Responses to Targeted Divestment
The targeted model also helps states avoid overstepping legal bounds when directing how public pension fund assets should be allocated. The first state legislation directing state-controlled funds to divest from Sudan, adopted by Illinois in 2005, was struck down by a federal judge in Chicago in February.

The ruling stemmed from a lawsuit against the state brought by the National Foreign Trade Council (NFTC) shortly after the legislation was passed. The business group successfully argued that Illinois’ law interfered with the federal government’s ability to conduct foreign policy by setting sanctions above and beyond what the U.S. already had in place.

Some of the council’s member companies had complained in 2005 about early legislation in other states as well, NFTC Vice President Dan O’Flaherty told Governance Weekly. The group decided to pursue the Illinois law because “[it] was the most poorly drafted,” O’Flaherty said.

The original bill’s sponsor, Illinois State Senator Jacqueline Collins, oversaw revised legislation that was sent to Gov. Rod Blagojevich’s office on June 29. The governor has 60 days in which to sign the bill. A spokeswoman for Sen. Collins’ office said that Blagojevich is planning a public signing of the bill in Chicago this month.

Investor Initiative: Berkshire Hathaway
The number of company-specific investor proposals regarding Sudan, however, has been low. This year, shareholders at Berkshire Hathaway voted on a proposal by shareholder Judith Porter that would have asked Berkshire Hathaway to refrain from investing in companies that have ties to Sudan's government. The Securities and Exchange Commission initially approved the company’s request to omit the resolution as too vague, but the insurance company’s billionaire founder, Warren Buffett, decided to allow shareholders to vote on it at the May 5 annual meeting, even though he opposed it.

Porter’s main concern was Berkshire’s large holding in PetroChina, a subsidiary of the China National Petroleum Corporation (CNPC). PetroChina itself does not operate in Sudan, but according to a Sudan Divestment Task Force report, state-owned CNPC owns a 40 percent stake in Sudan’s oil industry, and its board membership overlaps with PetroChina’s almost completely.

Berkshire Hathaway is the second largest shareholder in PetroChina after CNPC. In opposing the proposal, Berkshire management contended that PetroChina could not be held responsible for the activities of its parent company or the Chinese government. It appears that most Berkshire shareholders agreed, giving the measure only 1.8 percent support.

However, on July 28, the Financial Times reported that Berkshire Hathaway had reduced its stake in PetroChina to just under 11 percent. The company did not say, however, that the move came in response to shareholder pressure, the paper reported.

Moving Forward
Largely because of targeted divestment strategies, the movement toward Sudan divestment shows no sign of slowing. On July 24, the state of Michigan announced it had begun considering a divestment program for its public pension funds. If adopted, it would make Michigan the 20th U.S. state to adopt some kind of Sudan divestment policy.

Organizations like the Save Darfur Coalition warn against a growing partnership between China and Sudan, centering on oil interests. CNPC and fellow Chinese oil company Sinopec have some of the largest drilling and extraction contracts in the region, along with India’s Oil and Natural Gas Corporation (ONGC) and the Malaysian Petroliam Nasional Berhad (Petronas).

News reports indicate, though, that U.S.-based companies with investments in companies working in Sudan have responded to the economic pressure of divestment. Forbes magazine reported in March 2006 that at least two large U.S. firms have ceased all non-humanitarian dealings with Sudan: Xerox cut ties with its distributor in the Sudanese capital of Khartoum, and 3M stopped sales to all entities except aid organizations. These firms were among the ones targeted by initial divestment campaigns like the one at the University of California and the California Public Employees’ Retirement System (CalPERS).

Longtime task force target Fidelity Investments cut its holdings in PetroChina by 91 percent, beginning just a few days after the Berkshire Hathaway meeting.

In early July, U.K. automaker Rolls Royce announced it will "progressively withdraw" its existing contracts to make engines for oil- and mineral-extraction companies operating in Sudan, BBC News reported. Canadian firm CHC Helicopter, the largest supplier of helicopter transportation to the foreign and offshore oil industry, stopped all business operations in Sudan in March 2007, a company press release reported. Both firms were then taken off the list of the task force’s "highest offenders" in contributing to the genocide.

Sterling, the task force director, hopes that additional divestment will increase economic pressure on the Sudanese government to the point that it cannot continue using oil proceeds to arm ethnic militias.

Targeted models for divestment also appear less likely to face legal challenges like the broad-based divestment law in Illinois that was recently struck down.

"We've really had a fantastic relationship with the Sudan Divestment Task Force," said Jake Colvin, director of USA*Engage, a diplomacy resource and advocacy group that works with the National Foreign Trade Council.

"Their model is thoughtful," Colvin told Governance Weekly. "They’ve been willing to work with the business community."

For individual investors, many investment managers offer "Sudan-free" funds. In late June, the SEC set up a web tool for identifying companies with business interests in Sudan and other countries labeled “state sponsors of terrorism” by the U.S. government--but the tool was suspended July 20 after registered companies complained that the searches brought up outdated information.

Legislators are beginning to respond on a federal level, as well. On July 31, the House of Representatives overwhelmingly approved legislation authored by California Democrat Rep. Barbara Lee, which would require the Treasury Department to establish a list of companies whose activities directly affect genocidal operations in Darfur. A companion bill has not yet been introduced in the Senate.

Investors Also Target Iran
The push for divestment has extended into other geopolitical spheres as well. Some states are pushing for legislation that would require public pension funds to divest from companies that do business in Iran, which the Bush administration has accused of supporting insurgents in Iraq and aspiring to build nuclear weapons.

Missouri’s pension funds have partially divested from several companies with ties to Iran, including Halliburton--which was formerly run by U.S. Vice President Dick Cheney. An Iran divestment bill passed the California Assembly by a wide margin, and will be voted in the Senate at an unspecified date. Texas Governor Rick Perry is considering directing the state’s pension funds to divest from companies with holdings in Iran, while New York State Sen. Craig M. Johnson introduced a divestment bill for all of New York's public pension funds. According to Johnson’s office, the bill is still under consideration by the state Senate’s committee on civil services and pensions.

Meanwhile, CalPERS sent letters to four multinational energy companies--ENI of Italy, Repsol YPF of Spain, the Netherlands’ Royal Dutch Shell, and Total of France--asking them to report on and minimize the risks of investing in Iran.

On July 31, the U.S. House of Representatives passed a bill requiring the Treasury Department to keep a list of companies with economic ties to the Iranian government. Lawmakers approved the bill by a vote of 408 to 6. Sen. Barack Obama, a Democratic presidential candidate from Illinois, has already introduced companion legislation in the Senate.