abusesaffiliationarrow-downarrow-leftarrow-rightarrow-upattack-typeburgerchevron-downchevron-leftchevron-rightchevron-upClock iconclosedeletedevelopment-povertydiscriminationdollardownloademailenvironmentexternal-linkfacebookfiltergenderglobegroupshealthC4067174-3DD9-4B9E-AD64-284FDAAE6338@1xinformation-outlineinformationinstagraminvestment-trade-globalisationissueslabourlanguagesShapeCombined Shapeline, chart, up, arrow, graphLinkedInlocationmap-pinminusnewsorganisationotheroverviewpluspreviewArtboard 185profilerefreshIconnewssearchsecurityPathStock downStock steadyStock uptagticktooltiptwitteruniversalityweb
Article

9 Jul 2009

Author:
[column] David Weidner, Wall Street Journal

Blood Money on Wall Street - U.S. Fund Companies Need to Take a Stronger Stand for Human Rights

Given the choice, we would reject profiting from criminal activity… [W]e wouldn't accept cash from a regime supporting genocide. It wouldn't even be a choice -- for most of us. That's why it's so repulsive that mutual-fund companies including Vanguard Group and Fidelity Investments continue to reject shareholder resolutions that would ban investing in companies that are profiting from what's happening in Sudan... Vanguard fought the proposal, saying it had initiated its own policy in March. And when IAG [Investors Against Genocide] Executive Director Eric Cohen read Vanguard's response, he was impressed... But a closer look revealed that Vanguard, despite promises to scrutinize its investments, didn't do a thing once it identified problem holdings. The fund company continued to hold investments in companies such as Petrochina Co., Sinopec Shanghai, Petronas and Oil and Natural Gas Corp. [ONGC]... Vanguard spokesman Linda Wolohan said that the company made formal what was an informal process at the company. She said investors can look at their statements to find out if their funds invest in a company like Petrochina, but she said, it's not company policy to announce any divestment action if it makes one. "We don't take these issues lightly," she said. She added that singling out stocks would be problematic for Vanguard because of its investment strategy. Vanguard specializes in index funds that follow benchmarks that may include controversial issuers. Not every big investor has been as insensitive as Vanguard… In March, TIAA-CREF...announced a sweeping divestment policy... [In] the fall of 2007,...Berkshire Hathaway Inc. dumped its stake in Petrochina. Berkshire had held 2.3 billion shares... [Berkshire CEO Warren] Buffett said the stake was bought and sold purely as an investment... [S]hareholders of 13 Fidelity funds are facing an anti-genocide resolution sponsored by IAG... Like Vanguard, Fidelity is urging shareholders to defeat the proposal.... Fidelity wouldn't comment beyond information in the prospectus and a statement on their Web site. Divestment opponents claim that shunning companies profiting from genocidal regimes somehow gives too much power to activists and people outside the fund managers. It's the tired refrain that business should stay out of politics and that giving in to do-good activists somehow taints the purity of free markets. That's a bunch of baloney, of course.