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