The issue of divestment from Sudan in response to the government's prosecution of a genocide in the country's Western Darfur region has gained national attention, especially as many states have passed or are considering divestment legislation targeted at state pension funds. In California, a divestment bill recently passed the California Assembly by a margin of 72-4 and now stands in the state Senate (Pensions & Investments, At Deadline, June 12).
This bill, AB 2941, differs significantly from initial divestiture bills passed by the states of New Jersey and Illinois. Written in close consultation with both California Public Employees' Retirement System and California State Teachers' Retirement System, AB 2941 follows a model of "targeted" divestment first adopted by the University of California board of regents.
This model is limited only to those companies that provide significant revenue to the government of Sudan, impart minimal benefit to those outside of government circles, and have expressed no significant corporate governance policy regarding the situation in Sudan. Additionally, the bill limits the type of investments targeted and gives fiduciaries the option of avoiding divestment from particular companies (or types of investments) if it can be rigorously demonstrated that no financially equivalent alternative is available. Finally, the bill requires that potentially offending companies be engaged before divestment is mandated. Only those companies that fail to demonstrate moves towards substantial action within the short engagement period (three months) will be targets for divestment. Once a company is deemed unengageable, CalPERS and CalSTRS are given 18 months to complete the divestment.
It was our hope and intent to make AB 2941 a compromise between the need for substantive action and the equally important desire to avoid unintended harms to both innocent Sudanese citizens and to portfolio returns. This bill was developed over many months and in close consultation with numerous parties, including foreign policy experts, asset managers, and CalPERS/CalSTRS officials. We encourage those critical of Sudan divestment to read the bill and offer suggestions. The bill can be read at: www.leginfo.ca.gov/pub/bill/asm/ab_2901-2950/ab_2941_bill_20060526_amended_asm.pdf.
national policy director
Sudan Divestment Task Force