Ethical Performance
inside intelligence for responsible business


Caterpillar gets reprieve

April 2006

The Church of England’s Ethical Investment Advisory Group has decided not to recommend disinvestment from the US-based construction equipment company Caterpillar, despite a request to do so from the Church’s national assembly, the general synod.

At a special meeting last month the EIAG, which guides the Church of England’s investment policy, advised that about £2.5million ($4.36m) of Caterpillar shares held on behalf of the Church be retained. The synod had sought disinvestment because it was unhappy that Caterpillar bulldozers have been used by the Israeli military to demolish Palestinian homes.

However, the EIAG is answerable to the church’s three investing bodies – the Church Commissioners, the Central Board of Finance and the Pensions Board – rather than the synod. It does not have to act on synod votes and decided in this case to retain the shares and discuss the objections with Caterpillar.

Neville White, the EIAG secretary, told EP: ‘Engagement with Caterpillar is our preference. They have been very willing to talk to us, and extremely open. We’ve gone the extra mile by saying we won’t disinvest, and therefore we expect a course of progressive dialogue. In fact they have committed to that. We’ve already made some very specific requests for them to think about, though we can’t say publicly what those requests are.’

White emphasized that at present Caterpillar equipment is not being sold or intended for sale for use by the Israeli government. Caterpillar insists it has never provided earthmovers directly to Israel but to the US military, which sold them on.

He said the EIAG could find ‘no compelling evidence’ that Caterpillar is or has been complicit in human rights abuses. ‘We felt that to disinvest now would be punitive, and that we have to be forward-looking. But if sales to Israel were renewed, then our decision could be revisited with a view to looking at disinvestment,’ he said.

The EIAG had consulted on the objections between May and September 2005 and stated that it did not favour disinvestment. However, the synod’s ‘very rare’ call for disinvestment persuaded the EIAG, which normally meets three times a year, to convene a special session. It is Church policy to ‘completely avoid’ investment in companies that supply ‘military platforms ... such as aircraft ... and armoured vehicles’.

The synod’s recommendation on Caterpillar drew criticism from some quarters and prompted the Archbishop of Canterbury, the Most Rev. Rowan Williams, head of the Church of England, to write to England’s Chief Rabbi, Jonathan Sacks, expressing his ‘deep regret’ at any negative effect on ‘Jewish friends and neighbours’.

Caterpillar said it had ‘no intention of participating in a debate that appears aimed not at our company, but at the policies [of] the governments of the US and Israel’. It said the campaign was being waged by a small number of activists who wished to draw attention to conditions in Palestine.

The EIAG develops and co-ordinates ethical investment policy for the Church’s investing bodies, managing a £900m portfolio of equities on their behalf. It does this mainly through research and consultation provided by its Socially Responsible Investment Unit based at CCLA Investment Management in London.

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