Church Commissioners Annual Report 2018 Church Commissioners Church Annual 2018 Report
Total Page:16
File Type:pdf, Size:1020Kb
The Church Commissioners Annual Report 2018 Church Commissioners Annual Report 2018 Annual Church Commissioners Supporting the work and mission of the Church of England The Church Commissioners Annual Report 2018 Supporting the work and mission of the Church of England Presented to Parliament pursuant to section 12(2) of the Church Commissioners Measure 1947 Church Commissioners Annual Report 2018 01 Copyright © 2019 THE CHURCH COMMISSIONERS FOR ENGLAND Any enquiries about this report should be sent to the Church Commissioners’ Secretariat at their registered office: Church House Great Smith Street London SW1P 3AZ [email protected] Registered Charity Number 1140097 This document is available for download at: https://www.churchofengland.org/about/leadership-and-governance/ church-commissioners/about-church-commissioners/commissioners This report is printed on paper from responsible sources 02 Church Commissioners Annual Report 2018 Overview Contents Overview Foreword by the Archbishop of Canterbury 06 The Church Commissioners at a glance 07 The First Church Estates Commissioner 08 Mission Secretary to the Church Commissioners 10 Strategic focus 12 Mission and ministry 14 Bishops and cathedrals 18 Parish reorganisation and church buildings 20 Investment Objectives 22 Fund strategy and performance 22 Real asset performance 26 Responsible Investment 28 Engagement, voting and screening 30 Governance Objectives 34 Trustees and accountability 34 Attendance at Board and committee meetings 38 People and organisation 40 Risk management 42 Long-term financial strategy 43 Financial statements Independent Auditor’s Report 44 Consolidated statement of financial activities 46 Commissioners’ statement of financial activities 47 Balance sheets 48 Consolidated cash flow statement 49 Notes to the financial statements 50 Reference Professional advisors 74 Money available resolution 74 Independent Actuaries’ Report 75 List of larger investments 76 Cover image: Les Colombes was installed at Salisbury Cathedral in May 2018. Created by The Church Commissioners Michael Pendry, it formed part of the First World War Centenary events, but also became and Board of Governors 77 a symbol of hope and resilience for the community during the recent nerve agent incidents. Further background on the project can be found on page 19. (Photo: Ash Mills) Church Commissioners Annual Report 2018 03 The Church Commissioners support the work and mission of the Church of England across the country. 04 Church Commissioners Annual Report 2018 Overview We manage an £8.2bn investment fund in a responsible and ethical way. Each year we use the returns from our fund to facilitate growth, contribute to the common good and reimagine ministry by: — Funding mission activities — Supporting dioceses with fewer resources with their ministry costs — Paying for bishops’ ministry and some cathedral costs — Administering the legal framework for reorganising parishes and settling the future of closed church buildings — Paying clergy pensions for service prior to 1998 — Operating the national payroll for serving clergy Church Commissioners Annual Report 2018 05 Overview Foreword by the Archbishop of Canterbury Justin Welby Archbishop of Canterbury The Church Commissioners, throughout 2018, were key partners in providing the Church of England with the vital financial resources to help our 12,500 parishes proclaim the Good News of Jesus Christ across all communities. Contributing approximately 15% of the of how churches are seeking to be Since its inception, the TPI has Church’s annual running costs, the Church faithful to God – and faithful to their become a leading corporate climate Commissioners played a crucial role in communities in love and mission. action benchmark and is now the stability and growth of the Church supported by investors with over by providing ministry support as well as The urgency of climate change £10.3tn/$13.2tn in combined assets. funding for bishops and cathedrals. continued to be a major theme for the Commissioners as they continued to Climate Action 100+ (‘CA100+’), of which In addition to running costs, the use engagement and their voting rights the Commissioners were founding Commissioners also awarded funds for with some of the world’s largest oil supporters, now totals 323 investors with Strategic Development Funding (‘SDF’), and gas suppliers to drive change. more than $32tn of assets. CA100+ is an allocated to projects and initiatives investor initiative seeking to ensure that designed to accelerate renewal and In 2018 General Synod affirmed its support the world’s largest corporate greenhouse growth across the dioceses. for the Church Commissioners’ (and gas emitters take the necessary action other National Investing Bodies’ ‘NIBs’) on climate change. Under CA100+ the Since 2014, 59 projects have been approach to tackling climate change. Commissioners have been leading supported in 36 dioceses. Two further engagement with ExxonMobil, while tranches of SDF were awarded in 2018 The NIBs reaffirmed their commitment the TPI was designated one of the to 20 projects in 20 dioceses, which to engage urgently with companies CA100+ official data partners in 2018. appear throughout this Annual Report rated poorly by the Transition Pathway and in our Annual Review. The grants Initiative (‘TPI’) and will begin in 2020 I look forward to a continuing partnership were made as part of the Renewal and to start to disinvest from companies with the Church Commissioners in Reform programme, creating a growing that are not taking seriously their 2019 as we work together to support church in all places for all people. responsibilities to assist with the our wider mission of ensuring the transition to a low-carbon economy. Gospel of Jesus Christ is lived and At the July General Synod in 2018 the proclaimed in word and deed. Church announced that more than The successful launch of the TPI 100 new churches are to be created at the beginning of 2017 has been Justin Welby in coastal areas, market towns and followed up by other asset owners and Archbishop of Canterbury outer urban housing estates as part managers who use the tool to assess of the ongoing wider church planting companies’ preparedness for the initiative across the country, ensuring a transition to a low-carbon economy. Christian presence in every community. These projects are wonderful examples 06 Church Commissioners Annual Report 2018 Overview The Church Commissioners at a glance The Church Commissioners manage an £8.2bn investment fund. We aim to generate a total return averaging inflation (‘RPI’) +5% per annum over the long term. We use these returns to support the mission and ministry of the Church of England, including grants for mission activities, bishops and cathedrals. 8.9% per annum 9.4% per annum Total return over 30 years Total return over 30 years 1.8% 7.1% Total return for 2018 Total return for 2017 £164.4m Total charitable expenditure excluding clergy obligation* £68.8m £143.8m Mission activities Total charitable expenditure excluding clergy obligation* £56.6m Mission activities £36.4m Diocese and ministry support £37.3m Diocese and ministry support £54.3m Bishops’ ministry and cathedral costs £43.8m Bishops’ ministry and cathedral costs £0.5m £0.9m National payroll National payroll for clergy for clergy £4.4m £5.2m Administering the legal Administering the legal framework and other grants framework and other grants 2018 2017 £121.2m * Cash paid on clergy pensions for both 2017 and 2018 Church Commissioners Annual Report 2018 07 Overview The First Church Estates Commissioner “ Our active engagement and voting record provide greater leverage and influence than we could ever hope to achieve by acting alone or by forced divestment. ” Loretta Minghella First Church Estates Commissioner It will come as no surprise that our full year financial results reflect a common sentiment in the markets: while in 2018 cold winds blew throughout the equity markets, other asset classes provided few places to shelter. Despite this year’s fall in fund The range of projects being funded, I am pleased that the Commissioners’ performance, our long-term, actively covering the breadth of the country, is ethical investment policies had a positive managed and genuinely diversified truly exciting, from fresh expressions of impact on the performance of the equities approach allowed the Commissioners to church to planting of new congregations. portfolio, boosting the performance of continue to play a full role in supporting the global and UK equities strategies and revitalising the Church. The value of the Commissioners’ by 0.6% and 1.8% respectively. investment assets stands at £8.2bn As a fund managed in perpetuity, we are (31 Dec 2018) compared to £8.3bn The main detractor from performance clear about our objectives – to maintain (1 Jan 2018). Against a challenging was weakness in global equity markets the real value of the fund through time, backdrop, where the FTSE 100 index including the UK, which had its worst to be a leader in responsible investment dropped by 12.5% over the year, the year since 2008. This was mitigated by and to be a dependable and significant total return for the Commissioners’ our active management of the public contributor to the Church’s mission. portfolio in 2018 was 1.8%. equities and real assets portfolios, while negative returns from commercial and The money we raise is ultimately for the We are blessed with a talented and rural property were offset by strong Church’s benefit and I am delighted committed investment team and, with returns from our strategic land and that in 2018 the Church Commissioners a well-documented target to generate timberland portfolios. Our multi-asset, contributed approximately 15% of the a return of inflation (‘RPI’) +5.0% p.a. private credit and private equity strategies Church’s annual running costs, with over the long term, it is good to see delivered positive returns, underlining the increased allocations for Strategic that we have matched or exceeded our importance of a diversified portfolio. Development Funding. Two tranches target over 3, 5, 10, 20 and 30 years.