Leading financial institutions worldwide continue to invest more than US$43 billion in producers of cluster munitions despite a comprehensive treaty banning the weapons set to become binding international law, according to new research presented by Cluster Munition Coalition (CMC) members in Geneva today.
“Many leading banks have already changed their policies to reflect the growing international revulsion toward cluster munitions,” said Thomas Nash, Coordinator of the CMC. “It’s time for all financial institutions to stop the flow of funds to companies that produce cluster bombs, which cause tremendous human suffering and hamper development.”
The new research updates the findings of “Worldwide investments in cluster munitions: A shared responsibility,” the most comprehensive study to date of the role of financial institutions in funding cluster munition production. CMC member organisations IKV Pax Christi and Netwerk Vlaanderen co-authored the October 2009 report, and this update surveys 182 financial institutions in more than 20 countries – including retail banks, investment banks, asset-management companies and private and public pensions. The report looks into the investment practices of financial institutions to categorise them into a “Hall of Shame,” a “Hall of Fame” and “runners-up.”
“It is unacceptable for leading financial institutions to continue investing in weapons which are to be banned under international law and which continue to kill and maim for decades after they are used,” said Roos Boer of IKV Pax Christi and a co-author of the report. “These killer weapons are illegal and highly stigmatised, so it is very disappointing to see that so many leading banks continue to invest in them.”
The human and economic cost of cluster munitions is well-documented. The weapons have killed and injured thousands of civilians during the last 40 years and continue to do so, long after conflicts are over. Globally, 105 countries have signed the Convention on Cluster Munitions, which comprehensively bans the use, production, transfer and stockpiling of the weapons, and which will enter into force and become binding international law on 1 August 2010.
Some of the world’s top financial institutions undermine this commitment to ban cluster bombs by continuing to finance the following seven leading producers of the weapons and their components: Alliant Techsystems ATK (USA), Hanwha (South Korea), L-3 Communications (USA), Lockheed Martin (USA) Poongsan (South Korea), Singapore Technologies Engineering (Singapore) and Textron (USA). Since May 2007, financial institutions provided these companies with:
- investment banking services worth more than US$6,712.15 million;
- loans amounting to at least US$3,190.26 million; and
- owned or managed shares and bonds for at least US$33,116.1 million.
Of the 146 financial institutions listed in the report’s Hall of Shame, 102 are from countries that have not signed the Convention, and over half are from the United States. Fifteen are based in four countries that have signed and ratified the Convention (France, Germany, Japan and Spain) and 28 are from countries that have signed but not yet ratified the CCM. Thirty-two financial institutions investing in producers of cluster munitions are from the European Union, and 31 of these financial institutions are from countries that have signed the Convention.
The report’s Hall of Fame includes financial institutions that have adopted strong policies and are from countries that have signed the Convention. Among them are five government-managed pension funds (in Norway, Ireland, New Zealand and Sweden), three ethical banks and 13 private institutions. Research for the report showed that having a strong government policy is influential – the state-run Norwegian Pension Fund has excluded producers of cluster munitions since 2004.
“Worldwide investments in cluster munitions” also looks at national legislative initiatives to prohibit investment in cluster munitions. CMC and others believe that investing in cluster bomb producers must be interpreted as a form of “assistance”, which is prohibited under Article 1C.
“It is time to stop the double standards – countries should adopt policies to prevent these investments and financial institutions should disinvest from these banned weapons,” said Esther Vandenbroucke, of Netwerk Vlaanderen and a co-author of the report. “We praise the governments and financial institutions which have taken clear steps to stop investments in cluster munitions and we will be campaigning for others to do the same.”
Belgium, Ireland, Luxembourg and New Zealand have already outlawed investment in cluster munition producers. Switzerland is considering such a prohibition and other states such as Lebanon have said they see investment as one of the prohibited forms of assistance in the Convention on Cluster Munitions.
The CMC encourages all countries to adopt legislation prohibiting investments in cluster bomb producers, through its Stop Explosive Investments campaign, launched in October 2009.