April 17, 2009
Vanguard Funds Agrees to Proxy Vote on Investing in Companies Complicit in Darfur Genocide
by Robert Kropp
Shareowner action led by Investors Against Genocide proceeds to proxy ballot after Vanguard is
found to have increased its holdings in PetroChina.
A shareowner proposal that Vanguard Funds institute procedures to prevent holding investments in
companies that contribute to genocide or crimes against humanity has been included in the proxy
ballots mailed to shareowners of record of thirty of Vanguard's funds, with combined net assets of
The shareowner action was coordinated by
Investors Against Genocide, a
non-profit organization working to change investing strategies by investment firms so as to avoid
complicity in genocide. Proxy voting for genocide-free investing at Vanguard is scheduled for July
In its Securities and Exchange Commission (SEC) filing, the Vanguard trustees announced
their opposition to the proposal, stating that Vanguard has been directed by them "to implement a
formal procedure for regular reporting to the trustees on portfolio companies whose direct
involvement in crimes against humanity or patterns of egregious abuses of human rights would
warrant engagement or potential divestment."
However, Investors Against Genocide noted
that during the first quarter of 2009, Vanguard increased its holdings of PetroChina and the other
large oil industry partners of the government of Sudan which help fund the genocide in Darfur.
Furthermore, Vanguard has declined to make public the policy adopted by its Board of Trustees.
Investors Against Genocide found support for its concerns regarding the reputational risks of
funds that invest in companies which may be complicit in genocide in a 2007 report from KRC Research, a communications research
firm. In its report, KRC found that
71% of Americans believe that companies should take human rights abuses such as genocide into
account when investing overseas.
Furthermore, 77% of respondents said they would switch
their investments to a different company if they learned that those managing their funds had
significant investments in firms that were active in Sudan, and 84% said they would withdraw their
investments from American companies that do business with companies that directly or indirectly
According to Investors Against Genocide, the government of Sudan
uses as much as 70% of its oil revenue to provide arms and funding for genocide in Darfur, where
hundreds of thousands have been killed and 2.7 million people have been driven from their homes.
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