Monday, November 14, 2005

Dartmouth Divests, Sort Of

From this morning's press release, in the wake of a Board of Trustees meeting over the weekend (with my emphasis) added:

Based on recommendations by the board's Investment Committee and the College's Advisory Committee on Investor Responsibility (ACIR), the trustees voted to direct the College's Investment Office to avoid investments in six companies deemed to be directly complicit in what the U.S. Congress and Department of State have determined to be genocide in the Darfur region of Sudan. As a result, Dartmouth will avoid investing in ABB Ltd.; Greater Nile Petroleum Operating Company, Ltd.; PetroChina Company, Ltd.; Sudanese White Nile Petroleum Company; Petroliam Nasional Bhd (Petronas); and Sinopec Corp., all of which are involved in oil drilling or oilfield services in Sudan. The College does not currently hold stock in any of these companies.

"Divestment and screening are steps that should be taken infrequently and only in the most compelling circumstances," President James Wright said. "This decision reflects Dartmouth's concern about the Sudanese government's campaign of atrocities against civilians, which Congress and the State Department have described as genocide. This campaign has created a humanitarian crisis of major proportions in Darfur and Chad."

Board Chair William H. Neukom thanked the ACIR and the students involved in the Darfur Action Group for bringing the issue to the board's attention, and for their work in researching and analyzing the Darfur crisis and the activities of companies doing business in Sudan. Neukom said the board encouraged the administration to support additional educational programs concerning the Darfur situation.
So divestment apparently didn't require the College to actually sell a stock. That may be a first, but it does abide by the claim I made in an earlier post: for divestment to have any impact through the capital markets, it has to focus on new rather than old capital. In that post, I also suggested that the critical element in using markets to punish the offenders is to work through the product markets--to boycott the products rather than merely ownership of the assets.

It will be interesting to see where the divestment movement on campus goes from here.

See also the article in today's Dartmouth and some comments over at Joe's Dartblog.

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Niral Shah said...

To be a little more specific, the trustees followed the ACIR recommendation to 'divest' from a certain category of companies: those whose operations directly and substantially facilitate Khartoum's ability to carry out genocide. As of this August, ACIR/Investment Office research put these 6 companies in that category - the list could grow or shrink. The directive was to neither retain nor acquire stock - the fact that we didn't divest wasn't an effort to dodge a difficult decision. It more likely means our investors aren't huge fans of emerging market funds. We were invested in Petrochina as recently as Fall '04, if not more recently, though, and its possible we would have been again in the future.
This is a step ahead of Stanford and Harvard, who divested from certain companies, but are now not restricted from acquiring stock in other, similarly implicated corporations

Niral Shah said...

A word on the significance of the decision, and I'll leave your comments section alone.
The main objective is to keep Dartmouth's hands clean in this genocide.
The other large effect is the symbolic significance that enables other schools to act. Following Dartmouth's decision, the UC Regents yesterday agreed to research the feasability of divestment for its $65 billion endowment. Brown and Columbia are having similar deliberations today.
As for the economics, I'm not aware of an effective method of boycotting individual oil companies, especially when a large amount of exports go to China.
If a large number of institutions divest, and therefore divest from these emerging market index funds, and that leads to the creation of Sudan-free funds (like the Tobacco-free funds that exist today), could this have a palpable effect on investments in Sudan?

Arun Khanna said...

Major countries should contribute towards a U.N. UAV (unmanned aerial vehicles) force that can photograph atrocities in real time. UAV have the key advantage that unlike western peacekeeping troops, their deployment will be uncontroversial.
Only if Darfur hits prime time news will we see any real action to stop atrocities, perhaps through an embargo on Sudan. Frankly, disinvestment is unlikely to have any real impact on Sudan.