Published by Social Funds.
by Robert Kropp
A first-time resolution requesting that the company institute procedures to prevent investment in companies that contribute to genocide, submitted by Investors Against Genocide, wins 7.69% of shareowners’ votes.
SocialFunds.com — Yesterday’s annual meeting of JPMorgan Chase, held in Columbus, Ohio, had its share of drama. Security was tight as more than a thousand protestors demonstrated against the bank’s foreclosure practices, and a shareowner proposal filed by the New York City Pension Funds, calling on JPMorgan to amend its foreclosure policies, received 6.4% of shareowner votes. The bank has been ordered by federal regulators to review its policies.
A second shareowner proposal, requesting that JPMorgan “institute transparent procedures to prevent holding investments in companies that, in management’s judgment, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights,” received widespread attention before the meeting when Investors Against Genocide (IAG) took out a full-page ad in the May 11th edition of the Wall Street Journal which asked, “Are your investments tied to genocide?”
The first-time resolution won 7.69% of shareowners’ votes. According to Eric Cohen, co-founder and Chairperson of IAG, JPMorgan owns $1.3 billion in PetroChina, which, the proposal stated, “is internationally recognized as the worst offender helping fund the Government of Sudan’s genocide in Darfur.”
Described by the US government as the first genocide of the 21st century, the government of Sudan’s actions in the Darfur region has led to the killing of hundreds of thousands, as well as long-term displacement into camps of another three million people.
According to a 2010 study by KRC Research, 88% of respondents want their mutual funds to be genocide-free, and 84% said they would “withdraw their investments from American companies that do business with companies that directly or indirectly support genocide.”
Referring to the vote, William Rosenfeld, co-founder and Director of Strategic Initiatives for IAG, told SocialFunds.com, “We didn’t expect a perfect result. This is the first time we’ve gone against a corporation, and the institutional ownership of JPMorgan is 74%. The institutions are conservative and inclined to support management, particularly on social issues. We realized it was an uphill battle.”
The resolution did win far more than the three percent required by the Securities and Exchange Commission (SEC) to place it on the company’s proxy ballot in 2012. Rosenfeld said, “We intend to pursue this aggressively. We’ll be back at JPMorgan next year, but we also hope that they’ll talk to us during the year, and that they’ll reconsider.”
And Cohen told SocialFunds.com in March, “We’ll now have an annual opportunity to raise awareness of the problem.”
“This is a company that has signed onto many responsible investment initiatives, including the UN Principles for Responsible Investment (PRI),” Cohen said at the time. “Divestment fits with the kind of thing they espouse, but until now they’ve stopped short of drawing the line on investing in genocide.”
Originally, JPMorgan sought to have the resolution excluded from the proxy ballot, arguing that it was “materially false and misleading.” However, in March, the SEC informed the company that its effort to exclude the proposal had been turned down.
In his statement at the annual meeting, Rosenfeld said, “Many would suppose that 66 years after the end of the Holocaust and 17 years after the genocide in Rwanda, companies that value the public trust would avoid connections to genocide.”
However, he continued, “Ordinary individuals investing with JPMorgan may inadvertently invest in companies funding genocide.”
“Why does JPMorgan oppose this proposal?” Rosenfeld asked. “The company’s proxy says ‘the Firm’s existing policies and procedures appropriately address these issues.’ Do they? What is ‘appropriate’ about being one of the largest investors in a company connected to genocide? Ethical investing may mean different things to different people, but surely avoiding investments tied to genocide is a minimum standard we can all approve.”
Rosenfeld told SocialFunds.com that he followed his statement at the meeting with a question for the Board.
“I asked, Given the discussions you’ve had and the publicity around genocide-free investing, does the board understand that PetroChina plays a major role in supporting the genocide in Darfur?” he said. “If PetroChina doesn’t trigger divestment, are there any human rights issues that will?”
“I asked my question and there was no reply,” Rosenfeld said. “Most people made statements, but even when they asked questions, they didn’t get answers.”
“When we submitted this proposal, we had no idea about the situation in Libya,” he observed. “If Qaddafi is charged with crimes against humanity, wouldn’t shareholders want to know if JPMorgan invested in companies that contributed to those crimes? I think they would want to know that JPMorgan is using every kind of leverage to change the behavior of that company. And that it wouldn’t wait eight years to do it, like it has in Darfur.”
“It’s not strictly about Darfur,” Rosenfeld continued. “It’s trying to establish a principle, using Darfur as a bright line example. If you have a policy but invest in PetroChina, then your policy isn’t working.”