There was modestly good news about the crisis in Darfur last week, and I’ve been meaning to write about it. Unfortunately, I’ve been busy with other projects so the people at CSR Wire, a corporate responsibility newswire, and Bill Baue have kindly given me permission to post Bill’s CSR Wire story about developments at TIAA-CREF and Vanguard.
I’ve covered this story on and off for more than two years, sadly. Here’s a 2007 CNNMoney column and a 2007 blog posting about Fidelity’s ties to Sudan, and here’s a 2008 column that ran on Huffington Post. The people at the Darfur divestment campaign deserve enormous credit for keeping the pressure on U.S. mutual funds that invest in companies that do business in Sudan.
Bill Baue has done a great job covering CSR issues for years. He’s also a host of a podcast and Internet radio program called Sea Change Radio, well worth checking out. I’m hoping to find time to work with Sea Change in the months ahead. In any event, here is Bill’s story:
Nothing could be more boring than proxy statements; on the other end of the spectrum, nothing could be more grim than the systematic murder of a population — genocide. These two worlds are colliding as the issue of genocide increasingly appears on proxies, awakening shareholders to the hidden link between their investments and serial rape, displacement, and killing in places such as Sudan. Now, two huge investment firms — TIAA-CREF and Vanguard — say they are severing this link through genocide-free investment policies promoted by Investors Against Genocide (IAG) shareholder resolutions.
This past week, TIAA-CREF upped the ante in its anti-genocide activism by pledging to push companies supporting the genocidal Darfur regime to reverse this complicity — or face divestment. This applies immediately if invitations to meet with TIAA-CREF go unanswered by “target” companies that provide most support to the regime: PetroChina, CNPC Hong Kong, Oil and Natural Gas Corporation, Sinopec, and PETRONAS. Seven other companies have nine months to publicly announce “significant progress” before TIAA-CREF yanks them from its portfolios.
In 2006, TIAA-CREF began engaging with 22 companies, encouraging them to steer clear of genocide — and 10 companies pulled out of Sudan, or committed to humanitarian initiatives there. A quant analyst examining “just-the-numbers” would see some of this behind-the-scenes engagement reflected in TIAA-CREF’s holdings, as it almost halved its PetroChina stake from 38.5 million shares at year-end 2006 to 21.2 million shares at year-end 2008. However, TIAA-CREF more than doubled its Sinopec holdings over the same period, from 7.7 to 16.9 million shares, according to IAG data. All the more reason for bright-line commitments.
Congress members applauded TIAA-CREF’s move. “I am hopeful that TIAA-CREF’s decision to divest from companies that do business with the government of Sudan will inspire other companies to follow suit,” said Representative Melvin Watt (D-NC) of the House Financial Services Committee. IAG also welcomes the “me-too” phenomenon.
In fact, TIAA-CREF piggybacked Vanguard’s genocide-free commitment. Earlier this month, Vanguard’s proxy boldly stated that its existing procedures are “substantially identical” with an IAG shareholder resolution seeking “procedures to prevent holding investments in companies that…substantially contribute to genocide or crimes against humanity.” While IAG filed the resolution with 30 funds, Vanguard asserts its procedure applies to all of its 157 funds.
IAG withdrew its resolution with TIAA-CREF, and promises to do the same at Vanguard if the Emerging Markets Stock Index Fund “shows a significant reduction in its holdings of PetroChina,” according to IAG Chair Eric Cohen. However, Vanguard just disclosed in its first quarter SEC filings an increase of its holdings of PetroChina in its Emerging Markets Stock Index Fund from 149.6 million shares worth $112.5 million at year-end 2008 to 155.7 million shares worth $114.9 million now. So much for “substantially identical”!