March 15, 2013
15 Million Shares Vote for Genocide-Free Investing Proposal at Mutual Fund
by Robert Kropp
Investors Against Genocide calls on Franklin Templeton to adopt a policy against investing in
companies whose operations contribute to genocide.
Franklin Resources, the parent company of the mutual fund family Franklin Templeton, doesn't face
shareowner resolutions very often. In fact, a resolution filed this year by Investors Against Genocide (IAG) is the first
in at least 19 years, and may well be the first ever.
The mutual fund company owns seven
percent of the outstanding shares in PetroChina, the oil and gas company whose operations
contribute to the genocidal campaign of Omar al-Bashir's government. "Ongoing government-sponsored
genocide in Sudan has spanned more than two decades and resulted in the death of over 2.5 million
innocent civilians," IAG stated.
The resolution filed by IAG and its shareowner
allies requested that the mutual fund's board of directors "institute transparent procedures to
avoid holding or recommending investments in companies that, in management's judgment,
substantially contribute to genocide or crimes against humanity, the most egregious violations of
Franklin Resources held a general meeting yesterday, where 8.7% of
shareowners—nearly 15 million votes—supported the proposal. If abstentions and broker non-votes
were excluded, the percentage of votes supporting the proposal would be substantially higher. In
any case, under Securities and Exchange Commission (SEC) rules the percentage in favor was easily
high enough for the resolution to be included on the company's next proxy ballot.
their financial power and influence, accounting for almost $12 trillion in assets under management,
mutual funds are not legally bound by SEC regulations requiring corporations to hold annual general
meetings at which resolutions can be introduced and voted on by shareowners.
total is especially striking given that three senior executives at Franklin Resources collectively
own 32% of the company's outstanding shares. Despite a letter sent by 35 local and national human
rights and religious groups, along with genocide and corporate governance scholars, to the three
executives, urging them to support the proposal, the company recommended that shareowners vote
against it. "We believe that fostering economic and business development through investment can
often help in achieving reforms," the company stated.
Speaking in favor of the proposal at
the meeting, Armen Carapetian of the Armenian National Committee of America took issue with the
company's argument. "In some cases, that statement would be correct," Carapetian said. "However, it
is inappropriate and certainly does not apply to the genocidal regime in Sudan that has resisted
international condemnation for 10 years and continues its genocide and crimes against humanity
against its own people in Darfur and recently in the Nuba Mountains and Blue Nile states."
In 2012, after the board of ING Emerging Countries Fund took a neutral position on a similar
proposal, almost 60% of shareowners voted in favor of it. And 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.
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
The 2012 Report on Sustainable and Responsible Investing Trends in the
US from US SIF: The Forum for Sustainable and
Responsible Investment found that more than $1.63 trillion in institutional assets are invested
according to policies relating to Sudan. A 2010 study by KRC Research reported that 88% of
respondents want their mutual funds to be genocide-free, and 84% said they would withdraw
investments from financial institutions that do business with companies that support genocide.