Despite company’s effort to suppress vote, shareholders will be heard on genocide-free investing

JANUARY 9, 2014 – Today, the Securities and Exchange Commission made public a rejection of the attempt by Franklin Resources, parent company of Franklin Templeton mutual funds, to suppress a genocide-free investing shareholder proposal from its proxy ballot this year. The proposal, coordinated by Investors Against Genocide, requests “that the Board institute transparent procedures to avoid holding or recommending investments in companies that, in management’s judgment, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights.”

The Securities and Exchange Commission (SEC) ruled against all five bases for exclusion argued by Franklin Resources. The SEC stated that it was “unable to concur” with Franklin Resources on each of its five arguments..

On two of those arguments, the SEC further elaborated. It stated, “In our view, the proposal focuses on the significant policy issue of human rights and does not seek to micromanage the company.” It also stated, “Based on the information you have presented, it appears that Franklin’s policies, practices, and procedures do not compare favorably with the guidelines of the proposal and that Franklin has not, therefore, substantially implemented the proposal.”

“We are gratified that the SEC has upheld shareholders’ right to vote on the important social issue of investments tied to genocide,” states Eric Cohen, chairperson of Investors Against Genocide. “Americans, once they become aware of the problem, do not want their pensions and family savings connected to genocide. Although financial institutions may oppose it, ordinary investors who see the proposal will vote their values and support genocide-free investing.”

According to a market research study conducted by KRC Research in 2010, 88% of Americans would like their mutual funds to be genocide-free.

Shareholders approved a similar genocide-free investing proposal at the ING Emerging Countries Fund in June 2012 by a wide margin with 59.8% of votes in favor of the proposal and only 10.7% opposed.

An increasing number of institutions have made the decision to vote in support of genocide-free investing. For example, votes on genocide-free investing at JPMorgan Chase, have drawn support from T. Rowe Price, CalPERS, CalSTRS, Connecticut State Pension, Florida State Board of Administration, New York State Pension, NYCERS, Ohio State Teachers Retirement System, AFSCME, and Christian Brothers Investment Services, among many others.

A US SIF report, “2012 Report on Sustainable and Responsible Investing Trends in the United States,” supports the importance of Sudan-related investment policies as a key shareholder concern. Most strikingly, the report found that Sudan is the top socially responsible consideration for institutional investors.

Franklin Resources (NYSE:BEN) owned 1,470,026,753 shares of PetroChina, as of December 31, 2012. That holding amounted to 7% of the shares outstanding of PetroChina, a company widely recognized as contributing to the genocide in Sudan. Currently, half a million people in the South Kordofan and Blue Nile regions of Sudan are facing relentless aerial attacks, violent displacement, and starvation due to the Sudanese government’s ongoing military assaults. Ongoing government-sponsored genocide in Sudan has spanned more than two decades and resulted in the death of over 2.5 million innocent civilians.

Investors Against Genocide withdrew its shareholder proposal at TIAA-CREF when it adopted a public policy against investments tied to genocide. TIAA-CREF subsequently divested holdings in oil companies helping to support the genocide in Darfur, Sudan. American Funds divested its holdings in PetroChina following a well-publicized shareholder vote on genocide-free investing.

PDF of press release here.