Last month, Peter Kinder, a leading player in the United States' "socially responsible investments" community, called for a complete investment boycott of all firms operating in Sudan. Presumably this would include British Airways and Lufthansa who fly there and Nokia and Motorola whose mobile telephones are widely available in the country. The justification for his new campaign, familiar enough to Talisman investors in Canada and the U.S., is that firms operating in Sudan are complicit in the pain and suffering of Darfur. Many believe the dire situation in Darfur is being exacerbated by elements in the new national government. Indeed, in common with some of the more lurid commentary emerging from the U.S., people like Mr. Kinder argue that the "genocide" in Sudan is an even more compelling reason for divestment in that troubled country than was the case in apartheid South Africa, and that the tentative peace agreement signed by the government on Friday is no guarantee that the killing will stop.
These people may be right about the last point, but even if peace does not break out in Darfur, that is no reason for the kind of disinvestment Mr. Kinder is calling for.
As the president of KLD Research, the longest established and most influential social investment firm in the U.S., we can expect his advice to have an impact. We live in a world where opinion about corporate performance - ethical or economic - is socially constructed.
Commentators and agenda drivers of all stripes drive stock prices every bit as much as more rational or disinterested analysts. And, of course, influencing markets is as attractive to social activists as it is to some of the racier hedge funds. If Mr. Kinder says it is wrong to invest in Sudan, that statement will have an impact on the stock prices of firms who stay there, regardless of whether those firms are engaging progressively or not. This self-fulfilling prophecy will, in turn, reinforce Mr. Kinder's reputation for ethical stock-picking and his social index will continue to thrive. That is the nature of calls for divestment on ethical grounds.
I do not know if Peter Kinder has been in Sudan recently, but I have just returned from Khartoum where I have been working with an independent university, representatives of international institutions, and a variety of official and civil society institutions committed to building private enterprise options for the poor in southern Sudan and Darfur. From my four trips to Sudan in the last 18 months, I have reached three conclusions:
First, micro-enterprises and small- to medium-sized enterprises need access to finance and training and they need it now.
A few days ago, I was with a senior Sudanese government official who commands the respect of the international development community and the new national government. This hybrid government was formed only last year after the signing of a peace agreement between northern and southern forces who had waged war for two decades. This invariably upbeat and humorous man was celebrating the securing of 10 tractors - a minor breakthrough in what has been a virtual stalemate in creating livelihood for Sudan's poor, something that was supposed to happen after the peace agreement with the South. But the man was clearly showing signs of the enormous strain his demobilization and re-integration process is under. Just how far will 10 tractors go?
