June 30, 2012
Genocide-Free Investing Resolution Wins Majority Vote
by Robert Kropp
Investors Against Genocide's request that the ING Emerging Countries Fund refrain from investing in
companies that provide funding to governments engaged in genocide is supported by over 59% of
I've written more than 1,000 stories for SocialFunds.com, and find that certain subjects regularly
compel me to cover them. The efforts of Christian
Brothers Investment Services (CBIS) and other members of the Interfaith Center on Corporate Responsibility (ICCR) to
address human trafficking is one. Sustainable investment in Africa is another.
Genocide-free investing is a third. For years, Investors Against Genocide (IAG) has engaged
with mutual funds in its effort to prevent corporate funding of the genocide waged by the
government of Sudan in Darfur. Abetted by payments from oil companies doing business there, the
Sudanese government is responsible for civilian deaths that have been estimated at more than 2.5
In 2009, Omar al-Bashir became the first sitting head of state to be
charged in an international court with crimes against humanity.
It's hard to imagine how
US-based financial firms can justify investments in oil companies that bankroll genocide; yet
invest they do. According to IAG, four financial firms—JPMorgan Chase, Fidelity, Vanguard, and
Franklin Templeton—together have holdings of $9 billion in PetroChina, Sinopec, and other oil
companies whose payments to al-Bashir's government help fund ongoing crimes against humanity.
Although the four financial firms continue to justify their holdings, IAG's efforts have met
with significant success. In 2009, the Teachers
Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), a $400
billion financial services firm, divested its holdings in four of the five major Asian state-owned
oil companies with significant operations in Sudan.
Soon after TIAA-CREF announced its
divestment, American Funds, a family of mutual funds with more than $775 billion in investments,
divested virtually all its holdings in PetroChina.
This week, IAG gained another success,
when a shareowner resolution addressing genocide-free investing received a solid majority of
support. The resolution filed at
the ING Emerging Countries Fund, requesting that it "institute procedures to prevent holding
investments in companies that, in the judgment of the Board, substantially contribute to genocide
or crimes against humanity," won 59.25% of votes. Only 10.8% of the fund's shareowners voted
against the proposal.
ING did not recommend a vote either way on the proposal, because it
plans to merge its Emerging Countries Fund with the ING Emerging Markets Equity Fund. The two funds
own almost $3 million of three oil companies, including PetroChina, whose payments contribute to
genocide in Sudan.
ING did attempt to omit the proposal from its ballot, however, but the
Securities and Exchange Commission (SEC) de
cided in favor of the investors.
Testifying before Congress in 2010, Eric Cohen,
Chairperson of IAG, said, "Research shows that the vast majority of Americans are opposed to having
their hard-earned savings tied to genocide. Nonetheless, because most individuals entrust their
savings to mutual funds, millions of Americans are investing, unknowingly, inadvertently, and
against their will, in companies funding genocide."
At the same hearing, Adam Kanzer of Domini Social Investments, pointed out that risks
to the financial value of companies operating in Sudan include operational risks, reputational
risks, legal risks, and loss of license to operate. However, he noted, investors are not provided
with the tools needed to meet their "obligation as investors to respect human rights, and to seek
to do no harm."
Furthermore, Kanzer added, "There are a lot of mainstream investors that
still simply view these issues, regardless of how egregious they are, as off the table, which I do
consider to be a breach of fiduciary duty."
It remains to be seen, of course, whether ING
will respect the wishes of the vast majority of its shareowners after the merger of the two funds
is completed. It also remains to be seen whether the results of the vote herald an awakening of
mainstream investors to their fiduciary duty referred to by Kanzer in his testimony.