The Church of England has withdrawn £12m of fossil fuel investments as part of efforts to protect "the world's poor who are most vulnerable to climate change".
The Church Commissioners and the Church of England Pensions Board said investments into organisations working with thermal coal and tar sands have been withdrawn with immediate effect.
A spokeswoman for the Church of England said that from yesterday, neither body or the CBF Church of England funds will directly invest in any company that derives more than 10 per cent of its revenues from the extraction of the two fossil fuels.
Bishop Nick Holtam, the lead Bishop on the environment at the Church of England, said: “Climate change is the most pressing moral issue in our world [and] is happening rapidly.”
He said the move “marks the start of a process of divestment” that “better aligns the Church's investment practice with its belief, theology and practice”.
Rev Canon Professor Richard Burridge, deputy chair of the church's Ethical Investment Advisory Group (EIAG) said: "From an ethical perspective the focus of the investing bodies must be on assisting the transition to a low carbon economy.
“The Church has a moral responsibility to speak and act on both environmental stewardship and justice for the world's poor who are most vulnerable to climate change. This responsibility encompasses not only the Church's own work to reduce our own carbon footprint, but also how the Church's money is invested and how we engage with companies on this vital issue."
New policy
The church’s announcement coincides with a new climate change policy recommended by the EIAG that sets out how the church’s three national investing bodies (NIBs) will support the transition to a low carbon economy.
It said a primary focus of the new policy is an “intensive engagement” with companies that make a significant contribution to global greenhouse gas emissions.
The NIBs are key members of the ‘Aiming for a coalition’ group which has driven recent shareholder resolutions at BP and Shell to set a new benchmark for how companies interact with and make disclosures to investors on climate issues.
Tom Joy, director of investments at the Church Commissioners, said: "We want to be at the forefront of institutional investors seeking to address the challenge of energy transition. This will predominantly be achieved through strategic engagement, as seen by recent shareholder resolutions at Shell and BP.
“But this new policy rightly goes beyond to incorporate investment exclusions for companies focused on the highest carbon fossil fuels where we do not think engagement would be productive."
A statement from the Church of England said the new policy commits the church to intensify engagement with policy makers as well as organisations.
Pierre Jameson, chief investment officer of the Church of England Pensions Board said: "We want a global policy framework that incentivises a reduction in carbon emissions and the transition to a low carbon economy. We need governments meeting in Paris at the end of this year to agree long term global emissions targets with a clear pathway to a low carbon future."
