20100104
ft.com

TIAA-Cref has become the first large US asset manager to sell stakes in four Asian oil groups over concerns about human rights abuses in Sudan, a move that will increase pressure on other investors to sever ties with those companies.

TIAA-Cref, which has more than $400bn (£248bn, €279bn) under management, said on Monday that it had divested holdings in PetroChina, CNPC Hong Kong and Sinopec – three state-controlled Chinese oil companies, and India’s Oil and Natural Gas Corporation.

The US pension manager had small stakes in the companies and its decision failed to damp immediate appetite for PetroChina’s Hong Kong shares – which gained over 5 per cent on Tuesday after the company reported that its parent group had been buying its shares.

However, the move is a victory for campaigners who have been urging financial groups to sell shares in companies that do business with Sudan’s controversial regime.

International bodies and foreign countries have condemned the Sudanese government for human rights abuses during the conflict with rebels in Darfur.

TIAA-Cref’s share sale, which raised about $60m, will fuel calls for other large mutual fund companies to follow suit. So far, only US state pension funds and not-for-profit groups have pulled out of companies with links to Sudan.

Calpers, the California’s giant state pension fund, banned investments in nine companies, including CNPC and Petrochina, three years ago, but has so far not divested stakes in other companies having potential links to Sudan.

TIAA-Cref, which manages pensions and supplies financial services for academic, medical and research institutions, said it had made good on its promise to sell stakes in companies that “refuse to acknowledge the genocide [in Sudan] and engage in a productive dialogue about it”.

Hye-Won Choi, TIAA-Cref’s head of corporate governance, said her organisation had decided to sell only after unsuccessful talks with the four companies. “Divestment is not something we take lightly and it was a measure of last resort,” she said. “[But] we could not see eye-to-eye with the companies”.

She said TIAA-Cref would retain its stake in Petronas, Malaysia’s national oil group, after the company engaged in “constructive dialogue” and “took some responsibility to remedy the situation in Sudan”. Roger Ferguson, TIAA-Cref’s chief executive, met his Petronas counterpart, Tan Sri Hassan Marican, in recent months, TIAA-Cref said.

Sudan is a controversial issue in energy-thirsty developing economies such as China and India. Some of the countries’ oil companies have turned to nations such as Sudan after efforts to purchase oil assets in developed markets had failed amid concerns over national security.