The Church, which has an investment portfolio worth more than £9bn, will no longer put its money into any company that gets more than 10 per cent of its revenues from extracting coal burnt for energy or oil from tar sands.
This means it may retain shares in companies such as BHP Billiton, which mines coal but earns a large chunk of revenues from iron ore, copper, and aluminium, said Edward Mason, the Church's head of responsible investment. But companies that focus on coal mining, such as Peabody in the US, would be excluded.
"It's about an alignment of interests," Mr Mason said. "If you are a specialist coal mining company you don't share the interest that we have in the transition to a low-carbon economy and the sense of it as a moral imperative. But if you are a BHP Billiton, where coal is a small part of your portfolio, we can have a constructive conversation with you about the future of coal for you as a company."
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The Church's move makes it one of the most prominent recruits to a grassroots campaign that is spreading around the world and is modelled on the 1980s divestment movement to end apartheid in South Africa.
Heirs to the Rockefeller oil fortune, California's Stanford University and the World Council of Churches have already said they will reduce or cut fossil fuel investments. The Financial Times reported this week that Prince Charles is also shunning such holdings.
Pope Francis, meanwhile, is expected to deliver an encyclical letter — the most important form of teaching by a Catholic pontiff — in June, that will urge the world's 1.2bn Catholics to consider the risks of climate change.
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