘holy’ nation, and demonstrate God’s desire to set them apart from the idolatrous nations surrounding them. The teaching of the New Testament declares that in the new covenant of Christ all foods are again considered ‘clean’, and Christians are free to eat and enjoy all that God has created for food: “Then he heard a voice saying, ‘Get up, Peter; kill and eat.’ But Peter said, ‘By no means, Lord; for I have never eaten anything that is profane or unclean.’ The voice said to him again, a second time, ‘What God has made clean, you must not call profane.” Acts 10: 13-15.
God also commands the people to bless others by being generous in sharing their food. In Deuteronomy we read: “Every third year you shall bring out the full tithe of your produce for that year, and store it within your towns; the Levites, because they have no allotment or inheritance with you, as well as the resident aliens, the orphans, and the widows in your towns, may come and eat their fill so that the Lord your God may bless you in all the work that you undertake.” Deuteronomy 14: 28-29
Rich foods and feasting in the Bible are seen as wonderful pictures of God’s blessing and a foretaste of the ‘great banquet’ in heaven: “On this mountain the Lord of hosts will make for all peoples a feast of rich food, a feast of well-matured wines, of rich food filled with marrow, of well-matured wines strained clear. And he will destroy on this mountain the shroud that is cast over all peoples, the sheet that is spread over all nations; he will swallow up death for ever. Then the Lord God will wipe away the tears from all faces, and the disgrace of his people he will take away from all the earth, for the Lord has spoken.” Isaiah 25:6-8 in his parables, Jesus also uses the imagery of a great banquet to refer to the kingdom of heaven (Luke 14:16-24, Matthew 22:1-14).
The Bible is also full of examples where food and drink is seen as a demonstration of God’s good gifts: “Go, eat your bread with enjoyment, and drink your wine with a merry heart; for God has long ago approved what you do.” (Ecclesiastes 9 v7) and “You cause the grass to grow for the cattle, and plants for people to use, to bring forth food from the earth and wine to gladden the human heart, oil to make the face shine, and bread to strengthen the human heart.” Psalm 104: v14-15.
Conversely, famine and a failure of the harvest in the Old Testament are often a result of God’s covenantal curse for Israel’s disobedience: “You have looked for much, and, lo, it came to little; and when you brought it home, I blew it away. Why? Says the Lord of hosts. Because my house lies in ruins, while all of you hurry off to your own houses. Therefore the heavens above you have withheld the dew, and the earth has withheld its produce. And I have called for a drought on the land and the hills, on the grain, the new wine, the oil, on what the soil produces, on human beings and animals, and on all their labours”. Haggai 1:9-11
The role of food as an important and central aspect of Christian fellowship is also evident in the New Testament and was an important part of the early Church. Jesus often ate with his followers and at the last supper when he broke the bread and poured the wine, he commanded his followers to “do this in remembrance of me”. Getting together for the ‘breaking of bread’ was an important part of the early Church’s fellowship (Acts 2).
However, there are also clear warnings against the misuse of food in the Bible. Whilst food is a blessing to be received from God with thanksgiving, it can be abused when the true purpose of food or God’s authority over humankind is not acknowledged. When this is the case, other influences such as financial greed, bodily appetite or the opinions of others can determine how individuals and corporations view and use food. As a consequence of the misuse of food, many around the world face the health implications of over- nutrition whilst others face the prospect of malnutrition and its associated problems.
At a corporate level, a failure to recognise the call to trust God for the provision of food (Exodus 16, Matthew 6:31-33) or the need to be generous and fair in stewarding this God-given gift (Deuteronomy 14:28-29) may result in greed and an uneven, unfair distribution of food.
At a more personal level, a failure to recognise that food is a good gift from God to nourish the body may lead to the over or under-indulgence of food.
Gluttony and its consequences are warned against in the Bible: “Do not be among winebibbers or among gluttonous eaters of meat; for the drunkard and the glutton will come to poverty, and drowsiness will clothe them with rags.” Proverbs 23:20-21 “Those who keep the law are wise children, but companions of gluttons shame their parents.” Proverbs 28:7
In 1 Corinthians 6, the Apostle Paul warns believers not to sin against the body which is a temple of the Holy Spirit: ‘’ 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? For you were bought with a price; therefore glorify God in your body.” 1 Corinthians 6:19-20. Whilst Paul is speaking into a context of sexual immorality here, the principle applies to any other body-harming activity such as the abuse of drugs, alcohol or food.
The biblical approach to food and nutrition appears to be one which embraces the paradox of it being a gift from God to be consumed and enjoyed whilst recognising that when used inappropriately it can cause great damage and harm. Therefore emphasis is placed on:
This gives rise to the argument that products, advertising, or retail outlets which actively encourage unhealthy eating habits will be subject to enhanced scrutiny from an ethical investment perspective.
In his sermon, The Good Steward (sermon 51) John Wesley speaks about the role of humankind as steward of all that the Lord has entrusted to them, including food: “God has entrusted us, thirdly, with a portion of worldly goods; with food to eat, raiment to put on, and a place where to lay our head; with not only the necessaries, but the conveniences, of life.”
He then goes on to remind believers that they will be called to account for how they have stewarded these goods, the implication being that Christians must use food to preserve health and godliness and ensure that others do not hunger but are treated with love and care: ‘The Lord of all will next inquire, “How didst thou employ the worldly goods which I lodged in thy hands Didst thou use thy food, not so as to seek or place thy happiness therein, but so as to preserve thy body in health, in strength and vigour, a fit instrument for the soul?… Wast thou accordingly a general benefactor to mankind feeding the hungry, clothing the naked, comforting the sick, assisting the stranger, relieving the afflicted, according to their various necessities? Wast thou eyes to the blind, and feet to the lame, a father to the fatherless, and a husband to the widow? And didst thou labour to improve all outward works of mercy, as means of saving souls from death?’
John Wesley is also credited with saying: “Do you not know that God entrusted you with that money (all above what buys necessities for your families) to feed the hungry, to clothe the naked, to help the stranger, the widow, and the fatherless; and, indeed, as far as it will go, to relieve the wants of all mankind? How can you, how dare you, defraud the Lord, by applying it to any other purpose?”
John Wesley also considered that spiritual and physical health was closely related and that it is therefore important for Christians to take care of their physical health. He authored a book entitled ‘Primitive Physick’ which aimed to bring practical medical advice to those who could not afford medical doctors. In the prologue to the book, Wesley gives practical advice on maintaining a healthy diet which seems to emphasise eating good quality and wholesome food in small quantities: “The great rule of eating and drinking is to suit the quality and quantity of food to the strength of the digestion; to take always such a sort and such a measure of food as sits light and easy on the stomach.”
John Wesley believed that spiritual disciplines (or ‘works of piety’), which help a Christian grow and mature in loving God, are bound together with acts of justice and compassion (or ‘works of mercy’) through which disciples live out their love for God in the world by loving their neighbours as themselves. Christian perfection is loving God with all your heart and loving your neighbour as yourself, where the spiritual and practical needs of your neighbour must be recognised (‘whether they relate to the bodies or souls of men; such as feeding the hungry, clothing the naked, entertaining the stranger, visiting those that are in prison, or sick, or variously afflicted…’). This means that throughout its history, the Methodist Church has sought to address poverty and injustice, including tackling food poverty. For example, many Methodist Churches today run or support foodbanks. The Joint Public Issues Team published ‘Faith in Foodbanks’, which looks at the reasons why people are hungry and how and why churches are responding.
The range of ethical issues within the food and beverages industry is broad, encompassing labour and business ethics; nutrition, health and food security; environmental ethics; and animal welfare among others. The CFB’s previous policies: ‘Ethical Issues Related to the Food Industry’ and ‘Nestlé’, highlighted issues across all of these areas. This paper however, focuses solely on issues related to health and nutrition since these are unique to the food and beverage industry. Other issues which can be applied across different sectors will be addressed in other CFB work.
Issues related to nutrition and health is of major ethical concern when considering the impact of the food industry. It is possible for the activities of companies, whether involved in food production, distribution, or retail, to encourage unhealthy and unbalanced diets, or inhibit access to a healthy, balanced diet. Issues that will need addressing with companies would include, but are not limited to the following.
Food security has been defined as existing when all people have access to sufficient amounts of safe, nutritious and affordable food to provide the foundation for active and healthy lives. Food security is a complex problem given that the global food system is itself complex and is fundamentally dependent on natural resources whilst at the same time influenced significantly by social factors such as trade, urbanization and changing demographics as well as governmental policies.
Whilst food security might be seen as more of a challenge for the developing world, even in the UK food poverty is a growing issue. In recent years an extensive network of foodbanks has become established in the UK in response to increasing numbers of families unable to afford basic food. These foodbanks are largely run by churches and charitable organisations.
Companies can pose a threat to food security when they do not:
A lack of food security can lead to undernutrition where there is insufficient access to nutrients from food. Undernutrition can lead to stunting (underdevelopment), wasting (underweight), or vulnerability to infectious disease through immune system compromise. Undernutrition remains a systemic problem affecting millions of people, not just as a result of having insufficient food, but also where sufficient food is lacking in the micronutrients needed to sustain heath and wellbeing.
Companies can help to combat undernutrition by making their food products more widely available and by fortifying products with micronutrients. Food and beverage companies have the ability to do this through the strategic use of expansion targets and distribution networks, with reformulation of products targeted for undernourished populations. Many companies, such as Nestlé and Unilever, now have policies to address the challenge of undernutrition through micronutrient fortification. However ATNI reported in 2016 that no companies had integrated undernutrition into expansion goals at a strategic level.
Obesity and overweight
Worldwide obesity has more than doubled since 1980. Most of the world’s population live in countries where overweight and obesity kills more people than underweight. Increased Body Mass Index (BMI) is a major risk factor for non communicable diseases (NCDs) such as cardiovascular diseases (which were the main causes of death in 2012); Type 2 diabetes; musculoskeletal disorders; and some cancers. Childhood obesity is also reaching alarming proportions around the world. Many children now live in an obesogenic environment which encourages weight gain caused by an increase in the availability and popularity of unhealthy foods and a decline in physical activity. Childhood obesity is linked to a higher chance of obesity in adulthood leading to premature death and disability in adulthood, but also has physical and psychological health implications for childhood. As obesity and overweight are now more of a problem in middle and low income countries, many are now facing the double burden of dealing with health problems linked to undernutrition and infectious disease, but also a rapid increase in NCDs related to overweight and obesity, particularly in urban settings.
Although government policy, education and individual choice will play a large role in the addressing the problem, food and beverage companies also have a responsibility to influence and inform public health in the way they conduct their business. Companies can do this by encouraging and enabling all people to make healthier dietary choices in four main ways:
Reformulation and nutritional content
Food companies ought to be committed to reformulating food and drink products where possible to increase nutrient content and reduce salt, sugar and fat where it is unnecessarily high. Some products which might be regarded as ‘luxury’ or ‘treat’ items such as confectionary products are often high in sugar, fat and salt. This doesn’t make them inherently unethical, but such products must be marketed and priced appropriately to discourage over-consumption. Producers and retailers can also reduce the negative impact of food high in sugar, salt and fat by reducing the portion size.
It is important that consumers are able to make informed decisions about their diet, with nutritional content such as fat, salt and sugar clearly labelled on products. Supermarkets use two different methods to do this: the ‘traffic light’ system and Guideline Daily Amounts (GDA). There is no general consensus on the best method to use, although the Food Standards Agency (FSA) recommends the ‘traffic light’ labelling scheme which lists the amount of fat, saturated fat, sugar and salt with easy to understand red, amber and green traffic lights. Research has shown that almost half of UK adults lack the numeracy skills to enable them to make use of figures based on percentage of GDA. It is also important that children are able to understand nutritional labelling to aid education in making healthy food choices. The major UK food retailers currently use conflicting systems which may increase consumer confusion and dilute awareness.
Nutritional content and traffic light labelling can also be applied to out-of-home dining by adding calorie or nutritional content information to menus in restaurant and fast food outlets. Many companies are already displaying this information or highlighting healthy choices on their menus.
Availability and affordability of healthy options
Retailers such as supermarkets should endeavour to stock healthy option choices to enable consumers to make informed choices. It is also important that cost does not become a barrier to health, and suppliers and retailers should seek to price products fairly and appropriately so as not to encourage ‘nutrition discrimination’
The same principles also apply to out-of-home dining establishments. To ensure that consumers are given the opportunity to make healthy choices, the range of items available should contain healthier options which are fairly priced. Where restaurants and fast food outlets offer ‘meal deals’ these should include healthy options or allow for the possibility of substituting items such as potatoes or salad in place of fries.
Responsible marketing and promotion
In addition to clearly labelling products with their nutritional content, retailers should also ensure that their marketing practices are responsible with regards to nutrition and health. Producers and retailers have a particular responsibility in this area to ensure that the way they market products does not encourage the over consumption of those which are high in sugar, salt and fat, but rather encourages a healthy, balanced diet. Retailers have particular responsibility in this area as it relates to marketing to children.
Examples of marketing campaigns which might promote the purchase of unhealthy foods are those which offer significant discounts for multiple purchases of unhealthy products or offer prizes or discounts for collecting tokens on packaging. Some campaigns may particularly target vulnerable groups such as children through their advertising or packaging and encourage the purchase of unhealthy foods. Irresponsible product placement can lead to the impulse purchasing of unhealthy products such as through the placement of confectionary at supermarket checkouts.
Other examples of irresponsible or inappropriate marketing practices might include offering sports equipment for schools which requires the purchase of a large number of confectionery or snack products, the negotiating of exclusive contracts with schools for vending machines, or sponsorship that seems aimed at promoting the unethical marketing of food products.
Product content transparency and traceability
Producers and retailers have a responsibility to ensure that the food they sell is clearly labelled with its contents and that consumers are not in any way misled. The horsemeat scandal in 2013 highlighted the need for companies to audit producers and suppliers to ensure that the labelling of their products is accurate and ingredients are traceable. The scandal led to the establishment of the National Food Crime Unit in 2014 and to the tightening of regulations and increased scrutiny.
Where foods contain genetically modified (GM) ingredients this must also be made clear to consumers under EU regulations. The use of genetically modified crops remains controversial for a number of reasons including the potential risks to human health and the environment, and unease about the unnaturalness of the technology. Whilst there are negative controversies associated with GM crops, the potential benefits that the technology could offer to developing countries in improving food security must also be taken into consideration.
Breast Milk Substitutes
The marketing of Breast Milk Substitutes (BMS), particularly in developing countries, has been an ethical concern since the 1970s. Dubious methods of marketing these products has in the past contributed to infant mortality where women have been unable to afford formula milk or where water impurities have led to illness. In 1981 the World Health Organisation published its International Code of Marketing of Breast-Milk Substitutes (‘The Code’) to provide guidelines to companies marketing BMS. The main principles of the Code are that BMS products should not be advertised nor should they be promoted through healthcare facilities or the giving away of free samples to mothers or healthcare professionals. All information on BMS products should be purely scientific and factual and give clear information on the benefits of breast feeding and the hazards of artificial feeding. The Code also states that all products should be labelled in the indigenous language and should not depict pictures of babies. A more lengthy consideration of BMS issues and the CFB’s previous work on this is included in the appendices.
The misuse of alcohol has a significant impact on health, and serious knock-on effects for society. Excessive, rapid and chronic drinking pose serious health risks with alcohol rated as the third largest lifestyle risk factor for disease and death in the UK after smoking and obesity. Societal problems linked to excessive alcohol consumption include increased crime and violence rates, family breakdown, and financial loss to individuals, employers and public services.
Companies have a responsibility to market and price products appropriately so as to guard against over- consumption and ensure that measures are in place to comply with age restrictions. Because of the seriousness of problems linked to the misuse of alcohol, the CFB does not invest in companies with significant exposure and has published a Position Paper and Policy on Alcohol.
UN Sustainable Development Goals
The United Nations launched its Sustainable Development Goals in 2015 to provide a framework for
governments to address sustainability issues. Relevant goals include:
World Health Organisation
The World Health Organisation (WHO) established the Commission on Childhood Obesity in 2014 which published its report in 2016. The report sets out a comprehensive list of recommendations for governments and other stakeholders to address childhood obesity in different contexts around the world. The first of its six major recommendations is ‘to promote the intake of healthy foods and limit the intake of unhealthy foods and sugar-sweetened beverages’ and is particularly relevant to the food and beverage industry.
Recommendations to achieve this include:
UK Public Health Responsibility Deal
The UK government published its Public Health Responsibility Deal (PHRD) in 2011 which sets out a number of pledges which business can sign up to committing to actions which encourage and enable people to make healthier choices.
There are five core commitments which businesses can sign up to, and a number of more focused pledges on areas including food and alcohol. Food pledges come under the core commitment “we will promote and enable people to adopt a healthier diet” and concern out-of-home calorie labelling, salt reduction, and artificial trans-fat removal. Alcohol pledges come under the core principle “we will foster a culture of responsible drinking, which will help people to drink within guidelines” and address issues such as product labelling, under age drinking, making units of alcohol and calorie content clear, and advertising and marketing. A number of companies have signed up to the core commitments and individual pledges.
UK Government’s Childhood Obesity Strategy
The Strategy (published in the summer of 2016) points out that nearly a third of children aged 2 to 15 are overweight or obese and younger generations are becoming obese at earlier ages and staying obese for longer. Reducing obesity levels will save lives as obesity doubles the risk of dying prematurely. Obese adults are seven times more likely to become a type 2 diabetic, which may cause blindness or amputation, than adults of a healthy weight. Not only are obese people more likely to suffer from physical health conditions such as heart disease, they are also more likely to be living with conditions such as depression.
The Government also points to the economic costs. The UK spends more each year on the treatment of obesity and diabetes than on the police, fire service and judicial system combined. It was estimated that the NHS in England spent £5.1 billion on overweight and obesity-related ill-health in 2014/15.
The burden falls hardest on children from low-income backgrounds. Obesity rates are highest for children from the most deprived areas and this is getting worse. Children aged 5 and from the poorest income groups are twice as likely to be obese compared to their most well off counterparts and by age 11 they are three times as likely.
The Government strategy is to significantly reduce England’s rate of childhood obesity within the next 10 years. The first visible part of the strategy is the introduction of a soft drinks industry levy across the UK. In England, the revenue from the levy will be invested in programmes to reduce obesity and encourage physical activity and balanced diets for school age children. This is a levy on producers and importers, and not on consumers, and is designed to encourage producers to reduce the amount of sugar in their products and to move consumers towards healthier alternatives. Producers and importers have been given two years to lower the sugar in their drinks so that they won’t face the levy if they take action. Many manufacturers have already taken steps to reduce the overall levels of added sugar in their drinks, but the levy will create stronger incentives for action.
In 2005, the CFB policy, Ethical Issues relating to the Food Industry, was adopted, which highlighted the main issues of concern within the industry. Given the time elapsed since its publication and the growing importance and scope of the issues it sought to address, it was felt that a revision was required.
The CFB has always considered the abuse of alcohol to be an issue of great importance and in 1999 produced a position paper addressing the issue, followed by a policy in 2002. In 2012 both were revised to take account of changes in the industry and growing ethical concerns. The revised policy provides guidelines for ethical investment in companies exposed to alcohol.
CFB actions and JACEI Advice
With the exception of companies with significant exposure to alcohol, the CFB has never taken a decision to exclude or divest from a company on nutrition and health issues related to the food and beverages industry.
However, there was a long period when the CFB did not invest in Nestlé because of the controversies around BMS, although the company was never officially excluded from investment on ethical grounds. In 2005, following a great deal of work, JACEI advised the CFB that there was no ethical reason to preclude investment in Nestlé. The CFB has been invested in Nestlé ever since but has continued to monitor and assess the company’s ethical suitability throughout this time, reporting to the Methodist Conference on a regular basis. A detailed summary of the CFB’s actions with regard to Nestlé and BMS can be found in Appendix II. This Position Paper and accompanying Policy supersedes and replaces the CFB Policy on Nestlé published in 2007.
In line with the CFB policy on alcohol, a number of companies are excluded solely on the basis of alcohol exposure and others on the basis of exposure to alcohol and tobacco. Companies are generally considered to be of concern when exposure to alcohol approaches 20% of revenue or earnings and are then reviewed by JACEI. Historically, exposure to tobacco has been considered as being of greater concern than that to alcohol. Companies whose main business is in the production or sale of alcohol and tobacco are automatically excluded from investment.
Access to Nutrition Index
The Access to Nutrition Index (ATNI) is published by the Access to Nutrition Foundation (ATNF), and is based on the premise that food and beverage manufacturers have a significant role to play in improving global nutrition.
ATNI regularly assesses and ranks the world’s largest food manufacturers on their nutrition related commitments, practices and performance. It does this with the aim of driving improvement in the way that companies address global nutrition challenges such as through increasing consumer access to nutritious and affordable food and beverages by way of appropriate product formulation, pricing, and distribution, as well as being responsible in the way they influence consumer choice and behaviour through their marketing and labelling.
ATNI can be used as a tool for engagement with food and beverage companies as it provides an objective source of information for evaluating companies on their nutrition performance. It also allows for benchmarking companies against their peers and against international standards and best practice, which should encourage improved performance.
FTSE4Good is a stock market index designed to assist responsible investors in identifying companies with high standards of corporate social responsibility. In order to qualify for inclusion in the index, companies must meet a set of criteria covering areas such as the environment, human rights, and supply chains. FTSE4Good is the only responsible investment index to include criteria, including in-country verification, for the responsible marketing of BMS and so is particularly relevant when assessing companies exposed to this area.
This Position Paper recognises that since the CFB adopted its policy on the Food and Beverage Industry in 2005, much has changed, principally:
Given the increasing concern about the impact of poor nutrition to individuals and to society: