Methodist investment decisions are now being guided by a new policy on human rights which focuses on companies operating in areas of conflict around the world, the Church claims.
While governments are ultimately responsible for upholding human rights, the policy recognises that companies have obligations too, it says.
The policy has been adopted by the Central Finance Board of the Methodist Church, which manages £1 billion of Methodist Church investments.
The Church is urging companies to extend their engagement with human rights issues beyond their own operations by entering into dialogue with major suppliers and business partners.
The Methodist Church has been criticised on environmental grounds for its investments in carbon-based industries, but has adopted postive policies in other areas.
Bill Seddon, chief executive of the Central Finance Board of the Methodist Church, commented: “This new policy will help us engage with companies operating in areas where human rights are being ignored, often due to armed conflict. It will help us structure our on-going human rights engagement with companies.”
Senior Fund Manager Stephen Beer added: “Companies have responsibilities, not only to shareholders but also to their employees and people in the societies in which they operate."
He continued: "Companies can often face difficult dilemmas, which we recognise when we talk to them. Nevertheless, they should abide by clear standards and business practice.
"Our new policy covers just one aspect of our work to integrate human rights concerns with our investment approach. For example, we also engage with companies on labour rights and health and safety issues.”
The Central Finance Board (CFB) aims to reflect Methodist Church teaching in its investment approach. It integrates investment ethics with financial analysis, it says.
Through Epworth Investment Management the CFB team also manages investments for other churches and charities on the same ethical basis.
The new policy sets out what the CFB expects from companies. This includes the publication of human rights policies and an assessment of risk in areas of poor human rights.
Where a company risks becoming too closely identified with human rights abuses or where it is having an adverse impact on conflict, the company should be prepared to suspend operations.
The CFB calls on companies to put policies in place to remedy human rights breaches. Companies must also be willing to engage with investors on the issue. The new CFB policy, together with a discussion paper, is published on its website.
Steve Hucklesby, Policy Adviser for the Methodist Church, said: “In many parts of the world, local communities feel that they have no control over the immense power of big corporations. Meanwhile, companies often tend to think of their responsibility to local communities only in terms of charitable giving.
“You can still ask questions of senior executives about their responsibility for human rights beyond the workforce and be met with a blank stare. However, this is changing as people are increasingly aware that a company’s operations can have both negative and positive impacts on human rights and conflict.”
The Methodist Church says it wants to see strengthened human rights protection, consistent with the teachings of the Christian faith. Human rights protection is relevant given the expansion of capital investment into global markets where protection of human rights is inadequate.
Simon Barrow, co-director of the thinktank Ekklesia, which has urged churches to take a larger view of their economic commitments, commented: "Steps towards improving investment policies and practices according to ethical guidance and the promotion of corporate responsibility are to be welcomed.
"However, church bodies can and should go much further. Rather than operating an essentially 'harm reduction' policy, they need to be finding ways of making their resources work for good by directly investing in public benefit, environmental change and alternative economic mechanisms."