General Synod says it is willing to disinvest from companies that do not live up to its theological, moral and social priorities

The Church of England has said that it will, as a last resort, pull its investments from companies that fail to do enough to fight the "great demon" of climate change and ignore the church's theological, moral and social priorities.

Although the church's Ethical Investment Advisory Group (EIAG) has resisted calls for the church to pull its money from fossil fuel companies, insisting that engagement is the best way to effect change, its deputy chairman told the General Synod that it was considering "all options" when it came to developing future investment policy.

"Make no mistake, we reserve the final option of disinvesting from those particular companies who resist change," said the Rev Canon Professor Richard Burridge, adding that the church had sold its £3.8m stake in the controversial mining company Vedanta four years ago following concerns about its human rights record.

"Climate change is in sharp focus at the moment, with the UK experiencing such extreme flooding that even the chief scientist of the Met Office links [it] to climate change – not to mention forest fires in Australia and blizzards in the USA," he told the synod meeting in London on Wednesday. "Scientists warn about the damage we are creating but we do very little to mitigate the threat, or adapt to it."

But he added that while the EIAG recognised that climate change was a huge ethical investment issue, swift disinvestment from fossil fuel companies was not the answer.

"Pointing the finger at the extractive industries gets us off the hook and avoids the fundamental problem which is our selfishness and our way of life, which has been fuelled by plentiful, cheap energy and more and more people around the world wanting that," he said.

Burridge said that the church's investments and engagement with large UK companies with poor carbon emission management had led to 72% of the companies targeted improving their emission management.

His comments came during a debate that culminated in a vote approving the creation of a working group on the environment to monitor the church's action on climate change and other environmental issues.

Canon Giles Goddard of Southwark diocese, who proposed the motion, said the church needed to "align the mission of the church with its investment arm and with the life of the parishes".

He added: "Climate change is a moral issue because the rich world has disproportionately contributed to it and the poor world is disproportionately suffering. Poor communities are least equipped to deal with the impacts."

Steven Croft, the bishop of Sheffield, described the threat of climate change as "a giant evil; a great demon of our day", adding: "Its power is fed by greed, blindness and complacency in the present generation, and we know that this giant wreaks havoc though the immense power of the weather systems, which are themselves unpredictable."

He said the church had a "critical role" to play in lobbying politicians on climate change in order to bring about manifesto commitments to reach the target of an 80% reduction in UK greenhouse gas emissions by 2050.

The church's renewed commitment to tackling climate change was welcomed by Christian charities.

"Climate change is increasingly becoming one of the moral issues of our time and the church has a powerful voice with which to speak," said Christian Aid's senior climate change adviser, Dr Alison Doig.

"The next 18 months will significantly shape the politics of climate change with the UN global deal on emissions expected in Paris next year and the publication of the Intergovernmental Panel on Climate Change report next month. The church can now engage prophetically on this subject and speak with a united voice for those suffering both here and abroad."

Paul Cook, advocacy director of Tearfund, said the current flood in Britain were serving as a wake-up call to the church.

"The climate really is changing, and it's happening now," he said.

"It's not just a problem for our grandchildren, it's not just a problem for polar bears, it's not just a problem for people thousands of miles away; it's a problem for us too, today."