Responsible Investor

Darfur: The economic lifeline to genocide

How can institutional investors ensure they are not supporting death in Sudan?

In early 2003, rebel groups in Darfur, the western region of Sudan, took up arms over their systematic exclusion from political power and development. The government of Sudan responded with a brutal counter-insurgency campaign targeting non-Arab civilian populations in Darfur. By conservative estimates, 2.5 million people have been displaced and over 200,000 killed, but numbers are likely much higher. The conflict is known as the first genocide of the 21st century.
In 2004, several institutions identified divestment as a possible tool to exert pressure on the government of Sudan. While the Government of Sudan in Khartoum has been resistant to political and diplomatic pressure, it previously has been sensitive and responsive to economic pressure. It has to be; the government carries a debt burden as large as its GDP and garners 80% of its export revenue from oil. Sudan lacks the internal expertise or capital to extract resources itself and is therefore completely dependent on foreign companies to exploit its oil reserves. Furthermore, the majority of the oil revenues received by the Khartoum regime are spent on military expenditures.
Firms like China National Petroleum Corporation, Oil

and Natural Gas Company of India, and Petronas of Malaysia provide the economic lifeline for a genocidal regime. They have the leverage with the government necessary to change the situation on the ground in Sudan. Unfortunately, these major players have proven reluctant to do so.
Developed by the Sudan Divestment Task Force, a project of the Genocide Intervention Network, the targeted model of divestment encourages shareholders to exert pressure only on companies that have a truly problematic presence in Sudan, encouraging them to adopt a substantial policy in response to the Darfur genocide. Problematic companies, particularly those involved in Sudan’s oil, power, mining, and defense sectors provide significant support to Khartoum and fail to benefit Sudan’s marginalized populations. Rather than necessarily asking these companies to leave Sudan completely, shareholders should encourage companies to remain in Sudan and to use their considerable leverage to contribute to positive change. Shareholder divestment should only be used as economic incentive for the company to change if they are unresponsive to engagement.

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