TIAA-CREF, the $402 billion pension fund giant, became the first large U.S. asset manager to divest itself of investments with companies over concerns about human rights abuse in Sudan.
In a victory for activists focused on the genocide in Darfur, TIAA-CREF said it had sold $58 million in shares of four Asian oil companies – PetroChina, CNPC Hong Kong, Oil and Natural Gas Corporation and Sinopec – while maintaining its investment in PETRONAS, a Malaysian oil and gas company that has agreed to continue talks with the investment firm about conditions in Sudan. “Our decision to sell shares in these companies culminated a three-year effort to encourage them to end their ties to Sudan or attempt to end suffering there,” said Roger W. Ferguson, Jr., TIAA-CREF’s chief executive.
The divestment is likely to put pressure on other large asset managers to take similar action. In March 2009, as the result of pressure on the firm by its own shareholder activists, TIAA-CREF announced plans to intensify pressure on the five companies that maintained business relations with the government of Sudan.
“TIAA-CREF is the first large, mainstream financial services company to take a public stand supporting the overwhelming majority of Americans who do not want their savings and pension funds connected to genocide,” said Eric Cohen, chairperson of Investors Against Genocide, a non-profit group. “TIAA-CREF’s commitment to act sets a higher standard for the entire financial services industry.”
Cohen contrasted TIAA-CREF’s actions with those of Vanguard, another asset manager which also announced a human rights policy in March 2009. According to Cohen, Vanguard’s holdings of PetroChina and CNPC have increased since the announcement. “While TIAA-CREF honored its commitment to divest when the problem companies did not show significant progress to help end the genocide, Vanguard promoted a toothless policy which gives them the appearance of doing the right thing while actually doing nothing,” said Cohen. Other large shareholders in PetroChina include American Funds, Franklin Templeton and Fidelity, according to Investors Against Genocide.
TIAA-CREF said its corporate governance policies set a “high bar” for divestment, including “the gravity of TIAA-CREF’s concerns in Sudan, the likelihood of successful dialogue with target companies and a conclusion that divestment would have an insignificant impact on the financial performance of participants’ portfolios.”
Since the conflict in Darfur, western Sudan, began in 2003, an estimated 300,000 people have been killed and 2.6 million displaced from their homes, according to Amnesty International. The U.S. government has said the Darfur conflict constitutes genocide. In December 2007, President George W. Bush signed the Sudan Accountability and Divestment Act, which authorizes state and local governments to divest assets in companies that conduct business operations in Sudan and prohibits U.S. government contracts with such companies.