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Taking stock of taking stock

Posted: Tuesday August 03, 2004 12:24 AM EST

By Alexa Smith Presbyterian News Service

Presbyterian Church researching ‘selective’ divestment in Israel-related firms

LOUISVILLE — Bill Somplatsky-Jarman is knee-deep in Presbyterian policies, surrounded by paper-clipped piles of documents.

He’s beginning to research criteria the Presbyterian Church (USA) may use to select multinational corporations who do business in Israel to urge them to eliminate practices that undermine peacemaking efforts in the Middle East.

The PC(USA) General Assembly voted July 2 to start a process of a phased and selective divestment of its nearly $8 billion portfolio from select companies that profit from sales of products or services that cause harm to Palestinians or Israelis or both.

The effort is phased because it proceeds in stages. It is selective because it targets specific companies, since corporations differ in significance and involvement in undermining peace, as determined by the denomination’s research.

The Assembly also opposed Israel’s ongoing construction of a 425-mile-long “separation barrier” that winds across the West Bank, annexing land without negotiation. Portions of the barrier are built near the pre-1967 border, but some sections extend deep into Palestinian towns and farmlands on the West Bank.

It is a complex of high concrete walls, razor-wire fences, trenches and watch towers that Israeli contends is necessary to stop suicide bombers, pointing to a sharp drop in the number of casualties since construction began.

Both Assembly actions provoked a firestorm of criticism from Jewish groups.

It is Somplatsky-Jarman’s job to begin analyzing Presbyterian policies regarding Israel and Palestine to guide the process of establishing criteria for divestment, including decisions about which corporations are to be pressured to change their business practices.

So far, he has been trying to determine who profits most from building settlements, from constructing the wall and from selling machinery that destroys Palestinian homes, vineyards and orchards. At some point, he will check out the bank loans that finance such work, relying on input from agencies like the California/Nevada Interfaith Committee on Corporate Responsibility in San Francisco.

At its November meeting, the denomination’s Mission Responsibility Through Investment Committee (MRTI) will review the research, establish criteria and develop a work plan to approach corporations and financial institutions that provide products, strategic services and funding that the denomination has determined are harmful. Somplatsky-Jarman staffs the committee.

“Presbyterians have historically been concerned about the expansion of settlements — and the effect that has had on the breakdown of the peace process, making it even more difficult to return to the 1967 borders — and the construction of the wall,” he says. “U.S. companies who supply the wherewithal for the Israeli Defense Forces (IDF) to tear down houses — that’s definitely a concern.”

He glances up from a human-rights analysis of Caterpillar sales, published by the Investor Responsibility Research Center in Washington, DC.

The Presbyterian Foundation holds 36,900 shares of Caterpillar stock, which is worth about $2.7 million. Another 200 shares, valued at $15,000, are in the Board of Pensions’ $6 billion portfolio.

Somplatsky-Jarman knows that Caterpillar is already on the radar of several religious and secular groups that filed a shareholder’s resolution with the company in 2004, questioning whether supplying bulldozers to the IDF is consistent with Caterpillar’s Code of Worldwide Business Conduct. (See related story: Nuns squeeze Caterpillar)

Shareholders clobbered that resolution — 96 percent voted against it — but the 4 percent support is enough to re-file the resolution in 2005, according to regulations established by the Security Exchange Commission (SEC).

Somplatsky-Jarman is considering recommending joining those groups in another resolution; it depends on what they write and how it jives with Presbyterian policy.

He has dealt with Caterpillar before. In the early 1980s, the PC(USA) helped persuade Caterpillar to stop modifying trucks for use by the South African military. And MRTI is talking with the corporation now about lowering greenhouse gas emissions from its manufacturing facilities.

MRTI always initiates dialogue first to challenge corporate behavior or ethics, and turns to divestment as a last resort, a tool employed only when everything else fails, or when a company refuses to talk with church investors.

“Once we’ve divested, we’ve certainly made a public statement … that we’ve been unable to accomplish anything,” Somplatsky-Jarman says.

In order to actually divest, MRTI needs approval from either the Assembly itself or the General Assembly Council (GAC), which acts on its behalf in between Assemblies. To divest from an Israel-related company would require a GAC vote, as specified in the Assembly’s action.

When filing shareholder resolutions, MRTI may or may not need GAC approval. If a resolution speaks to general human-rights violations, the committee is free to move. If it is targeting a specific case, the GAC must approve.

This is controversial work, inside and outside the church.

Caterpillar is a good example, since MRTI has dealt with it before. Its headquarters is in Peoria, IL, in Great Rivers Presbytery. Members of local congregations work there, which means that some Presbyterians won’t take kindly to the national church’s “meddling” in corporate life, while others will support the effort in principle.

But outsiders get angry too.

Somplatsky-Jarman leans over and plays back the last message on his speaker phone. It is from an agitated — and anonymous — man, who spits out his words:

“Why are you trying to hurt the state of Israel, Bill? Why are you trying to hurt Jews? I’m outraged. I know exactly what’s in your heart, you son of a bitch. You want ‘em all to die in ovens, Bill?”

The message goes on, but Somplatsky-Jarman pushes a button and stops the tape. He’s had about 40 calls since the Assembly took action three weeks ago. Some from pastors wanting information. Others from reporters wanting comment. Some like this one, hurling abuse.

But he has been at this for a long time. He says that the church is just setting out to accomplish “long-lasting peace in the region, where everybody’s rights are respected, and that involves taking a critical view of the actions of everyone involved, including ourselves.”

What about a phased divestment process from Palestine to try and stop the violence generated by that side in the conflict?

Somplatsky-Jarman pauses and says: “There isn’t anything there. That’s literally true.”

The PC(USA) has never endorsed a blanket divestment, which would pull all investments out in one fell swoop. Even in the 1980s, when a massive divestment campaign was launched against South Africa-related businesses, the PC(USA) used a phased, selective approach. Not all companies share equal involvement in practices that concern the church, Somplatsky-Jarman says. Nor is the intent to upset a country’s wider economic life.

A deliberate, phased, selective process is more effective than a one-time comprehensive action, he adds.

While massive divestment focuses the act almost entirely on the divestor, a phased, selective divestment places the focus on the activities of a few specific firms — and invites sustained attention as it moves through a process, beginning with dialogue, that either leads to change or to other methods that attempt to alter a corporation’s behavior, such as shareholder resolutions or public pressure.

The church adopted a divestment policy in 1984 stating that divestment is an ethical form of witness. Somplatsky-Jarman says a phased, selective divestment process is consistent with Reformed theology because it challenges the world to examine its behavior and reform it.

The original language in the overture from St. Augustine Presbytery called for blanket divestiture of investments in all companies investing more than $1 million in Israel or receiving $1 million or more in annual profits from investments in Israel. The Assembly tempered that proposal, relying instead on the phased, selective approach. 

The PC(USA) seldom resorts to divestment. It did so with South Africa-related businesses. And three years ago with Talisman Energy, a Canadian oil company whose operations were protested by Presbyterians in Sudan as propping up the oppressive government in that country. Talisman was reinstated to the denomination’s investment portfolio this year after it pulled its operations out of Sudan.

The PCUSA has also divested from the alcohol, tobacco and gambling industries, as well as companies that are overly dependent on military contracts and those which produce components for nuclear weapons and land mines.

In his research, Somplatsky-Jarman has discovered that the merits of blanket boycotts of Israel-related businesses are being debated on U.S. university campuses and even in some major cities.

Some companies respond to pressure from stockholders or the public, and some do not. For now, Somplatsky-Jarman is plodding through piles of paper and surfing the Web, reading and researching.

“The first task of research is to verify what we’re actually talking about: Who is involved with Israel, and in what way?” he says. “We’ll be looking at what the church really wants to accomplish. Most of that revolves around the wall, settlement construction, and military activity that destroys Palestinian homes.

“ … We have Presbyterian statements that (speak) to the majority of those concerns. We just have to figure out who all is involved in that.”

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