Fidelity declines to divest from Sudan

Jun 19, 2008 @ 10:32 am

By Sue Asci

Fidelity Investments of Boston said yesterday the firm would not divest from companies that do business in Sudan.

The fund firm issued a statement at a shareholders’ meeting in Boston at which the nonprofit advocacy group, Investors Against Genocide, raised the issue through shareholder proxy voting.

The non-binding resolution proposed by the activist group asked the boards of two Fidelity funds to establish a policy to screen out investments in companies that support the economy of Sudan, where genocide is occurring in the Darfur region.

In yesterday’s voting, the resolutions received the support of 28% of voting shareholders for Fidelity’s Magellan Fund and 27% of shareholders voting in the Growth Company Fund.

Fidelity acknowledged in its statement, posted on its website, that the firm does not offer funds that are “socially responsible.”

“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,” the firm said in the statement.

“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.”

“During this period [of shareholder voting], Fidelity has done nothing to leverage its large investments to engage with the companies that are underwriting this crime against humanity,” Susan Morgan, director of communications for Investors Against Genocide, said in a statement.

“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.”

Fidelity also halted the voting on some proposals yesterday because seven of the pending shareholder votes did not reach quorums.

Since March, shareholders have voted on the resolution for 12 different Fidelity funds. The resolution garnered the support of 20% to 31% of those voting, depending on the fund.

Fidelity had $1.6 trillion in assets under management as of May 31.

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