TIAA-CREF Escapes Shareholder Vote on Israel Divestment

A Palestinian activist group’s proposal to bar CREF from stock of companies involved in Israeli West Bank settlements does not have to go to proxy vote, the SEC has decided.

(May 31, 2013) – TIAA-CREF's shareholders will not vote on a proposal seeking to bar the asset management giant from owning stock in companies related to Israeli settlements in Gaza.

The US Securities and Exchange Commission (SEC) has approved TIAA-CREF's petition to take no action on the proposal, which members of the Palestinian-led Boycott, Divestment and Sanctions (BDS) movement submitted in February.

The BDS has been calling on the College Retirement Equities Fund (CREF) to drop not only certain Israeli companies, but also a number of multinationals it claims provide "support for the Israeli occupation and segregated settlements in the West Bank including Jerusalem." If passed, CREF would be barred from owning stock in Caterpillar, Motorola, Veolia Transportation, and Northrop Grumman, among others.

The SEC's decision letter to TIAA-CREF allowed the omission because "it dealt with a matter related to CREF's ordinary business operations"—specifically, the buying and selling of securities. Furthermore, the regulator concluded that the financial firm already complied with what it deemed the proposal's broader aim: "Engagement of portfolio companies and consideration of divestment in appropriate cases."

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CREF, the SEC noted, followed internal investment guidelines for responding to social, environmental, and governance issues, even up to divestment. In 2010, it became one of the first major financial firms to drops companies with material business dealings in Sudan from its portfolio.

In response to TIAA-CREF's appeal to the SEC, an attorney with the Pro-Palestinian activist group claimed the firm was avoiding the Israeli "question because it has already divested from Darfur."

Another lawyer supporting BDS characterized the divestment submission as "in the tradition of the US civil rights movement and shareholder resolutions against South African apartheid."

In April, a spokesperson for the financial firm told aiCIO its attempt to exclude the divestment proposal from proxy vote was in accordance with these internal policies. "TIAA-CREF makes decisions that are guided by our corporate governance policies and the best long-term interests of our customers," the spokesperson said. "We are always listening and determining how best to serve clients according to our guidelines."

View the SEC's decision letter to TIAA-CREF here.