US funds under pressure by groups to sever Sudan investments
May 23, 2007 (NEW YORK) — The Save Darfur Coalition and other groups seeking an end to the bloody conflict in Sudan have been pressing mutual funds, pension funds and endowments to sever financial ties to companies that operate in the African nation.
The groups’ efforts represent what some observers see as a larger push toward what’s called socially responsible investing. It remains unclear, however, how far-reaching the effects of these groups will be.
“People through their investments may unwittingly help fund the genocide that’s going on in Darfur,” a region in Western Sudan, said Allyn Brooks-LaSure, spokesman for the Save Darfur Coalition.
The cause for the activists’ alarm is clear, as the conflict in Sudan has exacted a heavy human toll. Fighting between ethnic African rebels and the Sudanese government, which is backed by Arab janjaweed militias, has killed more than 200,000 people and displaced some 2.5 million since the violence began in 2003.
The activists contend that holding investments in companies that operate there makes investors complicit in supporting the conflict.
Some big investors are responding. Kansas, taking cues from California, this month passed a law prohibiting the state’s largest pension fund from investing in companies that operate in Sudan. And the University of Illinois in recent weeks joined dozens of other U.S. universities in vowing to sell investments in companies that do business there.
“I think the groups are trying to shed some light on the connection between outrageous behavior in some part of the world, like genocide, and the money connection to the average investor through their company-sponsored retirement plan or their pension plan. They’re trying to make a connection between two seemingly different worlds,” said Jeff Tjornehoj, an analyst at Lipper Inc., which tracks funds.
In recent weeks, Fidelity Investments, the largest U.S. mutual fund company, disclosed it slashed the stake that its domestic funds hold in China’s largest oil producer, PetroChina Co. (0857.HK), which invests in the Sudanese government’s oil exploration efforts. However, Fidelity has said repeatedly its move wasn’t the result of outside pressure and that it doesn’t tell its fund mangers when to buy or sell stock.
Dan Lefkovitz, an analyst who covers Fidelity at investment research provider Morningstar Inc., isn’t convinced, however, the company bowed to the public relations campaign waged by groups like the Save Darfur Coalition.
“I haven’t seen anything to really confirm that the reason they reduced the PetroChina stake is because of Save Darfur. I just don’t think they operate that way,” he said referring to the process Fidelity’s investment managers use in deciding where to invest.
But even as some companies reduce their investments in Sudan, for whatever reason, other companies appear unmoved by pressure to follow suit.
Earlier this month, shareholders of Berkshire Hathaway Inc. (BRKA), the company controlled by billionaire investor Warren Buffett, voted by a wide margin against a proposal to sell the company’s stake in PetroChina.
Tjornehoj contends while the Internet and email make it easier for activists to wage campaigns for what they see as greater corporate responsibility, the groups face a more difficult challenge with companies that aren’t as well known.
“It’s tough to get people involved with a program if the mark is an unknown asset manager. They really can’t expend the resources to target lesser-known or relatively unknown names,” he said.
Steve Schueth, president of First Affirmative Financial Network, an investment advisory firm overseeing about $650 million in assets that conform to various social causes, said that while the number of such investments has grown in recent years the public’s attention to social campaigns fluctuates. In the 1980s, for example, investors concerned about Apartheid began pushing with some success for multinational companies to suspend operations in South Africa.
“This is an ongoing phenomenon. It’s like a burning sun and every once in a while you get these big flares that bring it to the public’s attention. The success of this may breed more of these kinds of things,” Schueth said.
Representatives of groups placing pressure on those that invest in Sudan say much work remains.
“It means we move the ball down the field,” said Brooks-LaSure, referring to a decision by a company or investment adviser to reduce holdings in Sudan. “You don’t declare victory until genocide is over in Darfur.
“There are Americans that want their investments to reflect their values. They don’t want their investment retirement funds to be used to further something that is inconsistent with their values,” he said.
(AP)