Genocide-free investing policy urged for Fidelity funds

Shareholders of 13 Fidelity funds will vote next week on a non-binding resolution that asks the funds' boards of trustees to establish a policy of so-called genocide-free investing.
JUL 09, 2009
Shareholders of 13 Fidelity funds will vote next week on a non-binding resolution that asks the funds' boards of trustees to establish a policy of so-called genocide-free investing. The resolution asks the boards to “institute procedures to prevent holding investments in companies that, in the judgment of the board, substantially contribute to genocide or crimes against humanity.” The resolution is part of a campaign coordinated by the Boston-based shareholder activist group Investors Against Genocide. The group has targeted Boston-based Fidelity in the past on this issue and is challenging the firm now because some of its funds have holdings in PetroChina, a Beijing-based oil company that does business in Sudan, where the government is implicated in genocidal violence in the Darfur region. Last year, similar resolutions garnered support from 20% to 31% of shareholders in 21 Fidelity funds, said Eric Cohen, chairman of Investors Against Genocide. A majority vote is needed to pass the resolution. “I wouldn't be surprised if we had very similar results within those kinds of ranges,” he said. “Anything above high single digits is a very significant message.” Fidelity is opposed to the resolution. “Fidelity seems to have decided they are not going to change their mind,” Mr. Cohen said. “It is astounding that they would oppose it in the face of millions of customers being upset with them [in the last vote].” Fidelity has posted a statement on its website that reads: “We are sensitive to the ongoing tragedy occurring in Darfur, and like others in the world we are repulsed by genocide and all other crimes against humanity. 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. This may be the most viable way to bring constructive influence on world issues.” Regarding any actions the firm has taken to engage problem companies, company spokesman Vin Loporchio said: “We communicate directly with companies and we don't generally comment on holdings or individual communications of that type.” Investors Against Genocide has encouraged shareholder action with other mutual fund firms as well. Just last week, however, shareholders of 21 funds at The Vanguard Group Inc. of Malvern, Pa. voted on a genocide resolution, with an average of 89% of shareholders voting against the proposal. Vanguard had adopted a procedure that requires “regular reporting on portfolio companies whose direct involvement in crimes against humanity or patterns of egregious abuses of human rights would warrant engagement or potential divestment.” The practice had been in place on an ad hoc basis and was formalized by the board of trustees, Vanguard reported in March. This spring, Investors Against Genocide withdrew its proposal from the proxy ballot for New York-based TIAA-CREF's shareholder meeting after the institution announced a strategy to engage companies involved with the government of Sudan.

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