An increasing number of universities are responding to the genocide in Darfur by ordering the divestment of their endowment assets from companies doing business in Sudan, but experts question whether this initiative will force the same social and political upheaval the South African divestment campaigns did in the 1980s. “Half the companies in the [Standard & Poor’s 500] were affected by the South African divestment,” said Adam Sterling, national policy director for the Sudan Divestment Task Force, an organization that advocates divestment by universities, asset managers, cities and states. Unfortunately, said Adam Pener, chief operating officer at Washington, D.C.-based research firm Conflict Securities Advisory Group, the companies being blacklisted because of their ties to Sudan are largely unknown and the impact is thus not as pronounced.
The University of Wisconsin System and Cornell University were the latest to announce measures to divest from companies operating in the region in August. Other major universities and colleges that have divested over the past year include Stanford University, Yale University, the University of California, Brown University, Smith College and Harvard University. About 10 to 12 states are planning to introduce legislation in the fall and spring addressing the Sudanese divestment campaign, according to Sterling.
Cornell is pulling out $11 million in direct investments from companies that are currently operating in Sudan and sending a letter to roughly 100 managers that operate commingled funds, informing them of its new policy. “It’s a significant number of managers that we have to contact,” said Stephen Golding, executive v.p. for finance and administration. The $5.2 billion University of California is awaiting state indemnification against any possible claims against UC regents resulting from the divestment of two-thirds of its shares in nine companies, said Trey Davis, spokesman. Once approved, the university will begin divesting “in an orderly fashion over a period not to exceed 18 months,” he added. The school has also written to managers whose commingled funds it uses encouraging them to divest.
Sterling noted that the majority of investments by university endowments in companies with Sudanese ties are being done through commingled accounts, so the schools send letters encouraging managers to pull investments out of these companies, but it’s difficult to know whether the managers fully implement instructions. “It’s largely symbolic,” he said. A hard-line divestment plan might be too complicated for endowments, because “it would require them to pull out of the mutual fund completely.”