Engaging Fidelity

Recent and Earlier Positions

Fidelity first steps to divest from PetroChina and Sinopec - May 2007

Read about Fidelity's first step to divest from PetroChina and Sinopec and the campaign's response here. Fidelity's action, while significant, is only a first step; Fidelity is still a massive shareholder in PetroChina by virtue of shares purchased on the Hong Kong stock exchange, called H shares, which represented more than half of its previous holdings in PetroChina.

Since Fidelity has made no statement or commitment regarding divestment from PetroChina and Sinopec, investors entrusting their money to Fidelity mutual funds continue to risk inadvertently investing in these companies helping to fund the genocide in Darfur.

In the face of the genocide and citizen complaints, Fidelity continues to say that their only job is to make money and the genocide is someone else's problem.

Fidelity has been a major investor in the Sudanese oil industry - Fall 2006

In the fall of 2006, several members of the Massachusetts Coalition to Save Darfur reviewed Fidelity's holdings and were surprised to discover that Fidelity had very significant holdings in oil industry companies operating in Sudan.

• Fidelity was the largest holder of PetroChina (PTR) on the NYSE and had been increasing its holdings over the last few years.
• At the same time as ethically responsible investors are increasingly recognizing and addressing the problem of investing in companies which are helping to support the government of Sudan and fund the genocide in Darfur, Fidelity had adopted the opposite strategy of increasing its investment in Chinese oil companies doing business in Sudan.
• Click here for more information on the problem Chinese oil companies operating in Sudan - PetroChina (PTR), China Petroleum (aka Sinopec, SNP).
• Click here for information on Fidelity's SEC filing on May 15, 2007, and the attendant press coverage showing that our combined voices can have an impact.
• Click here for our most current view of Fidelity's holdings of PetroChina and Sinopec.

Attempting to engage with Fidelity - Fall 2006

We sought to engage Fidelity throughout the fall of 2006, primarily with letters, but also with attempts to follow up personally. These attempts included 5 letters, of September 30, October 24, November 4, November 20 and December 8, and attempts to reach 51 Fidelity executives, trustees, board members and fund managers.

In our communications, we alerted Fidelity to the problem of investing in the oil industry in Sudan, explicitly calling out both the effect that its investments had in supporting the genocide in Darfur and China’s actions to thwart UN efforts to stop the genocide. We urged Fidelity to join other responsible institutions in divesting these investments because:

• They are questionable investments on the merits and not in Fidelity’s funds enlightened self-interest, given availability of untainted investments
• If Fidelity’s customers knew that the investment strategy included aiding genocide in Darfur, it would not be how they would want their money used
• These investments are inconsistent with the Fidelity Cares corporate responsibility program
• These investments are inconsistent with the trusted advisor public image that Fidelity projects

We noted that Fidelity has the difficult responsibility of investing other people’s money, but emphasized the point made by Harvard University when it elected to divest its shares of PetroChina:

There are exceptional cases in which the strong presumption against divestment may be overcome. Although trustees have a legal and moral obligation to enhance and conserve the university's resources, there are rare occasions when the very nature of a company's business makes it inappropriate for a university to invest in the enterprise.

Further, as Harvard's President Lawrence Summers stated:

Divestment is not a step that Harvard takes lightly, but I believe there is a compelling case for action in these special circumstances, in light of the terrible situation unfolding in Darfur and the leading role played by PetroChina's parent company in the Sudanese oil industry, which is so important to the Sudanese regime.

We emphasized that the crisis in Darfur is the first time in history that genocide has been clearly identified while it was underway, noting that this unique circumstance demands special attention and action and that under these circumstances, it makes good business sense for Fidelity to address Sudan-related problem companies and recognize that its corporate governance must deal with Sudan-related issues.

We challenged Fidelity to consider that even if one believed that Sudan oil investments were good short-term and mid-term investments (an increasingly dubious proposition), one must draw a line against investing in genocide. We put the case starkly, asking:

Is there no threshold of moral depravity beyond which Fidelity would not invest? ... Would Fidelity have invested in the booming machete market before the genocide in Rwanda, or in Zyklon-B product sales before the holocaust? ... the genocide in Darfur is real, it is happening today, it is clear, publicly identified, authoritatively documented and declared, and Fidelity is a major investor in the companies helping to fund the genocide in Darfur.

Unfortunately, though we asked them to meet with us to discuss their position, Fidelity expressed no interest in discussing the problem, learning more about the situation, or addressing our concerns. Fidelity’s only response has been to indicate that fiduciary responsibilities preclude them from considering other factors in its investments except for legality.

Since we strongly believe that no fiduciary responsibility can justify complicity in genocide:

• We continue to urge Fidelity to join other responsible institutions in divesting from these companies which are helping to fund the genocide in Darfur.
• We are publicly urging concerned citizens to join us in telling Fidelity that they should divest and get out of Sudan.

Fidelity's position

• "Fidelity portfolio managers make their investment decisions based on business and financial considerations, and take into account other issues only if they materially impact these considerations or conflict with applicable legal standards."
  - Fidelity letter of October 5, 2006
• "We believe the resolution of complex social and political issues must be left to the appropriate authorities of the world that have the responsibility, and capability, to address important matters of this type. And we would sincerely hope that they would do so wisely on behalf of all of the citizens of the globe."
  - Fidelity statement to CNN Money, published January 29, 2007