This week, millions of shareholders at Fidelity Investments voted on a proposal advanced by Investors Against Genocide that asked Fidelity to commit to avoiding investments in companies that, in their judgment, substantially contribute to genocide. Despite Fidelity’s active opposition to the proposal, affirmative votes were recorded for four funds, ranging between 18 percent and 25 percent. Nine additional funds did not reach quorum and so the voting will remain open for those funds until they meet again on August 14, 2009. Results this year were comparable to last year’s when 14 Fidelity funds recorded votes ranging from 20 percent to 31 percent in favor of the same proposal.
During voting last year, Investors Against Genocide repeatedly asked Fidelity to take a neutral position on the proposal so that the voting results would give a better indication of the opinion of Fidelity’s customers. Instead, the company chose to once again actively oppose the proposal, and in doing so they stacked the deck against it and skewed the results. Unlike a political election, where the will and sentiment of the people is easily discernible, the shareholder voting process is heavily weighted in the mutual fund company’s favor. That’s because most ordinary investors either automatically vote across the board with management’s recommendations or do not bother to vote at all. Without Fidelity’s opposition, these numbers would undoubtedly have been even higher.
A 2007 study by KRC Research demonstrated that Americans are overwhelmingly opposed to being financially connected to genocide. In the study, 71 percent of respondents said companies should take extreme cases of human rights abuses, such as genocide, into account rather than base investment decisions solely on economic criteria. In that same study, 77 percent said they would switch to a different investment company if they learned that those managing their funds had significant investments in firms that were active in Sudan.
Fidelity’s lack of accountability stands in stark contrast to the recent, clear, public statements by TIAA-CREF to take strong action against problem companies. On March 26, TIAA-CREF announced its decision to vigorously engage problem companies partnering with the Government of Sudan and to divest from those companies if they continue to substantially contribute to genocide or crimes against humanity. Based on this policy, which applies to the ongoing genocide in Darfur as well as to future genocides, and is a clear victory for genocide-free investing, Investors Against Genocide withdrew our shareholder proposal from the proxy ballot for TIAA-CREF’s July shareholders meeting.
It is appalling that Fidelity is so determined to maintain its flexibility to invest in genocide that it chooses to alienate millions of its own customers who do not want their hard-earned savings to have any connection to genocide. In a recent column in the Wall Street Journal, David Weidner minced no words in calling Fidelity’s policy “a bunch of baloney.” As Weidner aptly states:
If we accept the idea that business should always turn a blind eye to reality, then we accept that there’s nothing really more important than money, and if that’s the case, we’re not much better than the criminals of this world.
The author is Director of Communications at Investors Against Genocide and Executive Director of Pax Communications.