How to Adopt Divestiture Strategy in an Organization
Divestiture, also called divestment or disinvestment, is an organization's calculated withdrawal of certain assets. Economic or strategic divestment, intended to increase profits, is a fairly common business practice. Political divestment takes place when an organization wishes to protest, for example, actions it defines as human rights violations or environmental abuses. One particularly well-known, still influential example is the "Divest Now!" campaign of 1970s and 1980s anti-apartheid activists. Whether you want your organization to engage in economic or political divestment, careful research and planning can boost your chances of success.
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Instructions
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Determine whether there are tactics you need to try before divestment. If you are thinking about economic divestment for your company, you might be able instead to improve its bottom line through less drastic measures. For example, it might be able cut costs and capital expenditures through the use of new information technologies and outsourcing. If you are thinking about political divestment from a business, you may first want to attempt dialogue with corporate management. If that is unsuccessful, next introduce resolutions to be voted upon at corporate shareholder meetings. You can try dialogue strategies with a government, like meeting with officials.
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Evaluate whether divestment will have the effects you intend. With economic divestment, consider, for example, whether your company will actually be able to sell off the particular assets in question in the current marketplace, or whether the sale will cause company's stock value to rise or decline. Assess the possible repercussions of a political divestment campaign for the populations you aim to help. The effects may very well be constructive. On the other hand, consider Amnesty International's rationale for seeking alternatives to divestment. Amnesty International believes that divestment often hurts economically vulnerable populations far more than the political or business leaders engaging in problematic actions.
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Study case examples of divestment. If you want to boost your company's bottom line. Look in depth at examples like those mentioned in the "Art of Strategic Divestment." If you are seeking divestment for political ends, examine historical campaigns such as the ones against South African apartheid and British rule over Northern Ireland, along with more recent efforts, such as those against the governments of Israel, Iran, Myanmar and Sudan and corporations like BP in the tar sand regions of Canada.
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Apply and adapt what you have learned from past and present divestment efforts as you create a proposal for your organization.
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Identify and engage with other divestment supporters at all levels of your organization.
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Present your divestment proposal to the appropriate decision makers within your organization with the help of your supporters.
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Consider any appeals process or other options for persuading your organization to divest if your plan is voted down or ruled against.
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Tips & Warnings
In the case of economic divestment, "consider a divestiture as a strategic solution, not a purge," advises the Silicon Valley Transaction Services Roundtable. In other words, fit it into a long-range plan for boosting profits, even if it serves short-term financial imperatives. (ref 5-SVTSR p. iv; res 2-Deloitte; ref 1-Accenture)
With political divestiture, do not simply propose a withdrawal of assets, but offer constructive investment alternatives. The United Nations Principles for Responsible Investing can serve as a blueprint here. The Social Investment Forum website is also a good resource. (res 6-UNPRI; ref 6-SIF)
References
- Accenture: The Art of Strategic Divestment
- Amnesty International USA: Q & A on Boycotts and Divestment
- Goliath Business Knowledge on Demand: Corporate Divestiture Gains as Value-Creator
- Green America: Social Investing: Shareholder Activism
- Silicon Valley Transaction Services Roundtable: Divestiture Strategies and Solutions
- Social Investment Forum: After South Africa-The State of Socially Responsible Investing in the United States
Resources
- Corporate Divestitures; W.J. Gole & P.J. Hilger; 2008
- Deloitte: Divestiture M & A News: Managing Your Company Portfolios Through Strategic Divestitures
- Indigenous Environmental Network: Canadian Indigenous Tar Sands Campaign
- The MacBridePrinciples: Irish America Strikes Back; Kevin McNamara; 2010
- RichardKnight.com: Campaign for Sanctions and Divestment Against Apartheid South Africa
- United Nations Principles for Responsible Investment
- Photo Credit now image by charles taylor from Fotolia.com
