Sixty-eight banks fuelling cluster munition producers with billions of dollars
Briefing paper by Netwerk Vlaanderen
Netwerk Vlaanderen
2007-03-01
Brussels
Netwerk Vlaanderen vzw Christophe Scheire Vooruitgangstraat 333/9 B-1030 Brussels - Belgium Tel. +32 (0)2 201 07 70 – Fax. +32 (0)2 201 06 02
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Today Netwerk Vlaanderen launches its new briefing paper ‘Explosive Investments’ revealing the results of its research into the financing of six cluster munition producers like Lockheed Martin, Thales and Raytheon. Sixty-eight financial institutions have been found to play a role in the financing of these companies.
International Banks Involved
Financial flows have reached these companies from all over the world. The research contains information on financial institutions from Australia, Belgium, Canada, France, Germany, Italy, Japan, Saudi Arabia, Spain, Switzerland, The Netherlands, UK and USA.
Together they secured credit facilities for these six cluster munition producers worth a total amount of US$ 12.6 billion (€ 10 billion) during 2004-2007. Investment banking services have also arranged bond issues for two companies worth a total amount of US$ 1.3 billion (€ 1 billion) during the same period. Several financial institutions have also been found to hold significant shareholdings in four cluster munition producers. And this is only the top of the iceberg.
Low Standard of Responsibility
Although 98% of cluster munition victims are civilians, cluster munition producers don’t have any problems attracting capital from financial markets. Financial institutions all over the world seem to have no objections financing companies producing cluster munitions. Expensive and well known concepts like corporate social responsibility and socially responsible investment seem to have little impact on these investment decisions. Financial institutions generally don’t even consider disinvesting from morbid civilian-killers like cluster munitions.
On the other hand civil society and affected communities are increasingly realising that the blind allocation of capital resources to this kind of company lends legitimacy to these companies and their continuing production of cluster munitions. A strong signal by the financial community that investing in cluster munitions is no longer meeting their ethical standards, would make a big difference.
Best Practices
Ambitious daydreaming? Maybe, but fortunately some financial institutions have already cleared the path for these developments. Recently not only ethical banks but also some mainstream financial institutions have decided to reject any investment in companies involved in cluster munitions. Examples are the Belgian KBC, the Norwegian Storebrand and the Norwegian Pension Fund.
Time for a Ban on Investments
Of course governments can also play a big role in reallocating capital resources away from cluster munitions. Firstly they can give the good example by excluding cluster munition investments from government funds, secondly they can vote laws banning investments in these weapon systems. Recent steps have been taken by the European Parliament, and the Belgian and Norwegian Parliaments. Now that Norway has taken the initiative to work on an international treaty to ban cluster munitions, including a ban on investments in the treaty could make a major shift.
International Banks Involved
Financial flows have reached these companies from all over the world. The research contains information on financial institutions from Australia, Belgium, Canada, France, Germany, Italy, Japan, Saudi Arabia, Spain, Switzerland, The Netherlands, UK and USA.
Together they secured credit facilities for these six cluster munition producers worth a total amount of US$ 12.6 billion (€ 10 billion) during 2004-2007. Investment banking services have also arranged bond issues for two companies worth a total amount of US$ 1.3 billion (€ 1 billion) during the same period. Several financial institutions have also been found to hold significant shareholdings in four cluster munition producers. And this is only the top of the iceberg.
Low Standard of Responsibility
Although 98% of cluster munition victims are civilians, cluster munition producers don’t have any problems attracting capital from financial markets. Financial institutions all over the world seem to have no objections financing companies producing cluster munitions. Expensive and well known concepts like corporate social responsibility and socially responsible investment seem to have little impact on these investment decisions. Financial institutions generally don’t even consider disinvesting from morbid civilian-killers like cluster munitions.
On the other hand civil society and affected communities are increasingly realising that the blind allocation of capital resources to this kind of company lends legitimacy to these companies and their continuing production of cluster munitions. A strong signal by the financial community that investing in cluster munitions is no longer meeting their ethical standards, would make a big difference.
Best Practices
Ambitious daydreaming? Maybe, but fortunately some financial institutions have already cleared the path for these developments. Recently not only ethical banks but also some mainstream financial institutions have decided to reject any investment in companies involved in cluster munitions. Examples are the Belgian KBC, the Norwegian Storebrand and the Norwegian Pension Fund.
Time for a Ban on Investments
Of course governments can also play a big role in reallocating capital resources away from cluster munitions. Firstly they can give the good example by excluding cluster munition investments from government funds, secondly they can vote laws banning investments in these weapon systems. Recent steps have been taken by the European Parliament, and the Belgian and Norwegian Parliaments. Now that Norway has taken the initiative to work on an international treaty to ban cluster munitions, including a ban on investments in the treaty could make a major shift.