Reassessment prompts sale of pension stock
After an investment in G4S, a London-based security corporation, prompted concerns about human rights and prison-related issues, the United Methodist Board of Pension and Health Benefits reassessed the purchase this spring and recently sold the stock.
Dave Zellner, the board’s chief investment officer, told United Methodist News Service that G4S initially passed its screen for investments related to prisons because the company does not receive more than 10 percent of its revenue from managing and operating prisons. The G4S stock, worth $110,000, was purchased last December.
But when the company’s other activities, such as maintenance, products and services related to prisons and other security services, were taken into account “we felt as though we needed to more broadly apply our exclusion of companies that have exposure to prisons,” he said.
It is not unusual for the board to be contacted by people around the denomination regarding its investments, Zellner noted. “We’re pretty serious about following through and investigating any reports we receive,” he said.
In this case, United Methodist Kairos Response, an advocacy group, said it particularly was concerned about the involvement of G4S in human rights violations in the Israeli prison system and the military occupation of Palestinian territories. The stock sale received attention from national news media, including the New York Times, after the group issued a June 12 press release.
The Presbyterian Church (U.S.A.) is meeting this week in Detroit, and a vote on possible divestment from some companies whose products are used by the Israeli government in the Palestinian territories is on the agenda. M. Theresa Basile, part of the Kairos Response steering committee, said the Presbyterian vote did not influence the timing of the group’s press release.
“The timing was due to when they (pension board) sold the stock and told us they were doing it,” explained Basile, who said she was pleased with the action by the Board of Pension and Health Benefits. “We just wanted to be very prompt in getting the word out after we were told.”
Discussions on ethical investing
The 2012 United Methodist General Conference, the denomination’s top legislative body, defeated a proposal for divestment from three companies whose products are used by the Israeli military in the occupied Palestinian territories.
The next year, the Boards of Pension and Health Benefits and Global Ministries formed a task force to explore human rights and ethical investment policies on a global level.
When the United Methodist Human Rights and Investment Ethics Task Force released a draft of its final report May 1 for public comment, a member of Kairos Response discovered G4S was part of the Board of Pension and Health Benefits’ stock portfolio, Basile said. While the committee’s report “was positive in many ways,” she added, Kairos Response had been aware of serious human rights concerns related to G4S for some time.
David Wildman, who monitors human rights and social justice issues for the United Methodist Board of Global Ministries, is a resource person for the task force. He said he also was aware of concerns over G4S and conveyed them in his comments.
The pensions board confirmed that it received several comments that “specifically cited G4S, observing that the company is involved in providing prison and security services to the Israeli Defense Forces and that the IDF has been accused of abusing the human rights of incarcerated Palestinians (including torture).”
Members of the pension board’s leadership and Thomas Kemper, the Board of Global Ministries’ top executive, also met with Kairos Response representatives to discuss the report.
Wildman said he appreciated the collaborative process and that the pension board took the concerns seriously and noted the "team effort" involved in providing additional information about G4S. “It was (from) various United Methodists from around the connection concerned about our investments and human rights issues,” he pointed out.
The pension board also received an e-mail about G4S in June from Military Court Watch, an advocacy group concerned about the detention of children. Zellner and Barbara Boigegrain, top executive for the Board of Pension and Health Benefits, were introduced to the group during a field visit to the Occupied Territories in October 2012.
“We were placed on their mailing list, and we periodically receive information from them regarding arrests and the treatment of Palestinian children,” Zellner said
In the email, Military Court Watch offered a critique of a report that exonerated G4S on the issue of mistreatment of Palestinians. “It was a piece of information that further brought attention to company’s involvement in prison activities,” he explained.
Other research showed that the British Methodist Church has declined, over the years, to invest in G4S stock. A 2009 report of the church’s Joint Advisory Committee on the Ethics of Investment cited a “new concern” over the company’s acquisition of Armor Group, a private security contractor. “The committee concluded that Armor Group came close to running private unregulated armies; involvement with which was considered unacceptable,” the report said.
In the end, the rationale for selling G4S shares, as noted in the pension board’s public statement, was that products and services tailored to the prison industry “may not align with UMC values.” The decision was specific to G4S.
“If we could turn back the clock, if we knew then what we know now, we probably would have deferred the purchase until we completed our research,” Zellner said.
When Board of Pension and Health Benefits directors meet in July, they can decide whether to put G4S on the restricted list, Zellner said. Investment staff also will review its policies regarding human rights and conflict-affected countries with the directors.
“Our board has been quite emphatic in saying whatever policies we develop need to apply across the world,” he said. “We just think it’s not appropriate for us to single out Israel.”