The Church of England, one of the world's wealthiest religious institutions, has decided to blacklist coal and tar sands investments, in a striking victory for campaigners seeking to make fossil fuels as unpopular as tobacco.
The Church announced on Thursday that it would sell £12m of its holdings in thermal coal and tar sands companies, two of the most polluting fossil fuels. "Climate change is the most pressing moral issue in our world," said the Bishop of Salisbury, the Rt Rev Nick Holtam, lead bishop on the environment.
The move comes nearly three years after the appointment of Justin Welby, a former senior executive at the now defunct Enterprise Oil company, as Archbishop of Canterbury.
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."
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.
Cardinal Peter Turkson of Ghana, a member of the Pope's inner circle who wrote an early draft of the encyclical document, told a conference in Rome on Tuesday that burning fossil fuels was disrupting the earth's delicate ecological balance "on an almost unfathomable scale".
The Vatican's move has stoked the expectations of environmental activists ahead of a global climate change agreement due to be agreed in Paris at the end of this year.
Until now, the Church of England has been engaging with the oil, gas and coal companies it has invested in, rather than divesting from them. It led a successful shareholder push earlier this month to encourage BP to be more transparent about how climate change could affect its business.
This engagement work is likely to continue, said Tom Joy, director of investments at the Church Commissioners, which manages Church assets. "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," he added.
Pierre Jameson, chief investment officer of the Church of England Pensions Board, said: "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."