Divest Selectively From Sudan

Since we, the Harvard Darfur Action Group, sent our letter to Interim President Derek C. Bok on March 8, some people have asked, “Why do we have yet another divestment campaign? Didn’t Harvard divest from Sudan already?” The answer is not yet. Harvard has only divested its direct holdings in two Chinese oil companies: Petrochina and Sinopec. The focus of our campaign, however, is not Harvard’s indirect holdings in these companies. While we do want Harvard to divest from stocks, exchange traded funds, index funds, and other financial holdings when reasonable alternatives exist, the primary focus of our campaign is that Harvard divest from the worst offenders operating in the Sudan.

Take Petronas, a Malaysian oil company in which Harvard has holdings: It has already completed a $1.2 billion oil development project, and since the start of the genocide, it has announced that it is constructing a $1 billion oil refining facility in Port Sudan, set to be completed by 2009. Worst of all, Petronas’ fuel is used for government military aircraft, which then bomb villages in Darfur.

Or take Schlumberger, a French oil field services company in which Harvard has holdings: CEO Andrew Gould came to speak at Harvard last week and said, “A presence in any country is characterized by a long-term commitment regardless of the regime.” Including genocidal dictators. Schlumberger’s presence in Sudan involves providing services to the three largest oil players in the country—China National Petroleum Company (parent company of Petrochina), the Oil and Natural Gas Company of India, and Petronas. Gould told me that his company pays $13.2 million every year to the Sudanese government and Sudan’s former finance minister Abda Yahia el-Mahdi has said that more than 70 percent of the government’s share of oil profits is spent on defense. Though it’s difficult to say with certainty without accounting records, if this proportion holds true for Schlumberger’s payments, almost $10 million goes from Schlumberger to a genocidal army.

These are two of the companies from which we want Harvard to divest. Our hope is that divestment will force the companies to change their behavior, and once they do so, we would gladly re-invest in them. We ask Harvard to divest only when a company meets four stringent criteria: 1) It has a business relationship with the Sudanese government or is involved in a government-created project; 2) It fails to benefit civilians outside of the government; 3) It fails to implement a substantial corporate governance policy regarding the crisis in Darfur; and 4) It fails to respond to attempts at shareholder engagement.

This is a far cry from the “blanket policy” of which the targeted divestment campaign has been accused. We have never advocated for “total divestment.” We recognize that it would be both impossible and harmful to the people of Sudan. Our policy is narrowly tailored to ensure that only companies that are funding the genocide and doing nothing to stop it—just like Petrochina and Sinopec—are targeted. Harvard has already decided two companies of this type merit divestment for their role in the genocide; we are merely asking them to extend this policy to other similar companies. We agree that extensive research and shareholder engagement should occur before any company is targeted for divestment, but campus advocacy need not occur every time.

Let’s imagine that Harvard decided to divest from every offending oil company in the Sudan within a few years of its launching operations. Given that it costs hundreds of millions of dollars to begin drilling, such large sunk costs would make the company loathe to pull out. In contrast, if oil companies knew before entering or expanding operations that doing so would make them subject to divestment, they might behave differently. Only a targeted divestment policy, by defining the actions that warrant divestment, would effectively deter an oil company from entering the country or proactively affect its behavior if it did decide to enter the country.

Most importantly, our strategy is working: The French oil company Total has announced that it intends to start drilling for oil in the Sudan. Fearing divestment, its executives met with the Sudan Divestment Task Force, creators of the targeted divestment plan. To ensure the support of its investors, Total informed the Task Force about their plans for implementing a human rights policy developed in conjunction with several local stakeholders in Sudan and the European Coalition on Oil in Sudan. As such, they are currently not targeted for divestment, and, providing they keep their promises, never will be.

Only a targeted divestment policy can achieve successes like this; a company-by-company approach, which only pursues companies after they have done wrong, simply cannot. Fifty student groups, 1,285 Harvard affiliates, and 33 faculty, instructors, and fellows—including Stanley Hoffman, Martha Minow, and Pulitzer Prize-winner Samantha Power—have called for targeted divestment. We hope that the Corporation Committee on Shareholder Responsibility will adopt a targeted divestment policy as a step toward changing corporate behavior in the Sudan.

Peter N. Ganong ’09 is an economics and math concentrator in Adams House. He is a member of the Harvard Darfur Action Group.