March 1, 2016

Screening: Guided by Revised ELCA Environment Screen, Portico Targets Thermal Coal Companies

On a regular basis, the ELCA reviews its social criteria investment screens, asking: Does this screen reflect the ELCA’s current social teachings and policies in light of the current landscape? As a result of this process, the ELCA Church Council approved a new version of the Environment screen in late 2014. The revisions gave direction to ELCA churchwide and ELCA-related organizations, specifically, to consider culling out the “worst players” such as companies with high EPA fines, multiple toxic spills, or certain fossil fuel companies.

Portico’s board of trustees responded in late 2015 by approving the use of this revised screen to identify companies that own thermal coal reserves and exclude from future investment.

When burned, thermal (or “steaming”) coal creates steam, which in turn generates electricity. It differs from metallurgical (or “coking”) coal, which is used to create coke necessary for making iron and steel. Because metallurgical coal has few substitutes, Portico has opted not to apply the screen to companies with only metallurgical coal reserves.

“Coal is the ‘dirtiest’ — most carbon-intensive — of all the fossil fuels,” Kurt Kreienbrink, Portico’s manager of socially responsible investing, said. “Screening out companies with thermal coal reserves ensures that future funds won’t be invested in companies owning a fossil fuel that inflicts serious damage to the environment.”

In its 1993 social statement “Caring for Creation: Vision, Hope, and Justice,” the church publicly called for God’s people to be aware of the harm ravaged upon the earth, and to practice good stewardship of our planet’s natural resources. Since then, ELCA issue papers and updated social screens have addressed the relationship between business practices and environmental harm. Since its creation in 1990, the ELCA’s social criteria investment screen on the environment has been a key driver in shaping Portico’s strategy for social purpose investments.