Investors Against Genocide responds to Fidelity
At the shareholder meeting on June 18, 2008, Fidelity rejected genocide-free investing, insisting on their flexibility to invest in genocide. Fidelity released a statement (copied below) suggesting, for the first time, that the reason it decided to retain its investments in companies that help to fund genocide was to help effect change in Sudan. Here is Investors Against Genocide response from June 19:
Eighteen months after Investors Against Genocide first highlighted Fidelity’s investments in companies that help to fund genocide, and after millions of Fidelity’s shareholders voted for our genocide-free investing proposal preventing such investments, Fidelity claims that it remains invested to serve as a positive influence in Sudan.
Over the last three months, millions of Fidelity customers voted to adopt the genocide-free investing proposal. In spite of this unprecedented level of shareholder support, Fidelity continued to actively oppose the proposal and insisted upon maintaining its flexibility to invest in genocide. Yesterday, the company announced its decision to halt the voting process for 7 of its funds, before the final results are recorded.
During this period, Fidelity has done nothing to leverage its large investments to engage with the companies that are underwriting this crime against humanity. As recently as the May 14 shareholders meeting, when asked what steps the company had taken to engage with the problem companies, Fidelity had no reply. Now, Fidelity has adopted the stance that it wants to “retain the ability to oppose practices that it does not condone.” If its intentions are sincere, Fidelity, acting as a large concerned investor, should promptly and publicly arrange for a high level meeting with the president of PetroChina asking that it, along with its closely related parent, CNPC, immediately engage with the genocidal government of Sudan on behalf of the Darfuri people. If after three months, PetroChina is unresponsive, Fidelity should divest its holdings with a public announcement regarding its reasons. Any lesser actions will demonstrate that Fidelity’s stated reasons for retaining these investments are disingenuous.
Investors Against Genocide believes that engagement can be an effective strategy in helping effect change. The genocide-free shareholder proposal that was supported by so many of Fidelity's shareholders explicitly endorses engagement. The shareholder proposal states, "If the fund can effectively influence the problem company's management, then this may be an appropriate action. If not, the security should be sold." The proposal, and our position, are clear. Engagement can be an effective strategy for large shareholders if such engagement is vigorous with clear time limits and real consequences applied to unresponsive target companies.
We look forward to Fidelity's public disclosure regarding its plans for a vigorous engagement effort with firm deadlines and meaningful consequences if no substantial progress is made to help end the genocide. If Fidelity truly wants to effectively engage with the problem companies as well as respond to the concerns of millions of customers who do not want their savings tied to the genocide, they will make the commitment to genocide-free investing as outlined in the shareholder proposal.
Here are further details as well as a link to our press release of yesterday.
Affirmative votes on the shareholder proposal earned as much as 31% and represented millions of Fidelity shareholders. In total, 14 funds reported votes on this proposal with results for those funds showing consistently strong support for genocide-free investing ranging from 20% to 31%. The results were especially noteworthy given that Fidelity actively opposed the proposal, and a large percentage of opposing votes were cast by institutional shareholders, "industry insiders," and others who may automatically vote with management. These results contrast dramatically with those of most shareholder proposals on social issues that lose by overwhelming numbers.
Fidelity's June 18 statement
Note to Fidelity Investors
Fidelity Investments does not presently offer funds that are described as "socially responsible." At this time, we make these types of funds available to investors through our FundsNetwork program. We may, however, take the potential effect of political or social actions of a company into consideration when deciding whether to buy, or sell, that company's securities.
We also do our best to see that our investment decisions are in line with our fiduciary obligation to ensure that every Fidelity fund is managed based on the investment objective described in its prospectus.
Sudan
We are sensitive to the ongoing tragedy occurring in Darfur and, like most others in the world, we are repulsed by genocide and all other crimes against humanity. We also respect the request by some to divest holdings in companies that have any Sudan–related activities as one way to bring pressure to bear on the Sudanese government.
It is a request that we have given time and thought in evaluating, and we know that other companies in the industry have done the same. On the surface, the task appears relatively simple. In fact, however, weighing the consequences of divestiture against the value of active retention is quite complex. Though we do not like to admit it, as investment advisors it is very difficult for us to evaluate cause–and–effect relationships in a social and political situation as sensitive as this.
That said, we have concluded that when it is appropriate to remain actively invested in a company, we will do so, thus retaining the ability to oppose company practices that we do not condone. This, in the long term, may have the greatest chance of ending those practices. There is the possibility that driving publicly traded companies out of Sudan may actually make the situation worse, exposing the region to state–owned companies or companies that are not traded on the world's exchanges and, therefore, not subject to any shareholder influence whatsoever.
It is our best judgment that this approach — when applied over the spectrum of the world's investment securities — may be the most viable way to help bring constructive influence to world issues.
Fidelity Investments does not presently offer funds that are described as "socially responsible." At this time, we make these types of funds available to investors through our FundsNetwork program. We may, however, take the potential effect of political or social actions of a company into consideration when deciding whether to buy, or sell, that company's securities.
We also do our best to see that our investment decisions are in line with our fiduciary obligation to ensure that every Fidelity fund is managed based on the investment objective described in its prospectus.
Sudan
We are sensitive to the ongoing tragedy occurring in Darfur and, like most others in the world, we are repulsed by genocide and all other crimes against humanity. We also respect the request by some to divest holdings in companies that have any Sudan–related activities as one way to bring pressure to bear on the Sudanese government.
It is a request that we have given time and thought in evaluating, and we know that other companies in the industry have done the same. On the surface, the task appears relatively simple. In fact, however, weighing the consequences of divestiture against the value of active retention is quite complex. Though we do not like to admit it, as investment advisors it is very difficult for us to evaluate cause–and–effect relationships in a social and political situation as sensitive as this.
That said, we have concluded that when it is appropriate to remain actively invested in a company, we will do so, thus retaining the ability to oppose company practices that we do not condone. This, in the long term, may have the greatest chance of ending those practices. There is the possibility that driving publicly traded companies out of Sudan may actually make the situation worse, exposing the region to state–owned companies or companies that are not traded on the world's exchanges and, therefore, not subject to any shareholder influence whatsoever.
It is our best judgment that this approach — when applied over the spectrum of the world's investment securities — may be the most viable way to help bring constructive influence to world issues.