UUA, other investors pressure Fidelity over Sudan
Shareholder resolutions would bar investments that ‘contribute to genocide’ in Darfur, elsewhere.
At issue are investments in two Chinese oil companies, PetroChina and Sinopec. Both companies provide significant revenue to the Sudanese government, which is engaged in the violent suppression of Darfurian rebel groups. Investors are now focusing on mutual funds that may include companies investing in PetroChina and Sinopec.
Investors Against Genocide (IAG), a Boston-based group, coordinated the submission of the proxy statements, which were to be voted on at the mutual funds’ annual shareholders meetings March 19. The statements requested “oversight procedures to screen out investment in companies that, in the judgment of the board, substantially contribute to genocide, patterns of extraordinary and egregious violations of human rights, or crimes against humanity.”
Fidelity management urged shareholders to vote against the statement.
At the Wednesday meeting of two of the funds, Fidelity’s Select Health Care Portfolio and its Capital & Income Fund, the proxy statements were supported by 28 percent and 27 percent of the vote, respectively.
Although the statements garnered only a minority share of the vote, protesters were jubilant. “We’re gratified at the surprisingly large share of the vote in favor of genocide-free investing,” said Eric Cohen, IAG chair, at a March 19 press teleconference following the meetings. “It’s highly unusual for a social concern to receive such a high percentage of the vote. More unusual, yet, because of the relatively short notification time in the publication of the proxy ballots.”
Votes were postponed for the other ten funds because of a lack of a quorum. The meetings will be rescheduled.
According to UN estimates, more than 200,000 people have been killed and 2.2 million people displaced in the conflict between non-Arab rebel groups and the Sudanese military and Sudanese government-supported militias. The conflict, which started in February 2003, has been declared a genocide by U.S. President George W. Bush.
The UUA General Assembly formally condemned the genocide in Darfur in a 2005 resolution calling for an immediate end to the conflict. While the UUA does not have any investments in Fidelity, UUA retirement plan participants have a total of $185 million invested in the plan, said Tim Brennan, UUA treasurer and vice president for finance, at the press teleconference. “We cannot accept genocide as a necessary evil or some side effect of successful investing,” he said. “We have the opportunity to use our financial assets to witness against the unspeakable evil of genocide.”
The UUA’s retirement plan has been managed by Fidelity Investments since 1999. In a May 2007 letter to Edward C. Johnson, Fidelity’s chair and chief executive officer, UUA President William G. Sinkford wrote: “We cannot ignore even indirect participation in genocide as an acceptable cost of doing business.” In the same month, UUA retirement plan participants were urged to move their funds from the Fidelity Diversified International Fund, which had holdings in Sinopec.
Last year Fidelity divested 99 percent of its direct investments in PetroChina and Sinopec traded on the New York Stock Exchange. However, it still has roughly $900 million invested in the two companies in domestic and international funds, traded on international stock exchanges.
See sidebar for links to related resources.
