We Invest in #TransitionReady Companies

At the most basic level, money is a tool for expressing the value of things. We also believe it’s a tool for expressing the values of our faith. That’s why we partner with Wespath to invest money for churches and agencies. Wespath engages the global financial market from a Wesleyan perspective.

Wespath’s most recent sustainable investment report states: “We view the world’s broad acceptance of climate change as the megatrend driving one of the most important shifts in the financial markets—the transition to the low-carbon economy… Overall, the world has adopted clean energy far faster than experts expected, and countries have moved aggressively in the past few years to reach their targets. This includes the U.S., where despite recent actions at the federal level, many states, cities, companies and citizens are taking action on their own to accelerate the transition to a low-carbon economy.”

Some companies are better positioned than others to remain profitable throughout the coming transition. For example, regulations-- from carbon taxes to clean energy subsidies-- increasingly favor clean energy. Technological advances in renewables, electric vehicles, and more are disrupting the oil and gas industry. The increase in extreme weather events poses a financial risk to insurance companies. And as the climate activism movement grows, major polluters face mounting pressures as their social license is eroded. 

Each company reports on these risks in a different way. Without a standardized metric, it’s been hard for investors to track and compare. This has been a concern not only for Wespath, but for Blackrock, the largest asset manager in the world. Wespath and Blackrock have worked together for many years, and last year they partnered to co-create a #TransitionReady framework. This framework evaluates companies based on their current and projected emissions, investments in low-carbon technology, and resource management. It synthesizes this data from multiple sources to create a picture of a company’s relative risk as it faces the low-carbon transition.

Wespath uses this framework to strategically over-weight companies that reduce waste and utilize carbon-efficient technologies, and under-weight those who don’t. We believe that this makes our portfolios more resilient to the low-carbon transition. That keeps your church’s investments safer. 

It also signals companies that their investors want them to create less garbage and pollution, and conserve more energy and water. That’s good for all of us… especially for the poorest of the poor, who are disproportionately affected by the climate crisis. By implementing the #TransitionReady framework, we are using our money to express our Christian values of stewardship and care for the most vulnerable. We don’t check our faith at the door when we go to invest in the global markets. We bring it with us, we let it shine, and we hold it up as an example for the world.

By Julia Frisbie, NWUMF Associate Director