WASHINGTON (Dispatches) -- A new study by the Alicia H. Munnell, former assistant secretary for economic policy in the U.S. Department of the Treasury and a member of the Council of Economic Advisors, shows that divestment by public pension funds of shares of companies doing business in or with some countries such as Iran “can be complicated, costly and ineffective.""

Munnell, who is now director of the Center for Retirement Research at Boston College, has done analysis about recent moves by U.S. state legislatures and municipal governments to enact, or propose, divestment by public pension funds of shares of companies doing business in or with Sudan and Iran, as well as other countries.
Her report – “Should Public Plans Engage in Social Investing?” – examines the results of past divestment efforts, and notes past efforts have “virtually no effect” on target companies, Pensions & Investments (pionline) reported. Even the most frequently cited international boycott that worked - the moves to isolate South Africa and force an end to apartheid - ""had virtually no effect on stock prices,"" she wrote. Other investors were eager to purchase shares that were shed by those that participated in the boycott.
Ms. Munnell, an economist with a Ph.D. from Harvard University, has studied pension investment issues since the 1970s from various vantages. Among them, she was assistant secretary for economic policy in the Department of the Treasury and a member of the Council of Economic Advisors, both in the Clinton administration, and senior vice president and director of research at the Federal Reserve Bank of Boston.
In this regard, “Rockymountainnews” reports, “The record of public campaigns to divest from companies involved with (these) states is not encouraging and we've generally been skeptical when activists and lawmakers have demanded that public pension funds modify their investment strategies for political reasons.”
Unfortunately, the Sudan law has encouraged new appeals to divest some U.S. pension funds from other states. State Sen. Josh Penry, R-Fruita, and Rep. Frank McNulty, R-Highlands Ranch, plan legislation that would target Iran, Rockymountainnews reported.
It writes, “The idea of defunding has its appeal. But effectively executing such a policy could well hurt Americans in ways the Sudan policy should not.”
Since 1995, sanctions imposed by Washington ended most dealings between U.S.-based companies and Iran. But most other nations have maintained commercial relations with the Islamic state. Even though an Iranian divestment plan of the type outlined by Penry and McNulty would primarily target government contractors and energy firms, it would be far more costly and difficult for pension funds to abide by than the Sudan law given the size of Iran's economy. Some of the many multinational companies that would be affected have a presence in some U.S. states such as Colorado, and hire Americans, Rockymountainnews reported