Disinvestment
Encyclopedia
Disinvestment, sometimes referred to as divestment, refers to the use of a concerted economic boycott
, with specific emphasis on liquidating stock, to pressure a government, industry, or company towards a change in policy, or in the case of governments, even regime change. The term was first used in the 1980s, most commonly in the United States
, to refer to the use of a concerted economic boycott designed to pressure the government of South Africa
into abolishing its policy of apartheid. The term has also been applied to actions targeting Iran
, Sudan
, Northern Ireland
, Myanmar
, and Israel
.
and municipal governments to sell their stock in companies which had a presence in South Africa, such shares having been previously placed in the portfolio of the state's, county's or city's pension fund. Several states and localities did pass legislation ordering the sale of such securities, most notably the city of San Francisco. An array of celebrities, including singer Paul Simon
, actively supported the cause.
Many conservatives
opposed the disinvestment campaign, accusing its advocates of hypocrisy for not also proposing that the same sanctions be leveled on either the Soviet Union
or the People's Republic of China
. Ronald Reagan
, who was the President of the United States
during the time the disinvestment movement was at its peak, also opposed it, instead favoring a policy of "constructive engagement
" with the Pretoria
regime. Some offered as an alternative to disinvestment the so-called "Sullivan Principles
", named after Reverend Leon Sullivan
, an African-American clergyman who served on the Board of Directors of General Motors. These principles called for corporations doing business in South Africa to adhere to strict standards of non-discrimination in hiring and promotions, so as to set a positive example.
, as some prominent Irish-American politicians sought to have state and local governments sell their stock in companies doing business in that part of the United Kingdom
. This movement featured its own counterpart to the Sullivan Principles; known as the "MacBride Principles" (named for Nobel Peace Prize
winner Sean MacBride
), which called for American and other foreign companies to take the initiative in alleviating alleged discrimination against Roman Catholics by adopting policies resembling affirmative action
. The effort to disinvest in Northern Ireland met with little success, but the United States Congress
did pass (and then-President Bill Clinton
signed) a law requiring American companies with interests there to implement most of the MacBride Principles in 1998.
meets many of the criteria for designation as such — and a provision more closely paralleling the disinvestment strategy aimed at South Africa was added in 1996, when the United States Congress passed the Helms-Burton Act
, which penalized owners of foreign businesses which invested in former American firms that had been nationalized by Fidel Castro
's government after the Cuban revolution
of 1959. The passage of this law was widely seen as a reprisal for an incident in which Cuban military aircraft shot down two private planes flown by Cuban exile
s living in Florida
, who were searching for Cubans attempting to escape to Miami
.
which eventually left the country, and was supplanted by Chinese investors.http://findarticles.com/p/articles/mi_m1058/is_6_117/ai_60026681http://www.sudanreeves.org/Sections-req-viewarticle-artid-393-allpages-1-theme-Printer.html
There is currently a growing movement to divest from companies that do business with the Sudanese government responsible for genocide in Darfur. Prompted by the State of Illinois - the first government in the U.S.A. to divest - scores of public and private-sector entities are now following suit. In New York City, Councilman Eric Gioia
recently introduced a resolution to divest City pension funds from companies doing business with Sudan.
The recent divestment of assets implicated in funding the government of Sudan
, in acknowledgment of acts of terrorism and genocide
perpetrated in the Darfur conflict
. In the United States, this divestment has taken place at the state level (including Illinois, which led the way, followed by New Jersey, Oregon, and Maine). It has also taken place at many North American Universities, notably Cornell University
, Harvard University
, Case Western Reserve University, Queen's University
, Stanford University
, Dartmouth College
, Amherst College
, Yale University
, Brown University
, the University of California
, the University of Pennsylvania
, Brandeis University
, the University of Colorado
, American University
, University of Delaware
, Emory University
, and the University of Vermont. The Sudan Divestment Task Force http://www.genocideintervention.net/ has organized a nationwide group which advocates a targeted divestment policy, to minimize any negative effects on Sudanese civilians while still placing financial pressure on the government. The so-called 'targeted divestment approach' generally permits investment in Sudan, and is thus radically different from the comprehensive divestment that ended apartheid in South Africa. Because targeted divestment permits investment in hundreds of multinational corporate and private-equity firms that support, lend legitimacy to, and pay taxes and graft to the government of Sudan, policy experts suggest that this "feel good" approach will have little impact on the Sudanese government's sponsorship of terrorism and genocide. Because of the massive deficiencies in the so-called 'targeted divestment approach,' human rights advocates recommend the more comprehensive approach to divestment that has been taken by the State of Illinois.
Under this approach, sponsored by State Senator Jacqueline Collins, public pensions are prohibited from investing in any corporation or private equity firm that conducts business in Sudan, unless authorized to do so by the U.S. Government.
(formerly Burma) has also been the target of disinvestment campaigns (most notably one initiated by the state of Massachusetts
.) Divestment campaigns have also been directed against Saudi Arabia due to allegations of "gender-apartheid." The University of California, Riverside's Hillel chapter has a Saudi Divestment petition circulating as of 2007.
Since 2007, several major international and Canadian oil companies had threatened to withdraw investment from the province of Alberta
because of a proposed increase in royalty rates.http://www.reuters.com/article/mergersNews/idUSN0528089920071105http://www.theglobeandmail.com/servlet/Page/document/v5/content/subscribe?user_URL=http://www.theglobeandmail.com%2Fservlet%2Fstory%2FRTGAM.20071127.wcnq1127%2FBNStory%2Fenergy%2Fhome&ord=732220&brand=theglobeandmail&force_login=true
, former president of Boston University
, observed that while boycotting a company's products would actually affect their business, "once a stock issue has been made, the corporation doesn't care whether you sell it, burn it, or anything else, because they've already got all the money they're ever going to get from that stock. So they don't care."
Regarding the more specific case of South Africa, John Silber recalled:
The common perception about the effectiveness of divestment lies in the belief that institutional selling of a certain stock lowers its market value. Therefore, the company's networth becomes devalued and the owners of the company may lose substantial paper assets. In addition, institutional divestment may encourage other investors to sell their stocks for fear of lower prices, which in turn lowers prices even further. Finally, lower stock prices limits a corporation's ability to sell a portion of their stocks in order to raise funds to expand the business.
Boycott
A boycott is an act of voluntarily abstaining from using, buying, or dealing with a person, organization, or country as an expression of protest, usually for political reasons...
, with specific emphasis on liquidating stock, to pressure a government, industry, or company towards a change in policy, or in the case of governments, even regime change. The term was first used in the 1980s, most commonly in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, to refer to the use of a concerted economic boycott designed to pressure the government of South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
into abolishing its policy of apartheid. The term has also been applied to actions targeting Iran
Iran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...
, Sudan
Sudan
Sudan , officially the Republic of the Sudan , is a country in North Africa, sometimes considered part of the Middle East politically. It is bordered by Egypt to the north, the Red Sea to the northeast, Eritrea and Ethiopia to the east, South Sudan to the south, the Central African Republic to the...
, Northern Ireland
Northern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...
, Myanmar
Myanmar
Burma , officially the Republic of the Union of Myanmar , is a country in Southeast Asia. Burma is bordered by China on the northeast, Laos on the east, Thailand on the southeast, Bangladesh on the west, India on the northwest, the Bay of Bengal to the southwest, and the Andaman Sea on the south....
, and Israel
Israel
The State of Israel is a parliamentary republic located in the Middle East, along the eastern shore of the Mediterranean Sea...
.
Iran
Eighteen American states have passed laws requiring the divestment of state pension funds from firms doing business with Iran.South Africa
The most frequently-encountered method of "disinvesting" was to persuade state, countyCounty
A county is a jurisdiction of local government in certain modern nations. Historically in mainland Europe, the original French term, comté, and its equivalents in other languages denoted a jurisdiction under the sovereignty of a count A county is a jurisdiction of local government in certain...
and municipal governments to sell their stock in companies which had a presence in South Africa, such shares having been previously placed in the portfolio of the state's, county's or city's pension fund. Several states and localities did pass legislation ordering the sale of such securities, most notably the city of San Francisco. An array of celebrities, including singer Paul Simon
Paul Simon
Paul Frederic Simon is an American singer-songwriter and guitarist.Simon is best known for his success, beginning in 1965, as part of the duo Simon & Garfunkel, with musical partner Art Garfunkel. Simon wrote most of the pair's songs, including three that reached number one on the US singles...
, actively supported the cause.
Many conservatives
Conservatism
Conservatism is a political and social philosophy that promotes the maintenance of traditional institutions and supports, at the most, minimal and gradual change in society. Some conservatives seek to preserve things as they are, emphasizing stability and continuity, while others oppose modernism...
opposed the disinvestment campaign, accusing its advocates of hypocrisy for not also proposing that the same sanctions be leveled on either the Soviet Union
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
or the People's Republic of China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
. Ronald Reagan
Ronald Reagan
Ronald Wilson Reagan was the 40th President of the United States , the 33rd Governor of California and, prior to that, a radio, film and television actor....
, who was the President of the United States
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....
during the time the disinvestment movement was at its peak, also opposed it, instead favoring a policy of "constructive engagement
Constructive engagement
Constructive engagement was the name given to the policy of the Reagan Administration towards the apartheid regime in South Africa in the early 1980s...
" with the Pretoria
Pretoria
Pretoria is a city located in the northern part of Gauteng Province, South Africa. It is one of the country's three capital cities, serving as the executive and de facto national capital; the others are Cape Town, the legislative capital, and Bloemfontein, the judicial capital.Pretoria is...
regime. Some offered as an alternative to disinvestment the so-called "Sullivan Principles
Sullivan Principles
The Sullivan principles are the names of two corporate codes of conduct, developed by the African-American preacher Rev. Leon Sullivan, promoting corporate social responsibility:...
", named after Reverend Leon Sullivan
Leon Sullivan
Leon Howard Sullivan was a Baptist minister, a civil rights leader and social activist focusing on the creation of job training opportunities for African-Americans, a longtime General Motors Board Member, and an anti-Apartheid activist. Sullivan died on April 24, 2001, of leukemia at a Scottsdale,...
, an African-American clergyman who served on the Board of Directors of General Motors. These principles called for corporations doing business in South Africa to adhere to strict standards of non-discrimination in hiring and promotions, so as to set a positive example.
Northern Ireland
There was also a less well-publicized movement to apply the strategy of disinvestment to Northern IrelandNorthern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...
, as some prominent Irish-American politicians sought to have state and local governments sell their stock in companies doing business in that part of the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
. This movement featured its own counterpart to the Sullivan Principles; known as the "MacBride Principles" (named for Nobel Peace Prize
Nobel Peace Prize
The Nobel Peace Prize is one of the five Nobel Prizes bequeathed by the Swedish industrialist and inventor Alfred Nobel.-Background:According to Nobel's will, the Peace Prize shall be awarded to the person who...
winner Sean MacBride
Seán MacBride
Seán MacBride was an Irish government minister and prominent international politician as well as a Chief of Staff of the IRA....
), which called for American and other foreign companies to take the initiative in alleviating alleged discrimination against Roman Catholics by adopting policies resembling affirmative action
Affirmative action
Affirmative action refers to policies that take factors including "race, color, religion, gender, sexual orientation or national origin" into consideration in order to benefit an underrepresented group, usually as a means to counter the effects of a history of discrimination.-Origins:The term...
. The effort to disinvest in Northern Ireland met with little success, but the United States Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
did pass (and then-President Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...
signed) a law requiring American companies with interests there to implement most of the MacBride Principles in 1998.
Cuba
Though in place long before the term "disinvestment" was coined, the United States embargo against CubaUnited States embargo against Cuba
The United States embargo against Cuba is a commercial, economic, and financial embargo partially imposed on Cuba in October 1960...
meets many of the criteria for designation as such — and a provision more closely paralleling the disinvestment strategy aimed at South Africa was added in 1996, when the United States Congress passed the Helms-Burton Act
Helms-Burton Act
The Cuban Liberty and Democratic Solidarity Act of 1996 is a United States federal law which strengthens and continues the United States embargo against Cuba...
, which penalized owners of foreign businesses which invested in former American firms that had been nationalized by Fidel Castro
Fidel Castro
Fidel Alejandro Castro Ruz is a Cuban revolutionary and politician, having held the position of Prime Minister of Cuba from 1959 to 1976, and then President from 1976 to 2008. He also served as the First Secretary of the Communist Party of Cuba from the party's foundation in 1961 until 2011...
's government after the Cuban revolution
Cuban Revolution
The Cuban Revolution was an armed revolt by Fidel Castro's 26th of July Movement against the regime of Cuban dictator Fulgencio Batista between 1953 and 1959. Batista was finally ousted on 1 January 1959, and was replaced by a revolutionary government led by Castro...
of 1959. The passage of this law was widely seen as a reprisal for an incident in which Cuban military aircraft shot down two private planes flown by Cuban exile
Cuban exile
The term "Cuban exile" refers to the many Cubans who have sought alternative political or economic conditions outside the island, dating back to the Ten Years' War and the struggle for Cuban independence during the 19th century...
s living in Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
, who were searching for Cubans attempting to escape to Miami
Miami, Florida
Miami is a city located on the Atlantic coast in southeastern Florida and the county seat of Miami-Dade County, the most populous county in Florida and the eighth-most populous county in the United States with a population of 2,500,625...
.
Sudan
During the late 1990s and early 2000s several Christian groups in North America campaigned for disinvestment from Sudan because of the Muslim-dominated government's long conflict with the breakaway, mostly Christian region of Southern Sudan. One particular target of this campaign was the Canadian oil company, Talisman EnergyTalisman Energy
Talisman Energy Inc. is one of Canada's largest petroleum SB companies. Based in Calgary, Alberta, Talisman Energy has operations around the globe including: Canada and the United States of America in North America; Colombia and Peru in South America; Algeria in North Africa; United Kingdom,...
which eventually left the country, and was supplanted by Chinese investors.http://findarticles.com/p/articles/mi_m1058/is_6_117/ai_60026681http://www.sudanreeves.org/Sections-req-viewarticle-artid-393-allpages-1-theme-Printer.html
There is currently a growing movement to divest from companies that do business with the Sudanese government responsible for genocide in Darfur. Prompted by the State of Illinois - the first government in the U.S.A. to divest - scores of public and private-sector entities are now following suit. In New York City, Councilman Eric Gioia
Eric Gioia
Eric N. Gioia is a New York City politician of the Democratic Party. He served for eight years as a member of the New York City Council...
recently introduced a resolution to divest City pension funds from companies doing business with Sudan.
The recent divestment of assets implicated in funding the government of Sudan
Sudan
Sudan , officially the Republic of the Sudan , is a country in North Africa, sometimes considered part of the Middle East politically. It is bordered by Egypt to the north, the Red Sea to the northeast, Eritrea and Ethiopia to the east, South Sudan to the south, the Central African Republic to the...
, in acknowledgment of acts of terrorism and genocide
Genocide
Genocide is defined as "the deliberate and systematic destruction, in whole or in part, of an ethnic, racial, religious, or national group", though what constitutes enough of a "part" to qualify as genocide has been subject to much debate by legal scholars...
perpetrated in the Darfur conflict
Darfur conflict
The Darfur Conflict was a guerrilla conflict or civil war centered on the Darfur region of Sudan. It began in February 2003 when the Sudan Liberation Movement/Army and Justice and Equality Movement groups in Darfur took up arms, accusing the Sudanese government of oppressing non-Arab Sudanese in...
. In the United States, this divestment has taken place at the state level (including Illinois, which led the way, followed by New Jersey, Oregon, and Maine). It has also taken place at many North American Universities, notably Cornell University
Cornell University
Cornell University is an Ivy League university located in Ithaca, New York, United States. It is a private land-grant university, receiving annual funding from the State of New York for certain educational missions...
, Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
, Case Western Reserve University, Queen's University
Queen's University
Queen's University, , is a public research university located in Kingston, Ontario, Canada. Founded on 16 October 1841, the university pre-dates the founding of Canada by 26 years. Queen's holds more more than of land throughout Ontario as well as Herstmonceux Castle in East Sussex, England...
, Stanford University
Stanford University
The Leland Stanford Junior University, commonly referred to as Stanford University or Stanford, is a private research university on an campus located near Palo Alto, California. It is situated in the northwestern Santa Clara Valley on the San Francisco Peninsula, approximately northwest of San...
, Dartmouth College
Dartmouth College
Dartmouth College is a private, Ivy League university in Hanover, New Hampshire, United States. The institution comprises a liberal arts college, Dartmouth Medical School, Thayer School of Engineering, and the Tuck School of Business, as well as 19 graduate programs in the arts and sciences...
, Amherst College
Amherst College
Amherst College is a private liberal arts college located in Amherst, Massachusetts, United States. Amherst is an exclusively undergraduate four-year institution and enrolled 1,744 students in the fall of 2009...
, Yale University
Yale University
Yale University is a private, Ivy League university located in New Haven, Connecticut, United States. Founded in 1701 in the Colony of Connecticut, the university is the third-oldest institution of higher education in the United States...
, Brown University
Brown University
Brown University is a private, Ivy League university located in Providence, Rhode Island, United States. Founded in 1764 prior to American independence from the British Empire as the College in the English Colony of Rhode Island and Providence Plantations early in the reign of King George III ,...
, the University of California
University of California
The University of California is a public university system in the U.S. state of California. Under the California Master Plan for Higher Education, the University of California is a part of the state's three-tier public higher education system, which also includes the California State University...
, the University of Pennsylvania
University of Pennsylvania
The University of Pennsylvania is a private, Ivy League university located in Philadelphia, Pennsylvania, United States. Penn is the fourth-oldest institution of higher education in the United States,Penn is the fourth-oldest using the founding dates claimed by each institution...
, Brandeis University
Brandeis University
Brandeis University is an American private research university with a liberal arts focus. It is located in the southwestern corner of Waltham, Massachusetts, nine miles west of Boston. The University has an enrollment of approximately 3,200 undergraduate and 2,100 graduate students. In 2011, it...
, the University of Colorado
University of Colorado at Boulder
The University of Colorado Boulder is a public research university located in Boulder, Colorado...
, American University
American University
American University is a private, Methodist, liberal arts, and research university in Washington, D.C. The university was chartered by an Act of Congress on December 5, 1892 as "The American University", which was approved by President Benjamin Harrison on February 24, 1893...
, University of Delaware
University of Delaware
The university is organized into seven colleges:* College of Agriculture and Natural Resources* College of Arts and Sciences* Alfred Lerner College of Business and Economics* College of Earth, Ocean and Environment* College of Education and Human Development...
, Emory University
Emory University
Emory University is a private research university in metropolitan Atlanta, located in the Druid Hills section of unincorporated DeKalb County, Georgia, United States. The university was founded as Emory College in 1836 in Oxford, Georgia by a small group of Methodists and was named in honor of...
, and the University of Vermont. The Sudan Divestment Task Force http://www.genocideintervention.net/ has organized a nationwide group which advocates a targeted divestment policy, to minimize any negative effects on Sudanese civilians while still placing financial pressure on the government. The so-called 'targeted divestment approach' generally permits investment in Sudan, and is thus radically different from the comprehensive divestment that ended apartheid in South Africa. Because targeted divestment permits investment in hundreds of multinational corporate and private-equity firms that support, lend legitimacy to, and pay taxes and graft to the government of Sudan, policy experts suggest that this "feel good" approach will have little impact on the Sudanese government's sponsorship of terrorism and genocide. Because of the massive deficiencies in the so-called 'targeted divestment approach,' human rights advocates recommend the more comprehensive approach to divestment that has been taken by the State of Illinois.
Under this approach, sponsored by State Senator Jacqueline Collins, public pensions are prohibited from investing in any corporation or private equity firm that conducts business in Sudan, unless authorized to do so by the U.S. Government.
Others
MyanmarMyanmar
Burma , officially the Republic of the Union of Myanmar , is a country in Southeast Asia. Burma is bordered by China on the northeast, Laos on the east, Thailand on the southeast, Bangladesh on the west, India on the northwest, the Bay of Bengal to the southwest, and the Andaman Sea on the south....
(formerly Burma) has also been the target of disinvestment campaigns (most notably one initiated by the state of Massachusetts
Massachusetts
The Commonwealth of Massachusetts is a state in the New England region of the northeastern United States of America. It is bordered by Rhode Island and Connecticut to the south, New York to the west, and Vermont and New Hampshire to the north; at its east lies the Atlantic Ocean. As of the 2010...
.) Divestment campaigns have also been directed against Saudi Arabia due to allegations of "gender-apartheid." The University of California, Riverside's Hillel chapter has a Saudi Divestment petition circulating as of 2007.
Since 2007, several major international and Canadian oil companies had threatened to withdraw investment from the province of Alberta
Alberta
Alberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces...
because of a proposed increase in royalty rates.http://www.reuters.com/article/mergersNews/idUSN0528089920071105http://www.theglobeandmail.com/servlet/Page/document/v5/content/subscribe?user_URL=http://www.theglobeandmail.com%2Fservlet%2Fstory%2FRTGAM.20071127.wcnq1127%2FBNStory%2Fenergy%2Fhome&ord=732220&brand=theglobeandmail&force_login=true
Industries
- Tobacco industryTobacco industryThe tobacco industry comprises those persons and companies engaged in the growth, preparation for sale, shipment, advertisement, and distribution of tobacco and tobacco-related products. It is a global industry; tobacco can grow in any warm, moist environment, which means it can be farmed on all...
http://www.ashscotland.org.uk/ash/4419.htmlhttp://www.macalester.edu/weekly/Archive/10-17-96/news/tobacco.html - Arms trade http://www.stopwar.org.uk/index.php?option=com_content&task=view&id=370&Itemid=115http://www.labournet.net/other/0710/lccawar1.html
Companies
- Talisman EnergyTalisman EnergyTalisman Energy Inc. is one of Canada's largest petroleum SB companies. Based in Calgary, Alberta, Talisman Energy has operations around the globe including: Canada and the United States of America in North America; Colombia and Peru in South America; Algeria in North Africa; United Kingdom,...
- because of its status as the main Western oil company in Sudan in the early 2000s.
Criticism
Some hold that divestment campaigns are based on a fundamental misunderstanding of how equity markets work. John SilberJohn Silber
John Robert Silber is an American academician and former candidate for public office. From 1971 to 1996 he was President of Boston University and from 1996 to 2003 Chancellor of the University. Since 2003 he has been its President Emeritus. In 1990, Silber took a leave of absence from the...
, former president of Boston University
Boston University
Boston University is a private research university located in Boston, Massachusetts. With more than 4,000 faculty members and more than 31,000 students, Boston University is one of the largest private universities in the United States and one of Boston's largest employers...
, observed that while boycotting a company's products would actually affect their business, "once a stock issue has been made, the corporation doesn't care whether you sell it, burn it, or anything else, because they've already got all the money they're ever going to get from that stock. So they don't care."
Regarding the more specific case of South Africa, John Silber recalled:
...when the students were protesting the South African situation, I met with them, and they said BU must divest in General Motors and IBM. And I said, "Why should we do that? Is it immoral to own that stock?" Absolutely immoral to own it. And I said, "So then, we're supposed to sell it to somebody? We can't divest unless we sell it to somebody. And if we burn the stock, that just helps General Motors, because it reduces the amount of stock outstanding, so that can't be right. If we sell it to somebody, we have just gotten rid of our guilt in order to impose guilt on somebody else."
The common perception about the effectiveness of divestment lies in the belief that institutional selling of a certain stock lowers its market value. Therefore, the company's networth becomes devalued and the owners of the company may lose substantial paper assets. In addition, institutional divestment may encourage other investors to sell their stocks for fear of lower prices, which in turn lowers prices even further. Finally, lower stock prices limits a corporation's ability to sell a portion of their stocks in order to raise funds to expand the business.
See also
- Economic and political boycotts of IsraelEconomic and political boycotts of IsraelBoycotts of Israel are economic and political cultural campaigns or actions that seek a selective or total cutting of ties with the State of Israel...
- Ethical consumerismEthical consumerismEthical consumerism is the intentional purchase of products and services that the customer considers to be made ethically. This may mean with minimal harm to or exploitation of humans, animals and/or the natural environment...
- Socially responsible investingSocially responsible investingSocially responsible investing , also known as sustainable, socially conscious, or ethical investing, describes an investment strategy which seeks to consider both financial return and social good....
- PrivatizationPrivatizationPrivatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...