American Funds’ approach to Sudan and socially responsible investing
Background
Although American Funds does not categorize any of its funds as “socially responsible,” when making investment decisions, we do consider the possible impact social issues may have on a company’s long-term success. It is important to remember that, as investment professionals, we have a fiduciary responsibility to base our investment decisions solely on the financial objectives stated in each American Funds prospectus.
The situation in Sudan
We abhor the genocide in Darfur and share with many the belief that investment firms with Sudan-related holdings should consider whether they could take actions that might help alleviate the crisis.
We are aware that some are urging investment firms to sell their holdings in companies doing business in Sudan based on the view that divestment is the best way to bring about needed change.
Others believe that staying engaged provides an opportunity to exert influence that could increase pressure on Sudan’s government to end the genocide. Earlier this year, Warren Buffett responded to calls for Berkshire Hathaway to divest itself of a firm doing business in Sudan by asking, “then what?” If publicly held international firms were to abandon their operations in Sudan, would their replacements — perhaps private companies or the Sudanese government itself — help, or might they actually make things worse?
We have spent much time discussing the potential effectiveness of various responses to this tragic situation. We have determined not to divest, but to use our status as a shareholder in companies doing business in Sudan to support calls for meaningful, enduring change. Among other things, we are urging the managers of these companies to press the Sudanese government to take actions to end the genocide.
Other social issues
Since the introduction of these funds in the 1950s, American Mutual Fund® and Washington Mutual Investors FundSM have policies that prohibit investing in the securities of companies that derive a majority of their revenue from alcohol or tobacco.