The movement to cut off business ties with Myanmar (Burma) is accelerating, as concerned investors gear up to file shareholder resolutions this month asking companies to develop guidelines about their policies there.
So far, activist shareholders plan to file resolutions at Atlantic Richfield Co., Caterpillar Inc. and Unocal Corp., said Simon Billenness, research analyst at Franklin Research & Development Corp., who is coordinating the resolution activity.
Resolutions also will be filed at Interdigital Communication Corp. and United Technologies Corp. if sponsors can be found, he said.
At the same time, the state of Massachusetts; Alameda County, Calif.; and 14 cities, including New York and San Francisco, have passed ordinances limiting purchasing from companies dealing with Myanmar, which has come under fire for human rights violations.
Last month the Los Angeles City Council passed such an ordinance, and another is pending before the Seattle City Council. In April, the Clinton administration announced sanctions, banning all new U.S. investment in Myanmar.
But none of this activity has yet led to divestment by the pension funds for employees of those governmental units. And most pension fund executives who are weighing such actions are reluctant to discuss divestment. Any divestment that has occurred so far is taking place among university pension funds, where the movement started, just as it did with South Africa in 1986.
The movement's tactics are different from those used in South Africa, observed Mr. Billenness, whose Boston-based firm manages $500 million in socially responsible investments. "We have learned that selective purchasing and shareholder pressure can be more effective than pushing for withdrawal," he said.
"It makes a lot of sense to hang onto the stock of companies still in Burma and use it to pressure them (the companies). Divestment is largely a symbolic action. When consumers boycott a company or cities engage in selective purchasing, it hurts a company's bottom line much more than disinvestment would," he explained.
Tim Smith, executive director of the Interfaith Center on Corporate Responsibility, New York, agrees with the strategy, saying: "The sale of stock was more important with the South African movement. But with Burma, using it (stock) to file resolutions has more impact."
There have been pockets of selling activity, however. In May, the $280 million University of Wisconsin System Trust Funds, Madison, sold roughly $240,000 in Texaco Inc. stock, following months of protests by various student groups over Texaco's policies in Myanmar. Since then Texaco itself has pulled out of the country.
John Peck, a member of the university's Alliance for Democracy, a national grass-roots organization that challenges corporate power, said: "We're still pushing for socially responsible investment for the rest of the pension fund. As far as we know, they still hold a number of companies that do business in Burma. We had asked the regents to use their power to subscribe to a proxy service, and they haven't told us if they have done that, or if they have set up a socially responsible alternative fund."
Marcia Bromberg, vice president for finance at the Wisconsin system, said the pension fund does not review its accounts by country. However, it has instituted a policy to be more sensitive to social issues. In addition, it won't invest in companies that have discrimination policies or engage in environmental or social injustices. "We are now working with the IRRC (Investor Responsibility Research Center) to review our portfolio in light of some of the complaints. We have recently hired new managers so there will be changes," she said.
Eventually, the student activists want to move to the state level to force Wisconsin to adopt a selective purchasing policy, Mr. Peck said.
The City of Madison passed an ordinance on Myanmar two years ago, but there has been no follow-up with the city's pension fund yet, he said.
That appears to be the trend around the country. In those cities and universities that have banned purchasing from companies with interests in Myanmar, pension fund executives are either removing themselves from the movement or exploring the status of their holdings.
Typical is the city of Ann Arbor, Mich., where the City Council last year passed a resolution not to purchase supplies or services from companies doing business in Myanmar. At the same time, it recommended to the trustees of the City of Ann Arbor Employees' Retirement System that it divest in stocks with Myanmar connections.
"We're in the process of looking at our investments with our investment committee," said Robb Hubbs, administrator of the $350 million pension fund. He has heard from his money managers that certain of the large-capitalization companies in the pension fund's portfolio are doing business with Myanmar, but most of the smaller companies are not. The pension board will have to review the list and determine if selling those large-cap holdings would violate the board's fiduciary responsibility, Mr. Hubbs said.
In California, a coalition of student government organizations has asked the regents to influence the $27 billion University of California pension fund to sell off its stocks with ties in Myanmar. The fund owns stakes in Telefonaktiebolaget LM Ericsson and Procter & Gamble Co. - two companies still in Myanmar, said Dan Orzech, head of the Bay Area Burma Roundtable, which has organized boycotting and leafletting campaigns to pressure companies to leave Myanmar and the university to divest.