the following podcast is produced or sponsored by a community member the content views and opinions expressed are those at the participants and do not reflect those of b a m c or the town of valmeyer b m c welcomes your comments call us at six one seven four eight four two four four three or email us at access at belmont media dot org hello everybody welcome to community conversations i'm your host roger colton and we're broadcasting on the b a m c podcast network there's the old adage that one should think locally i think globally but act locally and we have a church here in belmont that has been doing just that there is of course a growing concern about global warming and climate change and the folks at first church belmont decided to take some action about that today we have with us john colter man who is with the first church belmont john thanks for joining us and taking some time to come over and talk with us today pleasure to be here thank you john the first year spellman has just recently voted to divest from fossil fuel investments is that correct that captures it after that let's define some terms before we really get started what does it mean to divest right so divest there's another thing to clarify here so divest strictly divest just means ok i'm going to get out of a certain security or class of securities if i own them and i'm not going to own them going forward so fossil fuels in this case are saying we're going to basically sell off any fossil fuel investments that we have and we will cease purchasing any future investments in those in those areas and when when you talk about ted divest in from fossil fuels there is what's called the carbon underground two hundred that is that's the same as the carbon underground two hundred what it is today so the carbon underground two hundred is simply the top one hundred publicly traded global companies in coal based on their reserves  the holding to the reserves ok and then the next one hundred you might anticipate is the top one hundred natural gas companies that are publicly traded globally based on their reserves and  reserves is key here we believe that that's where the risk of standard assets are going to be greatest when the time when the time comes and we say the stuff has to stay in the ground so we're talking about a manufacturers that are really energy intensive you've got pipeline companies a whole transportation sector pharmaceuticals cetera so it's it's tough to say ok i'm going to divest from all of this and you probably don't want to do that anyway and first church i doctored a resolution that was democratically passed by the congregants first church correct that's correct we actually held two votes the first fossil fuel divestment is a subset of right so that was just kind of a gauge ok do we have an appetite for this or not and fortunately that came back pretty strong voice saying yes  we would do that and members felt that look if there is a little bit of financial hit because we had to divest you know those are our values we're willing to do that and then the second vote happened in october and that was to divest from fossil fuels and that passed overwhelmingly like nine to one and we talk about the resolution that was passed can you so you voted  to divest from the fossil fuel companies where there are other aspects or other elements to the resolution yes so the first was to the best everything from the carbon underground two hundred ok so that t the second part of this or three parts the second part was then to say ok we want to limit our exposure to fossil fuels to no more than three percent of our portfolio and fossil fuels should should also mention this to that so there are like thirteen different investment sectors all right there recognizing the best community fossil fuel is not one of them but there's the energy sector which we're kind of using as a proxy if you will for fossil fuels and short day that is a pretty good proxy you know and as time goes on more matter come to reflect more clean energy renewable become less of a proxy but that's the idea so we would say ok only three percent of the energy sector which is about half of what the standard and poor's awaiting is for their index this is under five hundred ok so we would be under weighted by half no more than half in the energy in the energy industry generally that's correct ok correct and then the third part is to say ok ask our parishioners to take a look at their own investment portfolios and to consider divesting from fossil fuels there as well and to look at anything else they can do within their own lifestyle changes to kind of do their part to decarbonise which seems to make sense so it's not simply the institution saying as an institution this is what we're going to do but the resolution goes on to say if the institution does it that each of the parishioners should look at their own conscience and look at how they spend their own money or invest their own money to do similar things exactly right  portfolio the churches and dominance and one point seven million dollars you know my son's on the money but if you look at the church as four hundred members and you know even if we get a quarter of them to say ok i'm to move my poor father into some sort of sri socially responsible investing rid of a lot more impact that way and it's a way to engage people to think about this as well so it's seven million dollars one point seven million dollars that's a chunk of change i assume or let me put this as a question can i assume that you didn't just decide to make these financial decisions without consulting with immediately engaged the parish board the finance committee an investment committee and very fortunate the church to have really strong qualified people on the finance and investment committees who have a big background in this  d you know we wanted to get their input here their concerns and just kind of bring them along the journey here of you know the whole education journey of what this is going to what this could mean for us all right so that we were all kind of working off the same set of facts and concerns and the fact that you perceive it must mean that they signed off and now to layer on ok some social element to it is foreign to them right but that's rapidly changing revolutionary so that was one area of concern and can i pursue that for just a minute that the notion that it's rapidly changing because it seems to me that if you divest your carbon investments that money doesn't just sit in a bank account somewhere q you're not just taking it out of an investment but the corresponding aspect of that is that you put that money somewhere else exactly and so what you do is you and there's going to be a question mark at the end of this what you do is use screen your investments for certain socially responsible and certain socially responsible criteria that's right and what where does the money go do you move it actually let me ask the question behind the question do you move it from carbon investments to investments in alternative fuels or do you move it from carbon investments to something completely unrelated right that's a good question that will vary from one  nto the next for first church belmont we kind of looked at the alternative energy securities and how they've been performing and it's wild it's all over the place beyond our level of risk tolerance right so we said ok let's try and look for just general investments that go with the criteria specified in the resolution to meet that criteria  ask is you talk about taking a hit my understanding is that one doesn't necessarily take a hit by divest stand from fossil fuels that for fossil fuel companies and  tell me if i'm wrong here but fossil fuel companies are actually becoming more and more risky investment is that is that a correct understanding the absolutely right you talked about stranded investment that's it made me think of it and i would guess most people don't know what what you mean by standard investment ok so yeah exactly so if you look at the energy sector over the last fifty years  it's done ok but then if you start to take that on a decade by decade as you move forward to the present it's just going down ok in performance and in fact you look at the most recent ten years and it's the worst performing sector the thirteen sectors all right and you know it seems like it's an industry in structural decline right sort of the early days of  ground if we're going to not cut the planet all right so and the value of the stock is mazed upon the reserves based upon the reserves and so it's just you two to add to those reserves at the same time so if the reserve if the value let me see if i'm following your your logic yeah so if the value of the stock is based on the reserves and if the expectation is that eighty percent of those reserves will never be accessed if we do indeed act to address global climate change then that means the stocks are overvalued yes and that means that if if you do invest in those stocks then you've got a risk you know that risk and divest stinging from those stocks therefore really protect you from from the risk of holding overvalued stocks that's right it just seems a prudent thing to do the rockefeller foundation several years ago divested rockefeller divest from fossil fuels and or to finish the thought that there is clearly a social element to the divestment movement but there is a financial element to it it's not that necessarily that we are going to accept a financial loss in order to pursue our social beliefs there those two components to financial considerations in the social  exactly ok and when he took over the church they were in sort of rough financial shape and he worked to get that house in order and then said let's fossil fuels and after one years before mints they were able to fund another half time position of the church which was that's a big deal for churches to be able to do something like that yes yes so yes you know you know there's a risk that you know like everything else in investing right there's some risk but there's a risk if you don't do it if you do it as well  you can be positive or negative but barron's has been doing a lot of research and publication about this recently but you know their whole premise is that look if you really take a look at the environmental social and governments aspects of your company and how that relates to the world at large you're going to be in better financial shape better position for returns going forward and companies are really starting embrace this and you talked about think the brookline church the the whole divestment movement i don't know if it's fair to you have cities in the u s and elsewhere throughout the world saying look let's let's divest and so you're not out on the limb here and you're part of a larger group of investors who are doing those very same thing that's right that's right and i mean the interest in sustainable investing or sri socially responsible investing has just really picked up the last four years it's easily doubled we're like close to ninety million assets now it's probably the fastest asset class in terms of growth you know younger people in particular are really flocking to this they say we don't want it's not just returns or looking for any more we want to be investing in companies are doing good for social good and i assume from church's perspective or the perspective of house of worship that  there are certain industries that you simply don't want to invest in that alcohol may be one fossil fuels gun manufacturers  i grew up in the era where the divestiture movement was directed toward companies doing business in south africa which was so that the notion of divestiture as a means of pursuing a public policy is not new at all it's not new to fossil fuels no it's not so right so we'll be looking to do that we're going to try to discourage that at the church at the church level but i will ask individual parishioners to of course to do that  one concern when you start to layer on too many filters you start to limit your universe of securities and you can and you can run greater risk of returns yes ok and that is certainly a real concern at our church but individuals might be willing to say look i can i'm fine with two or three filters in my portfolio and here my ho like there are two ways to go if one objects to what fossil fuel companies are or are not doing one is to divest your money the other is to leave your money in those companies and to engage those companies through shareholder actions or the election of directors or some other way can you talk about the balance and i and i seem that you've you've activism being very very effective i mean shell just recently announced that they're doubling their investments in clean energy israel is your shareholder activism exxon mobil the last shareholder meeting and see it was like vanguard state street in black rock brought a shareholder resolution to their annual meeting and asking exxon to be more forthcoming about the risks that climate change has on their business that passed two to one a year ago that same resolution failed by one to two so just in a year there was almost a complete flip a complete flip and that is how fast as a change and it's interesting to note too that you probably recognize those names as the big money management firms right yes bigger than big him bigger than beck yes and they have a big stake in the game here i mean they hold tens hundreds of thousands of shares in this stuff but they also have a lot of these index funds as part of their product little bit of this with our twist but they're pretty much obligated to hold the next few well but there are also looking after their own shareholders of course and they want to make sure that things don't go south with exxon mobile or the underlying securities in their index funds all right so that is where their interest is and if we can come back locally for just a minute what the first church down my head isn't unique to first church meaning there's nothing special about first church belmont that would allow this to work and they can look at where they want to engage in sheryl activism divestment or none of it right it's just of kind of a matter of educating yourself a little bit on this and deciding which way to  we're largely managing these monies ourself house to keep these costs down and you kind of need to go with a little bit larger firm or and be a little bit own you know and try and nominate somebody once a year from the church to go to the sheryl activism meetings or shareholder and i know here let me just wouldn't work and one point seven million dollars a lot of money and tell you start talking congregation or a school or even personally they would talk to you yes be happy to talk with anyone and we might engage somebody else from the church on  this should also point out i mean the roots of socialism also investing largely started here in the greater boston area and we have a lot of exceptional firms here that have decades of experience management for money management firms that have experience in this and boy they were all willing to come and talk to to us for free and kind of small peanuts in terms of  to talk about the socially responsible investing more broadly fossil fuels is just one aspect of that absolutely so hopefully we can get you back some day her right thank you roger i do appreciate  taking time to be here we've been talking today with john colter man john is a belmont resident and a member of the first church belmont here in belmont the first church belmont just voted to divest itself of its fossil fuel investments and that's what we've been talking about you can stream this podcast online and b m see podcast network at belmont media dot org and you can also find our podcast by searching for it on i tunes you can search for the b m sea podcast network i'd like to thank john again for stopping by today i would like to thank you the listeners for tuning into listening to us again i'm your community conversations host roger coleman and i will talk to you again in two weeks thank you