One component missing from the Illinois bill and others is a list of companies doing business in Sudan, making it difficult for public pension funds to discern what kind of financial impact divestment would have on their returns and risk profile.
However, several major public companies with financial ties to Sudan have emerged as legislators wage their respective campaigns. In addition to PetroChina, DivestSudan.org list Siemens AG, Alcatel SA, AO Taftnet and ABB Ltd.
State Sen. Jacqueline Collins, who sponsored the Illinois bill, points to the U.S. Treasury's Office of Foreign Assets Control as one source of information on companies doing business in terrorist-sponsoring countries. She also makes a reference to "an independent research firm specializing in global security risk."
Adrian Guerrero, legislative analyst for the Illinois Senate Financial Institutions Committee, said that refers to Conflict Securities Advisory Group Inc., Washington.
CSAG produces a proprietary list of companies through its Global Security Risk Monitor that asset management firms and pension funds can buy for $15,000 a year. The risk monitor identifies about 400 companies doing business in terror-sponsoring states. A list solely of companies doing business in Sudan is in the works for a price tag of $6,000.
But many pension funds are not sold on subscribing to a service. "We think (supplying the list) is a federal function," said John Day, spokesman the $33.5 billion Illinois State Teachers' Retirement System, Springfield.
Similar debates took place in the mid-'80s when state legislators led a divestment battle to promote the idea as a way of fighting the apartheid regime in South Africa. While U.S. companies are not as strongly linked to Sudan as they were to South Africa, the episode does offer a small window into what public funds face in selling off holdings.
Wilshire Associates Inc., Santa Monica, Calif., did a study in 1991 estimating it cost its client, the California Public Employees' Retirement System, Sacramento, about $590 million to divest stocks of companies doing business in South Africa.
William Atwood, executive director of the $10.6 billion Illinois State Board of Investment, Chicago, also pointed to opportunity costs. The Illinois bill provides pension funds about two years to divest.
Among the five companies listed on the DivestSudan.org website, ISBI currently holds 110,682 shares of ABB Ltd., valued at $703,748, Mr. Atwood said. ISBI has not performed a review to examine the full extent to which it holds entities that would be forbidden under the state's pending legislation.
The Illinois bill is "fairly broad, and the processing of identifying such publicly traded companies that conduct business in Sudan will be a fairly onerous project and we will not undertake to do that until we know what the law finally is," Mr. Atwood said.
Meanwhile, the CalPERS board will take a position at its meeting on May 16 on Assembly Concurrent Resolution 11, which encourages the $181.9 billion CalPERS and the $125 billion California State Teachers Retirement System to avoid investing in global corporations doing business in Sudan. The recommendation on the table calls for CalPERS' board to take a "neutral" stance, according to the agenda.
The CalSTRS board is expected to take a position at its June 2 meeting, said Sherry Reser, spokeswoman. ACR 11 passed the state Assembly in mid-April, and the proposal is awaiting hearing in the Senate Committee on Public Employment and Retirement.
In Texas, there are two bills in committee, waiting to be sent to the House floor for a vote. HCR 143, which encourages divestment, is expected to be sent soon. The second bill prohibits state pension funds from investing in companies doing business in Sudan.
New York's bill was referred to the Assembly's Committee on Governmental Employees in March. In New Jersey, a divestiture bill passed the state assembly Jan. 24 and was been in a Senate committee since.
A measure in Maryland requiring the state treasurer to make deposits in financial institutions that certified they had no direct loans or knowledge of indirect loans to a governmental unit or national corporate in Sudan was rejected earlier this spring.
Overall, the proposals "require public pension systems to be thinking about this issue, even if their state legislatures are not passing laws," said Jan Fetter-Degges, senior research analyst at the Investor Responsibility Research Center.
A study released last September from Conflict Securities Advisory Group and the Center for Security Policy, Washington, found that 86 public pension funds invested a combined $91 billion in companies doing business in Sudan. The findings were based on portfolio data gathered by the center, which was run against CSAG's Global Security Risk Monitor, which identifies any company doing business in a terror-sponsoring state.
Said Illinois Teachers' Mr. Day, "This isn't about our support about the goings-on in Sudan. But it's everything about our obligation to our plan members and their beneficiaries."