On July 9, 2011 the Republic of South Sudan became an independent and sovereign state, gaining independence from Sudan. The newly formed Republic of South Sudan is made up of the territory already exempted from the imposed trade embargo against Sudan originally declared by the U.S. government in 1997 due to the country’s continued support for international terrorism, ongoing efforts to destabilize neighboring governments and multiple human rights violations. While the creation of the new country is a significant and positive development, there remain several areas of concern with regards to the region. These include the reported ongoing violence in the Darfur region and the recent violence in the Southern Kordofan region. Sudan and South Sudan also have yet to negotiate an agreement relative to oil revenue or control over Abyei, a border region both countries claim as their own.
Implications for Legislative Mandates
The creation of South Sudan may impact certain states’ divestment legislation. Many states have “sunset clauses” which provide that the law will cease to have effect after certain requirements are met. While the creation of South Sudan is not a requirement in any state’s legislation, certain future actions taken by the U.S. government in response to the creation of South Sudan may meet the requirements of some states’ sunset clauses. These actions include the removal of Sudan from the U.S. State Department’s list of State Sponsors of Terrorism and the lifting of all sanctions against Sudan. Another example of how the creation of South Sudan may impact the interpretation of divestment legislation is in the identification of companies doing business in Sudan and their placement on prohibited lists. States will need to differentiate between companies with activities in The Republic of Sudan and in South Sudan. Some states, but not all, already differentiate between activities in the two countries with a clause exempting companies that only do business in South Sudan.
We anticipate that companies doing business within South Sudan will increase disclosure in an effort to distance themselves from the negative implications of involvement in the Republic of Sudan. Because of this, it will be critical to definitively identify all activities and their locations when doing research on companies with activities in either the Republic of Sudan or South Sudan. IW Financial has been tracking involvement in South Sudan and currently has the capacity to differentiate between this involvement and involvement in the Republic of Sudan.
We will continue to monitor corporate involvement in Sudan and the individual impacts of legal, social, and economic issues that may develop as a result of the ongoing political changes in the Middle East, including North Africa. To receive a free copy of our full briefing on the South Sudan situation click here.
About IW Financial
Established in 2001, IWF’s global compliance solutions offer asset managers and institutional investors a broad range of compliance research and consulting services. These services are designed to help organizations create appropriate guidelines as well as compliance list solutions that address both legislative and values/faith based investment mandates.
IWF’s global compliance solutions cover a broad range of corporate involvement factors across a global universe of publically traded companies incorporating bottom up and top down issue centric research. Additionally, IWF also provides a comprehensive range of proprietary ESG and SRI research and analytics available via an online platform or as a data feed.