TIAA-CREF sells PetroChina and Sudan-linked companies in Darfur protest

US pension fund furthers dialogue with Malaysia’s Petronas.

TIAACREF, the giant $402bn (€315bn) US pension plan and investment fund group for US teachers and researchers, has sold its shares in four Asian companies: PetroChina, CNPC Hong Kong, Oil and Natural Gas Corporation and Sinopec, in protest at their business links to the Sudanese government presiding over genocide in Darfur. The decision to blacklist the companies came after the fund set a nine-month ultimatum in March last year for the firms to start using their influence on the Sudanese government to stop the genocide or face being publicly dumped from their investment portfolios. TIAACREF said it had met with representatives of each of the four companies, but that talks had made insufficient progress. The equity holdings in the four companies are believed to have been valued at about $60m and were sold on December 31. Petronas, a Malaysian oil and gas company with Sudanese interests that was also a TIAACREF lobby target, has however agreed to further talks about its influence in Sudan.
Roger W. Ferguson, Jr., TIAACREF’s chief executive, said: “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. We have not divested from Petronas, which has acknowledged our concerns and engaged in dialogue about how it might address them.”TIAA-CREF’s nine-month ultimatum on Sudan-linked companies followed a campaign targeted at the fund itself by non-governmental organizations and pension plan members who accused it of increasing a controversial equity holding in PetroChina while simultaneously lobbying the company to use its influence to challenge the Sudanese government. Campaigners have also targeted US mutual fund firms including Franklin Templeton, American Funds, and Fidelity, which have been amongst the largest holders of PetroChina shares. Mutual fund firms are expected to come under renewed pressure to divest from Sudan as a result of TIAACREF’s actions. The engagement deadline laid down by TIAACREF was one of the most overt attempts to kick-start dialogue with companies in Sudan who investors and NGOs say are unwilling to discuss their links to the Sudanese authorities. Since 2003, more than 200,000 people are estimated to have died as a result of the conflict in the Darfur region of Sudan where the government is accused of using militia death squads against its non-Arab population. In a bid to internationalise the campaign against the Sudan-linked companies, TIAACREF said last year that it had publicly endorsed the U.N.-sponsored Principles for Responsible Investment (UNPRI) and would urge its investor signatories, which represent a combined $2.5 trillion in assets under management, to join its Sudan campaign.

TIAACREF said the decision to sell shares in portfolio companies with ties to Sudan considered factors including 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. TIAACREF began efforts to lobby companies in Sudan in 2006 and prior to the latest blacklisting had targeted 22 companies, of which 10 had either discontinued operations in Sudan or committed to humanitarianinitiatives, such as improving education, health and water supplies. In December 2007, the US House of Representatives and the Senate unanimously passed the Sudan Accountability and Divestment Act, signed by President George Bush, which enabled states and institutions to legally divest from Sudan. Tens of US states and universities have already pulled money from the country in protest.