Activists accuse TIAA-CREF of trying to ‘kill’ Israel divestment proposal on its own AGM proxy

Scheme members call for engagement with Caterpillar, Veolia, and Elbit Systems over Israel activities.

A group of pension fund members of TIAACREF, the $453bn (€318.9bn) retirement provider for US academics and researchers, has accused it of trying to ‘kill’ a shareholder proposal on divesting from Israel-linked companies lodged at its own upcoming annual shareholder meeting. TIAACREF confirmed to Responsible Investor that it has asked permission from the Securities and Exchange Commission to omit the proposal, tabled by the Jewish Voice for Peace group.
The campaigners are calling on TIAACREF – specifically the College Retirement Equities Fund (CREF) – to engage with investee companies such as Caterpillar, Veolia, and Elbit Systems which operate on the West Bank and in East Jerusalem “with the goal of ending all practices by which they profit from the Israeli occupation”.
The draft proposal continues: “If, by the annual meeting of 2012, there is no commitment to co-operate, CREF should consider divesting as soon as market conditions permit.” The four Swedish government AP pension funds and the Norwegian Government Pension Fund have already blacklisted Elbit Systems, the Israeli defence technologies firm, from their investment portfolios for alleged human rights violations in the Palestinian territories. The process of removing proxy proposals is one regularly used by US corporations seeking to avoid unwelcome motions from activist investors at AGMs. TIAACREF is itself an active shareholder and filer of shareholder resolutions. Responsible Investor revealed earlier this year how oil companies were trying to omit resolutions lodged by institutional investors on environmental issues.Brian Browdie, TIAACREF spokesman, said: “We always welcome input and suggestions from our participants. We carefully considered this proposal and determined that it would not allow us to effectively steward the savings that are entrusted to us.”
However, the campaigners say TIAACREF has tried to ‘kill’ the resolution and that they have hired a lawyer to fight to keep the resolution on the proxy.
The matter is now before the SEC and will need to be resolved before the proxy materials are sent out ahead of CREF’s annual meeting which is likely to take place in July.
In June last year, TIAACREF issued a response to the activists saying its responsibility to earn a competitive financial return “obliges us to invest in a diverse line-up of companies across all sectors of the global economy”. The Jewish Voice for Peace says more than 19,500 people have already signed a petition asking TIAACREF to divest from companies that profit from the Israeli occupation of the West Bank. TIAACREF, a corporate governance leader since the 1970s, usually avoids divesting from companies – preferring what it calls “quiet diplomacy”. But in 2009 it said it would sell off shares in companies with ties to Sudan. It was one of the first institutional investors to engage with companies on social issues such as automotive safety in the US and apartheid in South Africa. It says proxy voting and shareholder resolutions are key components of its engagement with investee companies.
TIAA, the Teachers Insurance and Annuity Association, was founded in 1918 with the College Retirement Equities Fund beginning operation in 1952.