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US Jurisdiction Applies Divestment Tools to Reverse Conflict in Sudan


The State of New York has divested its $86.2 million in retirement fund holdings from companies doing business with Sudan. The action, which is also directed at companies with commercial ties to Iran, was undertaken by New York State Comptroller Thomas P. DiNapoli to protest the conflict in Sudan’s western Darfur region, which the US government and others have characterized as genocidal.

Since 2003,the Darfur conflict has resulted in more than 300-thousand deaths and the displacement of between two and three million Sudanese civilians.

Director of the Conflict Risk Network (CRN) Melany Grout says the move sends a powerful message to encourage responsible corporate behavior and persuade other major companies and institutions to take stands that call attention to wrongdoing by Khartoum and other regimes against their own citizens.

“The message it sends to them is that there is a price to be paid if they fail to address stakeholder concerns -- the comptroller’s concerns about risk and connections to conflict. So I think divestment and the threat of divestment should encourage these companies to come to the table to discuss steps they can take,” she said.

The divestment follows two years of research by Comptroller DiNapoli into the risks and consequences of allowing companies, primarily engaged in oil and petroleum-related industries, to continue to operate in conflict zones without recognizing what the Conflict Risk Network advises are the practical and moral consequences: their impact on revenue streams, environmental damage, human rights concerns, and the additional instability they promote in such places.

Working since 2007 with the Sudan Divestment Task Force and its Conflict Risk Network offshoot, which was launched to succeed the task force in June, New York began a risk mitigation program for investments in companies doing business in Sudan. Grout says the divestment process undertaken by state pension funds, college endowments, foundations, and for-profit institutional investors serves to prompt corporations to change their traditional ways of doing business.

“Our organization since 2006 has been working to engage with companies that are operating in Sudan. The threat of divestment, in fact, which has been put in place through legislative means in 20-some states in the US and also implemented to a certain degree on the federal level, has actually brought some of them to the table to talk proactively about steps they can take. And with a couple of companies speaking with government officials from the government of Sudan, it has been effective as a tool in addition to taking other steps on the ground,” she said.

Grout suggests that while those divesting bodies continue to engage with certain companies, the divestment process can encourage these companies to continue dialogue and hopefully take steps to address their role in conflict on the ground.

“Over time, as more and more of them take positive steps, we’ll see a bigger impact. We have had members of our organization here meet with high-level US administration officials who have met with high-level Sudanese government officials. And they’ve said that literally every Sudanese government official brought up the issue of divestment and the pressure on companies. So it’s being felt, and it’s a big issue there. And we’re going to continue to work with these companies to leverage their sphere of influence there,” she observed.

The Washington, D.C.-based Conflict Risk Network and its Sudan Divestment Task Force predecessor (which Grout says was more limited in scope) are projects of the Genocide Intervention Network (GI-NET). With 20 founding members, the groups have engaged between 90 and 100 companies included in the network’s Sudan Company Report. In the case of New York State, CRN director Melany Grout says the door has opened up new opportunities to make more companies adopt a morally responsible approach to the conflict and play an important role in ending it.

“What we’ve been able to bring to their attention, I think, has enabled them to make the decisions that they announced, which was to withdraw from a certain number of companies and to also continue engagement and hold on to a number of companies that they believe may have a positive response. So I think that the important picture here is that the information we’ve provided has allowed the comptroller to take a look at his investments and then really be able to leverage its own influence against these companies,” she said.

The Conflict Risk Network counts 13 multinational corporations among businesses which have been convinced to take steps to address the humanitarian situation and reevaluate their operations on the ground in Sudan because of the Darfur crisis. Some US corporations have gone as far as speaking directly with Sudanese officials about the problems raised by having to operate under the continuing perilous conditions.

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