A new quantitative analysis from a US-based anti-genocide human rights group has found that corporations targeted for divestment in Sudan collectively underperformed their peer group over time. In Washington, the Genocide Information Network this week released an extensive report examining the historical and predicted financial performance of companies pegged as what it calls “highest offenders” by the network’s Sudan Divestment Task Force. It says that this economic forecast can help companies and investors determine if it’s in their interest to conduct business with a regime that continues to flout international calls to end attacks and atrocities against its own civilian population in the western Darfur region. Advocacy analyst Nina McMurry says that targeting companies working with Khartoum’s oil industry to divest can have a notable impact on Sudan’s most profitable sector.
“Sudan continues to grow its oil industry. That has been the most significant portion now making up about 90 percent of its export revenue. And Sudan is completely dependent on foreign companies to run its oil industry. Mostly, we’re looking at Chinese, Malaysian, and Indian companies. And they’ve been able to resist western sanctions because of the willingness of Asian companies to come in and invest,” she said
The Sudan Peer Performance Analysis reports that in general, companies targeted for divestment in Sudan turned in about 57 percent lower profitability over one year and roughly 20 percent over three years compared to their international competitors. Considering averages, the “highest offenders” did worse than their peer group average by about 46 percent over one year, 22 percent over three years, and 7 percent over five years. And the “highest offenders” top three performers trailed their peer group counterparts by 141 percent over one year, 53 percent over three years, and 27 percent over five years. Divestment Task Force analyst McMurry says that the poor showing corresponds to a pattern established since the rise of the Sudan divestment movement, which started about three years ago.
“There are a number of significant risk factors associated with companies operating in Sudan that could potentially have financial complications. It’s possible that the divestment movement is a factor. Also, things like the recent Sudan Accountability and Divestment Act, which was signed by President Bush in December of ’07, which authorizes state divestment and also prohibits those companies from contracting with the federal government. There are also risks associated with operations in these sectors in Sudan, including political instability, which has had some effect recently. Actually, four oil workers were recently kidnapped in Sudan and there’ve been several threats of that sort of thing. That’s directly tied to the political situation in the country. And then there’s the threat of sanctions based on the Khartoum government’s policies in Darfur and with regard to the north-south conflict in Sudan as well,” she noted.
The Sudan Divestment Task Force, rates and analyzes stocks on its website (http://www.sudandivestment.org) to help companies and investors evaluate the financial costs of doing business with Sudan. McMurry says that the new study, as well as other task force resources can help individuals and companies decide if it’s realistic for them to pull out of Sudan-related contacts.
"When investors are considering whether they want to adopt a Sudan-related investment policy, the study shows that they can do that in a responsible way because they have plenty of alternatives that perform just as well, if not better than the companies that are reporting the regime in Sudan,” she said.
Even if a choice to refrain from working with Khartoum is based entirely on moral grounds, McMurry argues, the Divestment Task Force analysis shows clear evidence that pulling out is the wisest course.
“According to fiduciary standards that public funds and others follow, they shouldn’t be making decisions purely for moral reasons, but they can if there are equivalent alternatives,” she notes.
The three-year-old divestment campaign received a boost this week from US presidential candidates, Barack Obama, Hillary Clinton, and John McCain. The three US senators running to succeed President George Bush issued a historic joint statement voicing their united resolve to denounce and end the genocide being carried out with the support of the Khartoum government. The statement, which appeared in a New York Times advertisement, said, ”We are taking the uncommon step of issuing a joint statement about an issue. After more than five years of genocide, the Sudanese government and its proxies continue to commit atrocities against civilians in Darfur. This is unacceptable to the American people and to the world community.” Task force analyst Nina McMurry said the candidates show of unity, in which they said, “Even as we campaign for the presidency, we will use our standing as Senators to press for the steps needed to ensure that the United States honors, in practice and in deed, its commitment to the cause of peace and protection of Darfur’s innocent citizenry.”