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January 06, 2005
Addressing the Israel-Palestine Conflict Through Shareowner Action and Selective Divestment
    by William Baue

Part two of this two-part article examines the Presbyterian Church USA's policy of "phased, selective divestment" and the Episcopal Church's decision to study the issue before responding.


In July 2004, the Presbyterian Church USA (PCUSA) General Assembly voted 431 to 62 to initiate a process of "phased, selective divestment" from companies profiting from Israeli policies that harm Palestinians, for example by bulldozing their homes. PCUSA coined the term "phased, selective divestment" in 1984 to address apartheid in South Africa through a process that first engages in dialogue with problem companies, escalates to resolution filing in the absence of progress, and ends in divestment from unresponsive companies. To allow time for this "phased" process, the earliest divestment could take place is June 2006.

The move engendered controversy and prompted responses.

"It is well known that the General Assembly's action created a great deal of anger in the Jewish community," said John Wimberly, a Presbyterian pastor and a member of the steering committee Presbyterians Concerned for Jewish & Christian Relations (PCJCR). "What is not as well known is the anger the action created within the PCUSA."

In December 2004, PCJCR issued a statement calling on PCUSA to postpone action on the phased, selective divestment process and to ultimately reverse the decision.

Other denominations also framed their response to the Israel-Palestine conflict investment-wise in the context of the PCUSA stance. For example, the Episcopal Church of the United States USA (ECUSA) has determined not to pursue a divestment strategy now; instead, its Social Responsibility in Investments Committee (SRIC) will undertake a yearlong study to determine the best way to address the problem.

"The Episcopal Church sought to be faithful to its own policy statements on Israel and the Occupied Territories in devising its policy on shareholder engagement," said Harry Van Buren, staff consultant to the SRIC and assistant professor of business and society at the University of New Mexico. "We thought that we needed to involve a variety of stakeholders over the next year--including Jewish and Muslim groups--in developing our policy work in this area."

"In short, we decided to undertake a deliberative process that would allow us to engage issues related to corporate actions that negatively affect both Israelis and Palestinians," he told SocialFunds.com.

Prof. Van Buren explains how misunderstanding of socially responsible investment (SRI) processes can create controversy that may be based more on misperceptions than on actual actions.

"One of the difficulties of working on this issue involves how information is misreported," said Prof. Van Buren. "The differences between divestment and shareholder engagement are quite clear, as are the differences between, say, targeted divestment and blanket divestment, and yet it is often the case that the two are conflated in reporting on this issue."

When the PCUSA's Mission Responsibility Through Investment (MRTI) committee met in November 2004 to set criteria for enacting the phased, selective divestment mandate, MRTI chair Carol Hylkema clarified that "divestment is a last resort."

"It is definitely our intention to focus on engagement to change corporate behavior and we are trying to get this message out to the church at large but it is difficult to get that opportunity," Ms. Hylkema told SocialFunds.com.

The six criteria offer a roadmap for MRTI engagement with multinational companies who provide the Israeli military with products and services that support occupation and the construction of a barrier wall in territories with disputed and unresolved land claims. While the criteria remain true to the General Assembly resolution by focusing predominantly on Israel, the committee also broadened the scope in its classification system to address the violence perpetrated by both sides in the conflict.

"The MRTI Committee chose to include Palestinian actions in the classification system," said Ms. Hylkema. "With that said, the Palestinian economy is a mess and we suspect there are few investors in the economy of Palestine in any area."

Ms. Hylkema also acknowledged that the inclusion of the term "divest" in the phase describing a process that predominantly uses strategies besides divestment has fueled the "uproar." The terminology was institutionalized as a specific PCUSA policy in the context of South Africa, when divestment was a more clearly appropriate strategy to address a regime explicitly based on apartheid. MRTI member Bernice McIntyre, a corporate lawyer, further explained during the committee meeting that some corporations will not respond to shareowner engagement without the overt threat of divestment.


Part one of this two-part article examines across-the-board divestment from companies profiting off Israeli policies that harm Palestinians, and the case against divestment.

 

 
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