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April 13, 2012
JPMorgan Chase Faces Investing in Genocide Resolution
    by Robert Kropp

For the second year, Investors Against Genocide submits shareowner proposal addressing JPMorgan Chase's extensive holdings in PetroChina, a corporate contributor to genocide in Sudan.

The Republic of South Sudan declared its independence last year, but the action did not signal the end of the genocidal aggressions of Sudan's President, Omar al Bashir, who holds the distinction of being the first sitting president to be indicted by the International Criminal Court (ICC) for crimes against humanity.

An estimated 2.5 million people from the Darfur region have been killed, and millions more displaced, in more than 20 years of atrocities committed by the government of Sudan. The US government has described the government of Sudan's actions in the Darfur region as the first genocide of the 21st century.

Last year, Investors Against Genocide (IAG) expanded its campaign for genocide-free investing beyond mutual funds to include banks as well. A first-time proposal submitted at JPMorgan Chase gained 7.4% of shareowner support, despite that fact that three-quarters of the bank's stock is held by institutional investors. After last year's vote, William Rosenfeld, co-founder and Director of Strategic Initiatives for IAG, told, "The institutions are conservative and inclined to support management, particularly on social issues."

Many institutions from the sustainable investment industry, however, supported the proposal. Institutions voting in favor of IAG's proposal last year included Calvert Investments, Christian Brothers Investment Services, Domini Social Investments, Green Century Funds, and Trillium Asset Management.

Because IAG's proposal at JPMorgan Chase received considerably more than the three-percent threshold required by the Securities and Exchange Commission (SEC) to place it on the proxy ballot this year, the organization has resubmitted the proposal. "We'll now have an annual opportunity to raise awareness of the problem," Eric Cohen, IAG's co-founder and Chairperson, told last year.

Despite the significant shareowner vote in favor of the proposal—and despite the fact that it is a signatory to the United Nations' Principles for Responsible Investment (PRI)—JPMorgan Chase actually increased its holding in PetroChina in 2011. It now owns $1.5 billion worth of PetroChina, and is one of the company's largest investors.

In advance of this year's annual general meeting, IAG sought to engage with institutional investors through an advertisement Pensions & Investments, as well as a direct mailing to hundreds of the company's largest shareowners. The proposal requests "that the board institute transparent procedures to avoid holding investments in companies that, in management’s judgment, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights."

In its proxy statement, JPMorgan Chase repeated its opposition to the proposal, stating that its "concern for the protection of human rights is reflected in our Human Rights Statement and guided by the principles set forth in the United Nations Universal Declaration of Human Rights." The company argued that its holdings in PetroChina "are in our custody business, where we do not own the shares outright but instead hold them at the direction of our customers."

"We purchase, sell and vote these shares only as directed by our customers," the proxy statement continued.

Despite the company's Human Rights Statement, it has no policy that directly addresses genocide-free investing.

JPMorgan Chase's annual general meeting will be held on May 15th in Tampa, Florida.


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