Don't Trust Vanguard: Vote For Genocide-free Investing

For the vast number of people who feel it is unethical to help fund genocide, the decision to vote in favor of the Vanguard shareholder proposal is an easy one.
This post was published on the now-closed HuffPost Contributor platform. Contributors control their own work and posted freely to our site. If you need to flag this entry as abusive, send us an email.

This week, millions of Vanguard customers will open their mail or email and be presented with a unique opportunity to vote on an important shareholder proposal. Question 3 on their proxy ballot asks if they want their personal savings to be invested by Vanguard in companies that substantially contribute to genocide or crimes against humanity.

It's not every day that proxy materials contain a question of such broad social importance. So the first decision Vanguard customers need to make is whether they will take the time to vote at all rather than simply throw away the voting materials as many people often do. It's very easy to vote online or through in the mail.

Next, Vanguard customers must decide their position on Question 3. For the vast number of people who feel it is unethical to help fund genocide, the decision to vote in favor of the shareholder proposal is an easy one.

However, voters may be confused by Vanguard's statement of opposition which tells its customers that there is no need to vote for Question 3 because Vanguard already has in place a policy which is "substantially identical." In the statement, Vanguard assures its customers that the proposal "calls for procedures that duplicate existing practices and procedures."

However, Vanguard's recent track record and statements tell a different story. Most concerning, Vanguard's SEC filing on March 31 showed that, in the most recent quarter reported, the company increased its holdings of PetroChina (NYSE: PTR) and the other large oil industry partners of the government of Sudan which help fund the genocide in Darfur. Further, in an interview with Bloomberg News, Vanguard spokesperson John Woerth said that no Vanguard fund had yet divested a holding because of concerns about rights abuses.

Vanguard has so far declined to make public the policy adopted by its funds' Board of Trustees, the criteria they use for judging companies, the names of companies about which it has concerns, or how it intends to implement the policy with problem companies. For the millions of Americans who are Vanguard customers and do not want their savings or pension funds connected to genocide, Vanguard provides no evidence of positive action and no transparency about its approach.

For these reasons, the recently updated Vanguard policy appears to be substantially different than the genocide-free investing proposal on the ballot.

The submissions at Vanguard are part of a broad campaign of shareholder action coordinated by Investors Against Genocide. The proposal is also expected to be on the ballot in early August for The Investment Company of America, a $53 billion fund, from American Funds, with more than 4 million shareholders.

Over the last several years, public support against investing in the genocide in Sudan has continued to grow, with the Sudan Accountability and Divestment Act passing both Houses of Congress unanimously, and 27 states and 61 colleges supporting Sudan divestment.

The government of Sudan has continued to pursue genocide in Darfur for over six years, using as much as 70% of its oil revenue to provide arms and funding for the genocide, rather than economic development for the poor people of Sudan.

Although federal law prevents most US companies from operating in Sudan, American financial institutions, notably mutual fund companies, are major investors in the Chinese, Indian, and Malaysian oil companies involved in Sudan which are helping to fund this genocide. As a result, ordinary investors, through their mutual funds, family savings, and pension plans entrusted to these financial institutions are inadvertently investing in genocide.

Starting this week and through July 2, when the Vanguard shareholders meeting will take place, Vanguard customers have a historic opportunity to tell the company to stop investing their family savings in companies that substantially contribute to genocide. Let's hope customers vote their consciences, rather than trusting Vanguard's vague statement. After all, why should they believe unsupported reassurances from Vanguard when the facts show that Vanguard has continued to invest in PetroChina, the worst offender of the oil companies supporting the regime in Sudan?

Popular in the Community