UCF Mideast Engagements

As an associated ministry of the United Church of Christ, United Church Funds seeks to respond to General Synod resolutions calling for investment-related action within the range of opportunities and limitations that underpin our work as an investment manager.

2005

Prior to the 2005 General Synod, when the resolution passed Concerning Use Of Economic Leverage In Promoting Peace In The Middle East, the Board of Directors of United Church Funds (then United Church Foundation or UCF) issued a statement reaffirming the organization’s commitment to influence the practices of the companies in its investment portfolio, and acknowledging the UCC’s decades-long history of using economic leverage. UCF stated,

We continue to believe that we have a spiritual and moral obligation…to be actively involved with the management of companies to seek change where the practices and values of those companies…do not live up to the spiritual and moral values of the United Church of Christ.

2006

The following year, UCF began participating in a task force that became known as the Ecumenical Action Group for a Just Peace in Israel-Palestine (EAG) — a group comprising representatives from the mainline Protestant denominations, a number of Roman Catholic orders, and other faith-based groups sharing an interest in this issue. The group remains active and continues to grow; the core members remain the Presbyterian Church USA (PCUSA), the United Methodist Church (UMC), the Sisters of Mercy, the Evangelical Lutheran Church in America, and the UCC.

2006 — present

With this group, UCF representatives have visited the region, participated in a number of shareholder engagements, and co-sponsored resolutions at corporate annual meetings. Action has primarily centered on Caterpillar, Motorola (through various corporate restructures), Hewlett-Packard and its EDS division, Citibank, and Microsoft. Through its Social Action Fund, UCF has maintained shares in relevant corporations to ensure its ability to continue engagement activity.

2011 — 2012

At the UCC’s 2011 General Synod, a resolution essentially seeking to undo the 2005 vote in favor of “positive investment” was tabled by the Synod. In early 2012, the PCUSA’s Mission Responsibility Through Investment Committee (MRTI) published a document describing the history of engagement — accomplished almost entirely in collaboration with UCF and other members of the EAG — as the MRTI called for its denomination to divest from Caterpillar, Motorola Solutions and Hewlett-Packard. In April, Quaker Friends Fiduciary Corporation divested from Caterpillar, following up a few months later with divestment from Hewlett-Packard and Veolia.

In the summer of 2012, divestment actions were brought to both the General Assembly of the PCUSA and the General Conference of the UMC. Several pro-Israel groups aggressively lobbied voting delegates from both denominations, and the actions were defeated. At the PCUSA, however, a procedural move effectively meant the actual divestment action did not come up for a vote. And at both denominations (and at the United Church of Canada), resolutions calling for boycotts of Israeli settlement products were adopted.

Persistent Engagement Gets Noticed

United Church Funds continues to believe that engagement with corporate management offers the best opportunity to effect social change. The South African anti-apartheid movement required decades of action to bring about change, despite a less complex domestic and geo-political situation. And ultimately, that change required both government sanctions (unlikely given the US-Israel relationship) and a critical mass of corporate defections from the South African economy.

Critical mass remains a salient factor in the success of economic leverage as well. While divestment sends a signal, that signal rings for one moment in time and then fades — and the signal doesn’t sound loudly without millions of dollars at stake. The portfolios of the organizations participating in the EAG remain too small to make a strong public statement, as the pension funds of most mainline denominations have limited their collaboration in engagement or have adopted an alternative course of action.

At his 2011 annual meeting, the CEO of Caterpillar invited unhappy shareholders to divest — a sure sign that engagement, while generally a long-term strategy, maintains the potential to ultimately effect change. As shareholders keep up the drumbeat of better practices, other pressures may mount as well: in June of 2012, Morgan Stanley delisted Caterpillar from its MSCI-ESG index in part over the reputational risk Caterpillar faces from its continued sales to the Israeli military. Several noted Roman Catholic sisters have demonstrated that a persistent thorn in the flesh of corporate management gets noticed.

Positive Investment Offers a Complementary Strategy

While engagement and divestment offer excellent strategies for bringing non-violent pressure to bear, positive investment can provide a means to support those who live daily with the struggle for justice. Some have presented “positive investment” as an alternative to engagement; the strategy sounds appealing, but yields extremely limited impact in the struggle to bring about a just peace. In fact, “positive investment” in Palestine has no impact at all on Israel, its economy, or most importantly, its ongoing Occupation.

In seeking opportunities for positive investment, a number of issues arise —

The Palestinian economy offers limited investment opportunities suitable for an organization with fiduciary responsibility. When they invested in the Siraj Fund, a Palestinian private equity (venture capital) vehicle, the Pension Boards UCC invested money from its endowment portfolio and did not invest member funds.
Venture capital investments offer little to Palestinians who are not already in viable businesses suitable for additional investment. The Occupation has devastated many small business owners and farming families, cutting them off from trade and even from productive land owned by their families for generations.
Because Israel maintains control of all borders to the Palestinian territories, the import and export of raw materials, finished goods and produce can be restricted on a moment’s notice — or even on the whim of a border official. Stories abound of produce trucks held up for days at the border, and only freed when the load had begun to spoil. In 2006, UCF met with the owner of a West Bank bus company who invested in additional vehicles after the Oslo Accord. When Israel placed restrictions on Palestinians’ movement not long after the Accord was signed, the bus company’s business deteriorated dramatically. What’s more, the only authorized service locations for the company’s vehicles were located in Israeli settlements.
The movement of individuals can be restricted at any moment as well. Palestinian Christian leaders have been silenced under threat that their cross-border and international travel visas will be revoked.
Leaving aside the near impossibility of transit in and out of Gaza, movement within the West Bank itself often proves arduous given the manner in which Israel has located settlements and confiscated Palestinian land for “security zones.” The map below reveals the limited amount of contiguous territory within the West Bank, a geographical fact that forces Palestinians into long transits to travel short distances.
Without the ability to move goods and people freely across borders, Palestinian businesses are constrained from seeking new markets beyond their borders, effectively creating a closed and very limited market for all but a few businesses.
Palestinian Land Loss (1946-2010)

The opportunity to participate in microfinance may offer a means of meaningful investment in the Palestinian struggle for justice. UCF has begun conversations with ecumenical partners and the Bank of Palestine, and is researching networks used by organizations like UNRWA (United Nations Relief and Works Agency for Palestine Refugees in the Near East) for potential engagements in the microfinance arena.

Divestment: A Last Resort

While the option to divest remains on the table, UCF believes divestment effectively removes us from the conversation and therefore from the opportunity to serve as a persistent voice for justice. What’s more, divestment itself can be divisive — particularly in the debate over the Occupation and the future of Israel-Palestine. As our ecumenical partners have found, the progress of divestment actions can be fraught and can even undermine the effort to use economic leverage. For the foreseeable future, UCF expects to remain active, engaged and vocal in the pursuit of a just peace for Israel-Palestine.

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