Fidelity, Calvert and Sudan

I’m an investor in mutual funds managed by Fidelity and Calvert. Right now, I’d like to disassociate from Fidelity and move more money to Calvert. Why? The crisis in Darfur.

Fidelity funds are major investors in PetroChina and Sinopec, two Chinese oil companies that provide revenues to the government of Sudan, which is carrying out a genocide against its own citizens.

Fidelity has resisted pressure to sell its holdings, as I wrote last month. This is despite the fact that institutional investors such as Harvard, Yale and Stanford, and the state pension funds of California, Illinois and New Jersey have all decided to divest. You can read about the campaign at www.fidelityoutofsudan.net and at www.sudandivestment.org.

Divestment shouldn’t be undertaken casually, or in support of every cause, but the genocide in Sudan is an extraordinary case. At the end of this post, I’m going to print excerpts from emails to Fidelity from some investors, asking the company to divest.

But first a few words about Calvert. Calvert’s a socially responsible investment company, based in Bethesda, Md., where I live, so I’ve had a chance to meet some people who work there. They bring a social conscience to work, along with the desire to deliver performance for their investors.

Calvert built a website about Darfur, explaining how and why it divested its holdings in companies tied to the genocide. One example: Last year, it approached Cummins, after learning that some Cummins engines, made as part of a joint venture in China, had found their way into trucks sold to the Sudanese government. Cummins, an Indiana-based engine maker with a strong record of social and environmental responsibility, responded quickly, telling Calvert that it had strengthened its export controls policy to explicitly ban transactions that might result in Cummins products going to Sudan. Cummins also said it had addressed the issue with its Chinese partners. This is the way SRI (socially responsible investing) should work.

Beyond cleaning up its own holdings, Calvert has provided social analysis and advocacy to assist the Sudan Divestment Task Force with its work. And it has posted on its own website a list of “five things you can do” about the crisis in Darfur.

In an interview on Calvert’s website, Bennett Freeman, calvert’s VP for social research, says:

We just don’t feel that we have the luxury of sitting back and not taking a stand on Darfur. It’s really up to everyone — whether governments, international institutions, multinational corporations, investors, NGOs, citizen-activists — to take a stand and do what we can that’s consistent not only with our values but also our capabilities.

Interesting, Calvert was also a leader in the 1980s movement to divest from companies doing business in South Africa.

As for Fidelity, I searched its website for the words “Sudan” and “Darfur” and came up empty. You’d think the company would at least be willing to explain itself publicly, given the campaign against it.

I’m trying to divest myself from Fidelity, but it’s not easy. Fidelity manages the 401-k plan of my employer, Time Warner, and the core holdings it offers are mostly Fidelity funds.

One last thought: This controversy does more than higlight the sometimes-stark differences between conventional investing and SRI investment. It’s an example of a bigger issue—the role of China in Africa—that is going to vex anyone who cares about social and environmental issues in Africa for years to come. Chinese oil and mining companies in Africa don’t seem to be operating with the social or environmental restraints that U.S. and European companies have slowly, grudgingly and imperfectly built into their African operations. More on this China-Africa problem another day.

In the meantime, some of those letters to Fidelity:

I am the son of a Holocaust witness. My father helped liberate Buchenwald. I find it particularly offensive that the “excuse” that Fidelity has used is that it is willing to engage in activities that may be morally reprehensible if it makes money for its clients. I am a client, and I expect better from you. When it was profitable to melt gold from Holocaust victims’ teeth would Fidelity have financed it? As you know, the Swiss banking conglomerates which profited from expropriation of Jewish property during the 1940s continue to pay for that poor decision. Does your organization really want that type of long term liability? Does your organization really think that short term profits can possibly justify long term shame?—James H. Kelly, M.D.

Here’s another:

It is more than moral blindness to maintain that someone else has the authority, capability, and responsibility to end the Islamic massacre of Sudanese citizens by their own government.

By merely glancing at the internal operations of your own company, you know full well that globalization means just that! We are in this together… I am responsible for Darfur, for Fidelity, and for me. Fidelity is responsible for Fidelity, Darfur, and for me. This is the ‘new game.’ And I believe that, somewhere deep down, you know this. – Father Gary Kinzer, Seal Beach, CA

And one more:

I have a daughter at college who is concerned about Africa. I am an old hippie, and I am concerened about Africa.
It is an imperfect world, and yes, Fidelity can not rally behind EVERY cause. But…if you do not have kids, you have had parents, siblings, or friends. Imagine they were being killed and tortured in the African holocaust.
It is an imperfect world, but that does not excuse our doing absolutely nothing about anything.—Daniel Berman, Washington , D.C.

Fidelity, are you listening?

P.S. Investor and alternative energy blogger Tom Konrad has an interesting comment below on the high fees charged by SRI funds. Anyone in the industry care to respond?