Targeted Sudan Divestment

by A. Sterling and N. McMurry

From the Summer 2007 issue of Values

Despite our repeated assertions of “never again,” we have witnessed recurring waves of genocide over the past century. From Armenia to Germany, from Cambodia to Bosnia and Rwanda, the international community has stood passively by or made token ineffectual gestures in response to each new instance of crimes against humanity. Today, the world is witnessing genocide in Darfur, Sudan. Since violence first broke out in 2003, the Sudanese government’s genocidal policies, including systematic rape and torture, have led to the deaths of more than 400,000 innocent Darfurians and the displacement of over two million people. Four years into Darfur’s genocide, the Sudanese government in Khartoum has adopted a new strategy of destruction, disguising Sudanese military planes as United Nations planes before bombing unsuspecting Darfurian villages.
 
While all instances of genocide are alike in imparting unimaginable human suffering, something sets Darfur apart. For the first time in history, the United States government has declared “genocide” while the atrocities are still occurring. This time, we don’t have to wait ten years for a Hollywood movie or a textbook to awaken our conscience. We already know what is happening in Darfur, and we can intervene today.
 
While the Khartoum government has proven essentially impervious to diplomatic pressure, it has demonstrated a historical responsiveness to economic pressure, largely a result of its dependence on foreign direct investment.
 
Viewing Khartoum’s wallet as a significant pressure point, a global campaign designed to place economic pressure on the genocidal regime has emerged and flourished. The Sudan Divestment Task Force, spearheading this campaign, has developed a unique approach to shareholder engagement and divestment, focusing its efforts on the most egregiously offending companies in Sudan. This approach, termed targeted divestment, seeks to maximize impact on the Sudanese government, while minimizing potential harm to both innocent Sudanese civilians and investment returns. 
 
The concept is simple, and it’s catching on quickly. The first phase involves identification of companies that have a business relationship with the government or a government-created project, deliver minimal benefit to the country’s underprivileged, and have expressed no significant corporate governance policy regarding the genocide. The second phase involves engagement of these companies, encouraging them to dramatically alter their behavior in Sudan, to exert pressure on the government, or to curtail operations in the country until the Darfur conflict is resolved. In the final phase, shareholders divest from companies that prove insufficiently responsive within a specified time frame.
 
Since Harvard University sold shares of PetroChina (whose parent company, China National Petroleum Corporation, is the largest player in Sudan’s oil industry) in 2005, 17 states have adopted policies of divestment from Sudan, and eleven of these states have adopted the targeted divestment model. Over 52 universities have adopted policies related to their Sudan-linked investments, and dozens of socially responsible investing (SRI) firms have provided support for the movement by committing to divest from Sudan, supporting shareholder engagement initiatives, and offering research and advocacy assistance.
 
While the general paradigm of shareholder activism favors continued engagement over divestment, the situation in Sudan is unique, and targeted divestment represents a unique approach. Extended engagement through traditional mechanisms such as proxy voting and coalition building often takes years—a timeframe wholly unsuited to the urgency of ongoing genocide. Many companies operating in Sudan have already been engaged for years by numerous shareholders, and while some have altered their behavior, others have explicitly expressed their unwillingness to do so. While the targeted divestment model still calls for engagement, it calls for that engagement to be expedited and followed by the “stick” of divestment should company behavior fail to change. This targeted approach has already succeeded in changing the behavior of several major firms operating in Sudan—Rolls Royce and CHC Helicopter are the latest in a series of large companies that have left Sudan in response to shareholder pressure and the specter of divestment.
 
As the targeted divestment movement continues to pick up momentum, investors and companies alike are beginning to realize that genocide is a bad investment. And as the movement expands internationally, with active campaigns in seven countries outside of the United States, the Khartoum government may soon come to the same conclusion.
–A. Sterling and N. McMurry
 
Adam Sterling is the director of the Sudan Divestment Task Force and Nina McMurry is the organization’s lead analyst. The Sudan Divestment Task Force is a project of the Genocide Intervention Network. For more information, visit

www.sudandivestment.org.

 


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