(October 26, 2011) — Indiana’s pension funds are ridding themselves of Sudan-linked firms.

Indiana’s pension funds have started unloading nearly $16 million in investments in two companies which do business in Sudan, according to Indiana Public Media. Indiana Public Retirement System (INPRS) executive director Steve Russo told the news publication that three companies were dropped from the state’s watchlist after the fund contacted them in February. Currently, the state is in the process of unloading investments in mining-equipment company Atlas Copco and the natural gas and diesel engineering firm Wärtsilä OYJ.

“It’s very hard for us to go back and say, ‘if we hadn’t had to have divested from that company, would the funds have been better off or not?,” Russo told the news service. “It’s almost impossible to go back and do that research.”

In 2007, Sudan’s human rights violations prompted legislators to prohibit pension-fund investments in companies doing business there. The law currently gives the Indiana scheme three years to begin the divestment process, and a total of five years to finalize the process. The state department lists Iran, Syria, Cuba, and Sudan as state sponsors of terrorism.

The decision by INPRS follows a move by the nation’s largest public pension fund to slash its investment associations with Iran and Sudan, fully complying with state divestment laws passed in 2006 and 2007. In May, the California Public Employees’ Retirement System (CalPERS), worth roughly $236 billion, asserted that it planned to shed the rest of its Sudan and Iran-linked holdings.

The move came in response to strong sanctions adopted in 2010 by the federal government, the United Nations, and European Union, which started the withdrawal of several large multi-national oil and energy companies from Iran, which has been identified as a state sponsor of terrorism, as well as Sudan, which has been cited for genocidal acts. In 2006, the Legislature passed laws instructing the state’s pensions — CalPERS and California State Teachers’ Retirement System (CalSTRS) — to withdraw their money from Sudan and Iran a year later. Instead of ordering immediate divestment, however, the laws provided the pensions with additional time to give them greater ability to follow through on their fiduciary duty. Following the legislation, CalPERS adopted an initial Sudan divestment policy in 2006. While the nation’s largest public fund once had $2 billion invested in 47 companies in the two countries, as of May CalPERS owned shares valued at approximately $160 million in only eight companies that fell within the parameters of the State’s Iran and Sudan divestment acts, according to a statement on the fund’s website.

“The cost of continuing to hold the stock of these eight companies is greater than the value of divesting them,” said Rob Feckner, CalPERS Board President, in a statement released May 16 from the fund. “Consistent with our fiduciary duty as trustees, we’re taking this step in the best interest of the Fund.”

Other funds have faced mounting pressure to exit holdings of Iran. In August 2010, Massachusetts Governor Deval Patrick signed legislation that would force the state pension fund to divest from companies supporting Iran’s oil industry. According to the legislation, the Massachusetts Pension Reserve Investment Board (MassPRIM) – which manages roughly $42 billion on behalf of public entities in the state – had one year in which to hire an independent research firm to conduct a study of its holdings and divest from any companies that invest in the Iranian oil industry. The MassPRIM board must also update the list of prohibited companies on a quarterly basis, the law stipulated.