Co-Financial Advisors’ Statement on Actions Following the UUA’s 2014 Climate Divestment Resolution

By Chris Chepel, David Stewart

We have recently received some questions about whether the UUA followed the 2014 Business Resolution on Fossil Fuel Divestment (the Resolution) approved by the General Assembly. We confirm that yes, the UUA has followed the requirements of the Resolution. Following completion of the five-year timeline laid out in the Resolution, the UUA and UU Common Endowment Fund (UUCEF) have also continued work on climate justice and a fossil-free future in new ways.

Here is what the Resolution required of the UUA and the UUCEF and what the UUA has done:

Requirement 1. Cease purchasing securities of Carbon Underground 200 (CU200) companies as UUCEF investments immediately.

The UUA immediately stopped making new direct investments in these stocks within the UUCEF’s separately held accounts. As noted in Requirement 3, a different approach was needed for pooled investments.

Requirement 2. Continue to divest its UUCEF holdings of directly-held securities of CU200 companies, reaching full divestment of these companies within five years.

The UUCEF holds about 25% of its portfolio directly. In its third-year implementation update (2017 PDF), the UUA reported that it had sold off all directly-held CU200 assets for companies with which the UUA was not engaged in shareholder advocacy.

The UUA strategically maintained holdings in companies it was actively engaging in shareholder advocacy as permitted by the Resolution (see Requirement 5).

Requirement 3. Work with the UUA’s current and prospective pooled-asset managers for the purpose of creating more fossil fuel-free investment opportunities, with the objective of full divestment of UUCEF indirect holdings in CU200 within five years.

The UUCEF holds about 75% of its portfolio indirectly in pooled funds that have multiple investors and are managed by outside managers. Divesting from specific types of investments in pooled accounts is challenging because as an investor, the UUA does not have direct control over the specific investments made by the fund. Pooled accounts are often designed to provide diversification by investing in a wide range of assets, sometimes including the fossil fuel sector.

Pooled funds are an important tool for the UUCEF, offering access to better investment opportunities, larger economics of scale, and lower costs than those available through direct investment.

In the first year following the Resolution, the UUA surveyed all its asset managers about their approach to fossil fuels. By the fourth year following the Resolution, the UUA implemented screening and interview criteria for asset managers. These criteria used to evaluate current and potential managers included environmental, social and governance (ESG) approaches, including managers’ approach to fossil fuels.

In the judgement of the UUA’s Board-appointed Investment Committee (IC), whose primary responsibility is the management of the UUCEF, there are not yet sufficient fossil fuel-free pooled investment opportunities to prudently meet the objective of the Resolution. In 2023 the UUA committed to compiling an annual report of the holdings in outside asset managers’ pooled funds to evaluate and hold them accountable for their performance on ESG commitments, including progress on fossil fuel divestment. The IC continues to evaluate fossil-fuel free pooled investment opportunities.

Requirement 4. Invest an appropriate share of UUCEF holdings in securities that will support a swift transition to a clean energy economy, such as renewable energy and energy-efficiency-related securities.

Since 2015, the UUA has invested $1.7 million in Brockton Capital Management which retrofits buildings, $2.95 million in SJF Ventures which invests in climate solutions and social impact companies, and $12.3 million total in two different private equity funds by Generation Investment Management, which focuses on sustainability. The IC has incorporated Identification of appropriate renewable energy and energy-efficiency related investments into the ongoing oversight and management of the UUCEF.

Requirement 5. Regardless of other requirements, the UUA may retain investments in CU200 companies in which it is engaged in shareholder activism seeking environmental justice or transition to clean and renewable energy.

The UUA was an early adopter and recognized leader of shareholder advocacy on fossil fuels, maintaining an active fossil fuel engagement program. The UUA partnered and leveraged its strength through key coalitions including the Interfaith Center for Corporate Responsibility, the Ceres Investment Network on Climate Risk and Sustainability, and the Investors and Indigenous Peoples' Working Group. The UUA has reported on its shareholder advocacy efforts since 2008.

In 2022, the UUA divested from all companies directly held in the shareholder advocacy portfolio that it had not engaged in the past year, and instituted a cap of $100,000 for each remaining investment held for shareholder advocacy purposes. Some investments held in support of shareholder advocacy had grown beyond this cap due to investment returns over time, and the UUA divested of holdings in excess of the cap.

In 2023, the IC voted to completely end shareholder advocacy with fossil fuel companies. Going forward, the UUA will focus on advocacy around fossil fuel financing through banks, other human rights issues, and racial justice community investing.

Requirement 6. The UUA may only purchase the minimal shares of CU200 companies necessary to permit introduction of shareholder resolutions seeking environmental justice or transition to clean and renewable energy.

The UUA followed this requirement for any new holdings. Most of the securities for companies that the UUA engaged with as a shareholder were held before 2014, and the UUA maintained these holdings consistent with Requirement 5.

Requirement 7. The UUA shall not take any action inconsistent with its fiduciary duty or that is incompatible with the principles of sound investment.

The UUA Board and its appointed Investment Committee take this responsibility very seriously, and always act to follow their fiduciary duty to protect the assets that have been entrusted to the UUCEF by member congregations and the assets that directly support the mission of the UUA.

Requirement 8. The President and the Treasurer of the UUA shall report to each General Assembly from 2015 through 2019 on our Association’s progress on the above resolutions.

Reporting to the General Assembly was completed throughout this required five-year period – in 2015 (PDF), 2016 (PFD), 2017 (PDF), 2018 (PDF), and 2019 (PDF).

Requirement 9. All Unitarian Universalist congregations and Unitarian Universalists are encouraged to review their congregational and personal investments with a view to taking action to end climate change, such as public divestment of their holdings in fossil fuel companies, supporting shareholder activism designed to end use of fossil fuels, and investment in renewable energy and conservation.

While this is not a responsibility solely of the UUA, the UUA has promoted congregational participation in the UUCEF as one way of meeting this goal.

About the Authors

Chris Chepel

Chris (she/her) has been a Unitarian Universalist for over 30 years, initially connecting as a teenager through her local congregation’s youth group. She has been actively involved with several congregations, most recently a Founding Member of WellSprings Congregation in Chester Springs,...

David Stewart

David (he/his) found his spiritual home in Unitarian Universalism in 1999. He has been an active member of several congregations, including All Souls Unitarian Tulsa, Jefferson Unitarian in Golden, Colorado and Northwest Unitarian Universalist (NWUUC) of Sandy Springs, Georgia....

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