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February 18, 2010
American Funds Sells PetroChina Holdings
    by Robert Kropp

The mutual fund family responds to the use of oil revenues to fund genocide in Darfur, following shareowner pressure led by Investors Against Genocide.


Advocates of genocide-free investing won another important victory this week, when American Funds, a family of mutual funds with more than $775 billion in investments, decided to divest virtually all its holdings in PetroChina. Before a shareowner meeting held on November 24, American Funds owned 167 million shares in PetroChina, worth $190 million.

PetroChina is one of five major Asian state-owned oil companies with significant operations in Sudan, where, according to Investors Against Genocide, the government has used much of its oil revenues to fund a campaign of genocide in Darfur, where hundreds of thousands of people have been killed.

At the shareowner meeting, Investors Against Genocide advanced a resolution asking that the Board of American Funds “institute procedures to prevent holding investments in companies that…substantially contribute to genocide or crimes against humanity.” American Funds opposed the measure, and affirmative votes for the proposal ranged from 8.5% to 11.8% at the meeting.

Following the decision by American Funds to divest its holdings in PetroChina, Eric Cohen, Chairperson of Investors Against Genocide, said in a statement, “We congratulate American Funds for divesting from PetroChina. Their action is a positive affirmation of their human rights policy.”

The divestment by American Funds was the second major divestment of holdings in PetroChina. In January, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), a financial services company with $363 billion in combined assets under management, announced that as of December 31, 2009, it had divested its holdings in four of the five major Asian state-owned oil companies with significant operations in Sudan.

At the time, Cohen said of the TIAA-CREF divestment, “TIAA-CREF’s commitment to act sets a higher standard for the entire financial services industry.”

Mutual funds that have yet to make a similar commitment to genocide-free investing include Fidelity, Franklin Templeton, and Vanguard.

According to a representative telephone survey of 1,022 adults in the US, conducted by KRC Research in 2007, 71% of respondents believe that companies should consider human rights abuses when making investment decisions.



 

 
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