Linking Genocide and Investments

Fidelity Fund voters rejected a proposal, spearheaded by Investors Against Genocide, which would have stopped Fund managers from investing in organizations that “in the judgment of the board, substantially contribute to genocide, patterns of extraordinary and egregious violations of human rights, or crimes against humanity.” Only 27 percent of shareholders in Fidelity’s Capital & Income Fund and 28 percent in its Select Health Care Portfolio voted for the proposal. These numbers may be in response to the fact that Fidelity encouraged investors to vote against the resolution.

Investing in interest based hedge funds is not cutting edge- for instance, hedge fund contributors can invest in Green Hedge funds or funds directed towards a specific industry. This platform though called for a company-wide decision irregardless of the nature of the fund to avoid those businesses that contribute to genocide. A cross-company decision of this magnitude would affect all investors; Fidelity is a 1.5 trillion company with assets in a variety of areas.

Yet, they are not immune to pressure in this field. According to Reuters, “last year, Fidelity sold a big chunk of its PetroChina holdings, and Buffett sold his entire holding.” (Petro-China is an oil based company with ties to Sudan.) Furthermore, with 27% of investors voting against the company position, hedge fund managers are going to have to look at their investment options a little bit closer.

I wonder though if any of these reforms will make a difference in the long run. The Investors Against Genocide site states that “ethical investing” must have a minimum standard- no one should want to earn their retirement or savings from the dead bodies of a genocide. The premise is good and the concept of ethical investing should be embraced. I for one am going to take a closer look at where my money is being invested. However, there are a lot of problems with ethical investing especially in regards to genocide.

For one, genocide is not a business related function. It is psychological, emotional and personal. Businesses may make profits from the fall out of genocide but few rarely contribute to genocide. Therefore, the question of ethics is more a question of opportunity. If a company is not contributing to the perpetuation of genocide but profiting from the fall out- I’m not sure I can say thats intrinsically wrong. It is merely the nature of the free market. If a business though is promoting or contributing to genocide than they should be held as accountable as the political leaders who promote genocide.

Secondly, it is hard to determine the role a business plays in genocide. Now in the DRC Chinese companies are mining coltan with the help of Rwandan military leaders. This is contributing to raised ethnic tensions, profit for genocidaires and more killings but the company is merely filling a void that any other company with the same resources would fill. Do we fault the company for being there or the situation for allowing them to exist? I’m more inclined to argue it is a situational issue not a business issue.

Thirdly, if we refuse to invest in one company another hedge fund will be able to pick it up and profit from it. Therefore, the push will only limit the investment options of some while increasing the options of others. Therefore, the least ethical amongst us will be able to recieve the greatest benefits. That to me seems paradoxical.

I argue in favor of ethical investing by individuals up to a point. Yet, I hope that ethical investing will become less of an issue as businesses become more transparent and ethical. We can’t blame genocide on business and therefore we shouldn’t hinder those investments.

I know this position is controversial, I welcome your comments.

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