KLD's Sudan Compliance recommended by Illinois State Universities Retirement System

KLD Completes Update of the Sudan Report

KLD's Sudan Compliance recommended by
Illinois State Universities Retirement System

By the end of January 2006, money managers for Illinois pension funds must comply with recent state statutes for divestment in Sudan. The Illinois Public Act 0043-0097 calls for all public pension funds in the state to divest themselves of companies doing business in Sudan.

The Illinois State Universities Retirement System (SURS) has recently recommended KLD's Sudan Compliance as an independent research source to help its investment managers screen out from the fund prohibited investments connected to Sudan.¹

To learn more about KLD's Sudan Compliance, click here: http://www.kld.com/compliance/sudan.html

¹ "Illinois fund recommends firm for Sudan screening", Pensions & Investments, December 12, 2005

KLD Completes Update of the Sudan Report

In November 2005, KLD completed research on its Sudan Compliance product, a global list of companies identified as having involvement in Sudan. KLD's Sudan Compliance product enables investors and money managers to carry out engagement or divestment mandates related to corporations involved in Sudan. The list, designed to be compatible with the guidelines set out by the State of Illinois Sudan legislation, is customizable to differentiate between eight types of involvement, in anticipation of other emerging state legislation and mandates. Clients can also elect to include information that details a company's specific involvement in Sudan.

The KLD Sudan Compliance product covers all companies in the global publicly traded universe. Not surprisingly, a vast number of companies (44%) currently on the list are located in Asia Pacific, with India and Malaysia accounting for 17% of the total companies each. The Middle East accounted for 14% of the companies.

Twenty-nine percent of the companies are located in Europe, with France and Germany accounting for the most companies, each with 6% of companies on the list. The United States and the United Kingdom each accounted for 5% of the total companies.

Among the eight different types of identified company involvement in Sudan, the most common type, companies providing goods or services in the country, account for 80% of the companies on the list. The next largest category, companies identified as having employees or facilities in Sudan, account for 32% of the total companies.

One of the trickier issues encountered during the research of the Sudan Compliance product was the problem of differentiating companies that were involved, but as providers of humanitarian services within the country. The State of Illinois excluded humanitarian aid and services from its definition of forbidden entities and does not provide specific guidelines or definitions for this type of involvement, leaving the door open for varied interpretations. While KLD will make a list of these companies available to clients on request, the companies identified by KLD as providing humanitarian services within Sudan will not be included on the initial list of restricted securities. "KLD felt strongly that neither we nor our clients would be interested in penalizing these companies with divestment for providing humanitarian aid to Sudan," reported Claire Moroni, KLD's lead research analyst for the Sudan project.

For more information about KLD's Sudan Compliance product, please contact Randy O’Neil at roneil@kld.com.