Published on January 21st, 2013
Good start of the year to Stop Explosive Investments
Switzerland and Netherlands ban investments in cluster munition production
From 1 January 2013 legislation banning forms of investments in cluster munitions came into effect in Switzerland and the Netherlands.
The Cluster Munition Coalition (CMC) welcomes the steps taken by the Dutch and Swiss governments, both States Parties to the Convention on Cluster Munitions (CCM).
With this new legislation, the Netherlands and Switzerland join a growing number of states in outlawing financial support for production of these banned weapons. These acts speak to the ‘preventative nature’ of the Convention on Cluster Munitions and should be applauded” says Amy Little, from the Cluster Munition Coalition.”
In the Netherlands, the Dutch Market Abuse (Financial Supervision Act) Decree was changed to include an obligation to “prevent any Dutch financial institution to directly support any national or foreign enterprise which produces, sells or distributes cluster munitions.” The legislation includes a prohibition on providing loans, acquiring or offering a financial instrument that has been issued by a company engaging in the production, selling, or distribution of cluster munitions, and acquiring non-marketable holdings in the capital of such a company.
“Although the legislation contains some loopholes that we have argued against, we consider this a great step forward and expect financial institutions to take their responsibility and ban all investments in producers of these weapons from now on”, says Roos Boer, from CMC member organization IKV Pax Christi in the Netherlands.
In Switzerland, on January 1, the revised Federal Law on War Material came into force, which includes a prohibition on direct and indirect investments in the development, manufacturing or acquisition of prohibited “war material”, including cluster munitions. The legislation means that it is forbidden to directly offer credits, loans and donations or comparable financial benefits in this regard. Indirect investments are forbidden “if the intention is to bypass the prohibition on direct financing”.
“We believe the wording of the Swiss legislation could be even stronger, however the fact that Switzerland has banned the financing of cluster munitions is significant, especially given its role as a global financial hub. We expect financial institutions to respond accordingly and responsibly, and to fully disinvest from cluster munition producers”, said Petra Schroeter, from CMC member organisation Handicap International in Switzerland.
On January 8, Swiss bank UBS issued a statement declaring, “we have decided that we will not provide credit facilities, capital market transactions as well as buying and holding equity and/or bonds (including derivatives) of companies that are involved in the development, production or purchase of these controversial weapons”.
Full disinvestment from cluster munition producers by UBS would be an extremely positive outcome of this legislation. In the 2012 report “Worldwide Investments in Cluster Munitions; a shared responsibility”, authored by IKV Pax Christi (the Netherlands) and FairFin (Belgium) UBS was found to have investments in 4 companies identified as cluster munition producers.
The CMC and its members will continue to monitor worldwide investments in cluster munition producers by financial institutions worldwide, including UBS. The CMC calls on all governments to include a prohibition on investment in cluster munitions in their national legislation, to implement the Convention on Cluster Munitions. Certain forms of investment in cluster munitions are now banned in 7 states including Belgium, Ireland, Italy, Luxemburg, the Netherlands, New Zealand and Switzerland. Another 21 states have made interpretive statements that indicate that they consider investments in cluster munitions to be prohibited by article 1.(1).c of the Convention on Cluster Munitions.