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By Richard Valdmanis
BOSTON, Aug 12 (Reuters) - Pope Francis heartenedenvironmentalists around the world in June when he urgedimmediate action to save the planet from the effects of climatechange, declaring that the use of "highly polluting fossil fuelsneeds to be progressively replaced without delay."
But some of the largest American Catholic organizations havemillions of dollars invested in energy companies, from hydraulicfracturing firms to oil sands producers, according to their owndisclosures, through many portfolios intended to fund churchoperations and pay clergy salaries.
This discrepancy between the church's leadership and itsfinancial activities in the United States has prompted at leastone significant review of investments. The Archdiocese ofChicago, America's third largest by Catholic population, toldReuters it will reexamine its more than $100 million worth offossil fuel investments.
"We are beginning to evaluate the implications of theencyclical across multiple areas, including investments and alsoincluding areas such as energy usage and building materials,"Betsy Bohlen, chief operating officer for the Archdiocese, saidin an email.
The pope's encyclical, a letter sent to all Catholicbishops, has sharpened a debate well underway in Catholicorganizations and other churches about divestment. But manymajor American dioceses have resisted the push.
"You now have this clash between Pope Francis' vision of theworld, and the world that the bishops who run the investmentslive in," said Father Michael Crosby, a Capuchin friar inMilwaukee who advocates socially responsible investing in thechurch.
"The bishops are a very conservative group, and I'm nothopeful this will be resolved anytime soon."
Dioceses covering Boston, Rockville Centre on Long Island,Baltimore, Toledo, and much of Minnesota have all reportedmillions of dollars in holdings in oil and gas stocks in recentyears, according to documents reviewed by Reuters.
The holdings tend to make up between 5 and 10 percent of thedioceses' overall equities investments, similar to the 7.1percent weighting of energy companies on the S&P 500 index,according to the documents.
Factbox:
The United States Conference of Catholic Bishops' guidelineson ethical investing warn Catholics and Catholic institutionsagainst investing in companies related to abortion,contraception, pornography, tobacco, and war, but do not suggestavoiding energy stocks.
While several organizations of progressive Catholic nuns andpriests have been actively urging energy companies to make theiroperations more socially responsible, that activist approach hasnot taken hold at the level of the dioceses.
A spokesman for the USCCB declined to comment when asked ifthe organization was considering adjusting its investmentguidelines after the encyclical, deemed the most controversialpapal pronouncement in half a century.
"The Pope's intent was to say to people: there is an urgencyon this issue," said Frank Coleman, who manages CatholicResponsible Investing for the Christian Brothers InvestmentServices, which has resisted calls to divest the fossil fuelshare of its $6 billion under management.
"Divestment is a good way to raise the urgency. But it isnot the be-all to end-all of solutions."
POLICY AND PAPAL VISIT
When Francis makes his first visit to the United States inSeptember, he is expected to press lawmakers to act on climatechange in a joint session of Congress, a move almost certain tocome under attack from conservative politicians who oppose hisintervention in the debate.
Republican presidential candidate Jeb Bush, a Catholic, saidright before the encyclical's publication that he doesn't "get economic policy from my bishops or my cardinal or my pope."
The American church remains a deeply conservativeorganization led mainly by bishops appointed by Francis'predecessors. The Archbishop of Chicago, Blase Cupich, is one ofFrancis' few major appointees so far in the United States.
Regardless of where dioceses stand on the debate, theirfossil fuel holdings have likely triggered losses in recentyears due to sliding oil prices, adding to financial strainfaced by the U.S. Catholic Church from sex abuse casesettlements and declining attendance that have cost the churchbillions of dollars, leading to a rash of Catholic schoolclosures and unfunded clergy pension obligations.
The S&P 500 Energy Index fell nearly 9 percent in2014, and U.S. oil prices this month slumped to their lowestlevels since mid-March to around $44 a barrel.
The Archdiocese of Boston held roughly $4.6 million worth ofenergy stocks in 2014, representing about 6 percent of its stockmarket investments, according to its most recent financialreport. The archdiocese also offered employees a "CatholicValues" retirement savings fund through Catholic mutual fundfirm Ave Maria that included shares of companies like AnadarkoAPC.N>, Halliburton, and Range Resources.
A spokesman for the diocese declined comment.
The Archdiocese of Chicago had "under 8 percent" of its$1.65 billion portfolio in fossil fuels, a spokeswoman said.
The Diocese of Rockville Centre in Long Island, meanwhile,listed $6.3 million in energy company shares among itsinvestments in 2013, the year covered in its most recent report,representing about 8 percent of its equities investments. Anofficial declined comment.
Dioceses in Baltimore, Toledo and much of the state ofMinnesota reported significant holdings of oil and gas stocksmainly through mutual fund portfolios. The Diocese of Toledosaid it was considering how to react to the encyclical, whilethe others did not comment. Many other dioceses, including thoseof New York and Los Angeles - America's largest - did notprovide detailed information on their holdings and also declinedcomment.
GEORGETOWN BENDS TO PRESSURE
The tussle over fossil fuel investments has already hit theendowments of major Catholic universities. Last year, theMarianist University of Dayton said it would begin divesting itsholding in fossil fuel companies. And in June, Georgetown, aCatholic university in Washington, D.C., said it would no longerdirectly invest in coal companies, handing a partial victory toa student-led campaign for complete fossil fuel divestment.
U.S. schools that have resisted activist calls fordivestment in fossil fuels have argued that their responsibilityto ensure strong returns to fund their operations trumps anysocial benefits that might be gleaned from selling off coal, oiland gas stocks.
One of the environmental advocacy groups pushing alluniversities to divest, 350.org, has also specifically askedFrancis to tell the Vatican Bank to drop fossil fuel assets.
"Now that the Pope has made his views clear, it is up to thedifferent forces within the Vatican and within the CatholicChurch - the conservatives versus the progressives - to figureout the change," said Yossi Cadan, a senior divestmentcampaigner at 350.org.
Cadan said, however, that he expected any moves by Catholicdioceses to divest to happen overseas first, possibly incountries with large Catholic populations that are morevulnerable to climate change like the Philippines. "The UnitedStates will probably not be the pioneer here," he said.
Coleman, of Christian Brothers Investment Services, believesthere are benefits to remaining invested.
"Our strategy has been active ownership, to get companies tounderstand the impact of their emissions and to reduce them, tolook at their carbon footprint and to invest in other energytechnologies," he said.
But for Amy Domini, who runs Domini Social Investments, LLC,a mutual fund firm that says it seeks to provide strong returnsfor investors who "wish to create positive social andenvironmental outcomes", the U.S. Catholic Church has no choicebut to reconcile its investments with the realities of climatechange.
"Otherwise the bishops will be saying they follow the popewith their spirits, but not with their money," she said. (Additional reporting by Bruce Wallace in Washington; Editingby Mary Milliken)
