The Church of England declares war on pay day lenders and then it’s uncovered they’re one of their investors. It’s a perfect story. And it draws back the curtain on the difficult business of ethical investment.

Further unfortunate headlines have largely been nipped in the bud by a frank and disarming interview with Justin Welby in the feared 8.10 slot on the Today Programme. He achieve that through such unorthodox techniques as:
1. Answering the questions
2. Being honest
3. Admitting fault

This isn’t a new idea for the Church of England, it’s had a similar policy toward unscrupulous lenders for twelve years, expanded in 2011 to prevent investment in the new breed of pay day lenders such as Wonga that have proliferated in the light of recent economic crises. The recommendation in its ethical investment policy on high interest lenders not to invest in companies with more than 25 per cent of their business in this area is not a cop out, and nor is it tolerating a little bit of sin.

The policy if correctly implemented – and my suspicion is that the investment through a hedge fund in which the Church’s pension fund invests is an error rather than a gap in the policy – means that companies engaged in pay day lending would not be invested in. However, were there a company that produces databases used for a wide variety of companies some of which were pay day lenders, then investment in this company would be acceptable as long as pay day lenders were not the core of their business model. Where the policy would fail to achieve its ends is if a pay day lender was part of a large business engaged in many different industries and the pay day lender comprised less that 25 per cent of its business, in this case the policy would need amending. And the policy is not rigid, it does not condone everything that isn’t automatically caught by the threshold, it allows the space for companies to be specifically excluded from investment. I expect that following this revelation closer attention will be paid and portfolios reviewed to ensure similar embarrassments are avoided.

What should the Church of England invest in? Through the Church Commissioners they have over £8billion to look after, most of which is in the pension fund. That’s a lot of money and they take seriously the importance on placing it where it can do good and trying their best to not do harm. It might make a nice sound bite to say they should do more than minimise harm, but that assumes that’s all they were trying to do. And what if in doing good they might also do some harm, shouldn’t that harm be minimised?

What if in disinvesting from a company, even one with dubious practices they cause people to lose their jobs? That’s not necessarily a reason to continue investing, but harm minimisation is an essential part of deciding where to invest, and when the amounts of money invested are of the scale they are in the Church of England the impact of policy decisions can have significant consequences.

We could all envisage an idyllic scenario where the Church of England only invests in companies that do good, that create jobs, respect their workers, contribute to the community and conduct themselves with transparency, candour and are above reproach. And there are companies that are better than others. But something the Church knows better than others is that companies, like any organisation, like the church itself, is made of humans, and humans have that certain something, that je n’ai se quoi, that makes them at times act not in the interests of others, of the world around them, but in the interests of themselves. It is what Francis Spufford abbreviated as the hptftu. It’s what Justin Welby had the gumption to label as sin on the Today Programme. And that happens in all areas of life, even in the best companies, even in the churches where we seek to serve God and make him known.

Francis Spufford quotes Leonard Cohen to illustrate his point: “There is a crack, a crack in everything, that’s how the light gets in.”

An indication of our commitment to the good is not a naivety about our fallenness, or a refusal to have anything to do with it, but a determination to see places of darkness brought into light.

The Church of England should seek to invest in that which does good as well as avoid investing in that which conducts palpably bad things. It should invest in enterprises creating jobs, it should invest in organisations stewarding the environment, it should not be put off by the complexities of doing this, or the impossibility of finding perfect companies.

But the responsibility of the Church Commissioners is also to make money. They have a fiduciary duty to the money they manage, they have pensions for clergy which cannot just be donated to good causes. They have to find a way of doing good, minimising harm, and making money.

And one other thing. What if the engagement of the Church of England’s investing bodies with companies encourages them to act better than if they did not engage or invest? What if they looked at all the companies in which they could invest, what if they found faults with them all and drew their money out?

What if instead they used their power as investors, their votes and annual general meetings, the threat of withdrawal of funds to encourage better actions, lower executive remuneration, better treatment of workers, clarity of supply chains, reduction in corruption, care of the world and contribution to society?

There’s a place where investment in companies is inconsistent with the role of the Church in society. And there is a time when disinvestment should take place. There are times to stand clearly and unambiguously and refuse to have anything to do with something that is not contributing to the flourishing of the common good. And there are times to get alongside those walking in darkness and lead them to the light.

Finding the balance between the two is the role of one as wise as a serpent and as innocent as a dove. And it appears to be the route the Church of England is endeavouring to take.