Why Divest? A Focus on Financial Institutions

5 Reasons Financial institutions should divest from nuclear weapons producers

1. Nuclear weapons are inhumane. Financial institutions can have their own opinion, and do have their own opinion when it comes to what is allowable for them, and their clients to invest in. Financial institutions can decide not to invest in products that are inhumane by design.

2. There is a stigma attached to financing the bomb. No one wants to be known as a nuclear weapons investor, just as financial institutions don’t want to be known as investing in prostitution. There are some reputational risks that investors need to consider.

3. Consumers are going green. Around the world consumers are seeking ways to eco-label their activities, whether by purchasing fair trade products or shifting their investments towards socially responsible funds.

4. Nuclear weapons producers are financially neutral. For the most part, the return on investment from nuclear weapons producers is not significantly more or less than other industries and markets. There is no significant financial benefit, or loss, from divesting from these producers.

5. There exists a binding obligation to negotiate disarmament and eliminate arsenals. This obligation means that nuclear weapons production is not a viable long term industry. In addion, as of 22 January 2021, nuclear weapons are comprehensively prohibited under international law, as is any inducemnet or encouragement to continue manufacturing them.

How to find out if your institution is investing in nuclear weapon producers?

A logical first step is to look in the Don’t Bank on the Bomb report- organised alphabetically by financial institution.  If they are not listed, just ask them directly. Sending a letter is more effective than scanning their websites, as unfortunately many banks, insurance companies and pension funds are not very transparent about their investments. Some institutions will give clients the impression they invest in a responsible way by showing general business principles like the UN Principles of Responsible Investment or a Code of Conduct. Since there is often a difference between business principles and business practice, general answers cannot guarantee any certainty over their business practice. Citing confidentiality issues, many financial institutions have gotten less and less transparent, this results also in a lack of accountability.

This lack of transparency plays a role on different levels. When contacting financial institutions, you can ask specific questions about each level:

• The policy level: What is the investment policy in relation to the arms industry or nuclear weapon producers?
• The implementation level: If there is a policy, there should be clear information about the way the policy is implemented. How is an institution performing?
• The transaction level: Stakeholders should be able to find the names and details of the major transactions a financial institution has carried out. What is this institution investing in?

A lot of the information is already available in the Don’t Bank on the Bomb report, at least for  several hundred financial institutions. If you want to investigate institutions that are not in this report, or if you want to examine investments of less than 0.5% total share or bondholdings, it helps to have some basic understanding of the financial world and a lot of patience to go through a company’s annual reports, announcements to stock market authorities, press releases, business newspapers and magazines, etc. Unfortunately, the information you are looking for is not usually available for free – you need to pay to get access to expensive databases and search machines.

How to use Don’t Bank on the Bomb to find out if your bank invests in nuclear weapons

The Don’t Bank on the Bomb report does not include all companies involved in all aspects of nuclear weapons nor does it include every single financial institution that holds shares or bonds of these companies. The report does list the financial institutions that are most heavily invested in nuclear weapon producers, and can be useful for your own campaign in the following ways:

1) Take a look at the ‘Hall of Shame’ section of the report and search for financial institutions active in your country. Even if the headquarters of a bank is not located in your country, as long as they have subsidiaries in your country it is worthwhile to include them in your campaign. Subsidiaries may not decide upon the policy of the whole group, but they can influence policy in a positive way.

2) If the institution you want to target is not listed in this report, you may want to consider hiring a research company specialised in researching financial data. Like the company we used: Profundo (http://www.profundo.nl/). They have access to all the necessary databases and experience in finding nuclear weapons investments specifically. You will need to pay them for their services though.

3) The banks listed in the ‘Runners-up’ list might also be a good target. These financial institutions are on their way to be included in the ‘Hall of Fame’. They have already decided that there is something bad about investing in nuclear weapons. Our experience is that most of them are very easy to approach and willing to engage in exchanges of views. They may be convinced to make the amendments to their policies and practices that will get them in the Hall of Fame of the next Don’t Bank on the Bomb report, and fully divest from any nuclear weapon producer holdings.

4) Read the more detailed information on how the financial institutions you are targeting are investing in nuclear weapon producer(s), and which ones. Take a look in the producer list to learn more about the producing companies and the role they play on maintaining and modernising nuclear weapons.

5) Take a look at the criteria used for the research. These criteria give you more information on how the research was carried out and will answer some questions you or others (financial institutions, media) may have.

6) Take a look at the ‘Hall of Fame’ to see which financial institutions have good policies on nuclear weapon producers. These policies are important examples for other financial institutions, and they are clear proof that ending financial involvement with nuclear weapon producers is possible. Policies that prohibit or limit investment in nuclear weapon producers are not limited to ethical banks alone- there are pension funds and mainstream banks and insurance companies with good policies as well!

IMPORTANT

It is important to look for all financial institutions active in your country, not only the ones which have their headquarters there. Campaigning efforts by other NGOs has shown that targeting subsidiaries can change policies of the whole group! For targeting a subsidiary in your country, it can be a good strategy to raise public awareness among the clients of the institution. But, as the policy is made on the group-level, it is important to communicate with the parent company headquarters directly. This means you should seek contact with persons responsible for the policies of the whole group. It is a good idea to put the persons responsible for the subsidiaries in copy of your communications so they are aware of your efforts and the issues you raise. This way, you involve the subsidiary in your action and you can pressure both sides: the subsidiary and the group.

If a financial institution is not listed in the Hall of Shame, it does not mean they are not investing in nuclear weapon producers. The Hall of Shame is a non exhaustive list. For the research in this report, we only look at investments in 30 nuclear weapons producing companies and only if the involvement is above a threshold of 0.50% for owning or managing assets of nuclear weapon producers. This means that the financial institutions which own or manage less than 0.50 % of assets of any of these 30 nuclear weapon producer are not listed. Also, it means that investments in other companies that may be involved in the production of nuclear weapons are not listed in this report. Extra research can reveal financial links not mentioned in this report. All of the financial institutions in the Hall of Fame however, have undergone an implementation check- none invest in any of the identified nuclear weapon producing companies.

The Don’t Bank on the Bomb report has given special attention to some public pension funds and sovereign wealth funds. These are particularly interesting because most of them are state owned. This becomes even more important when the Sovereign Wealth Funds (SWF) or Public Pension Funds (PPFs) home country has ratified a nuclear weapons free zone agreement. Moreover, SWFs and PPFs sometimes hold a substantial stake in the capital of companies. This gives them considerable voting power at annual meetings, and sometimes even one or more seats on the board of directors. If one of the listed funds is based in your country, this is a very interesting campaigning opportunity!

What are we asking financial institutions to do?

Develop a comprehensive policy against investing in nuclear weapon producers

Financial institutions should develop policies that exclude all financial links with companies involved in the production of nuclear weapons. Investment makes production possible. This means that no exceptions will be made for financial services on behalf of third parties, for funds that follow an index, for project finance for civil purpose of a company that is also involved in nuclear weapons, nor should it be a policy that only excludes project financing for nuclear weapons.

Inform the producer why they are divesting

Financial institutions should inform the producing company about the decision to end investments because of the company’s involvement with nuclear weapons. The financial institution can set clear deadlines within a limited time frame for the company to stop its activities related to the production of nuclear weapons, in order to reverse its decision to divest. In cases where a producing company continues it’s involvement in the production of nuclear weapons after the set deadline, the financial institution will have to divest until the producing company stops its involvement. New requests for investments will have to be declined therefore until the company has stopped all activities related to the production of nuclear weapons.

Apply the divestment policy to all activities

Financial institutions should apply their divestment policy to all their activities: commercial banking, investment banking and asset management. All of these activities actively assist a company in the production of nuclear weapons. In case this requires a policy change for investment funds, investors should have a deadline to sell their participation in these funds after notification of this policy change.

---

Who shall I target?

Campaigning on financial institutions and their investment policies includes contacting and meeting with people who work for these banks. But banks and investors are often huge companies with thousands of employees. So who do you need to talk to?

Try to climb as high as you can

Campaigning efforts are more effective if you are able to get in contact with members of the board of directors. If the board of directors gets involved in your topic, you are halfway there. Most of the time, it will be difficult to contact someone on the board of directors, so it is important to find people that are involved in the decision making process on policies relating to investments in nuclear weapon producers. Furthermore, the people you talk to should be in a position to influence internal company policies.

A rule of thumb: talk to the people in charge of the policy

The best situation is to have a meeting with someone responsible for commercial banking, and someone responsible for asset management. Figure out what financial products the company offers (issuances, loans, asset management, etc) and meet with the persons responsible for all of these. It is important to find someone who is interested in the nuclear weapon issue and both willing and capable to influence internal company policies.

Assess the situation with the bank that you are interacting with

Who you choose to talk to within the financial institution can have advantages and disadvantages for your campaign. Below are a few key departments and positions that you may want to consider targeting:

Sustainability department

Advantage: It will be easy to generate interest in the issue, and they know how to get sustainability or ethical issues on the internal agenda of the company.

Disadvantage: in some cases, sustainability departments are more about influencing the perception of the public than about influencing the behaviour of the institution. If a sustainability department is part of – or can only be contacted via – the companies communication department, that is often not a good sign (see below).

Investment managers

Advantage: If you can convince investment managers to consider divestment, you are halfway there. Investment managers are usually keen to avoid limits to their investment practices.

Disadvantage: You will have to be able to enter into complex technical discussions about practical problems to implement a divestment policy on nuclear weapons.

Communications department

Advantages: This department is often the first to feel pressure caused by public campaigns. They take responsibility for any damage to the image of their company, and therefore may be susceptible to proposals that can help to protect or improve the company image.

Disadvantages: Often, communication departments know very little about sustainability. They are mostly concerned with the image of the company. Often their goal is to reduce and manage the harm that you could potentially bring to them. They often use the “don’t target us” message.

How to respond to frequently heard reactions by financial institutions

Financial institutions will use several arguments to convince their clients, and you as a campaigner, that they are committed to doing their best on the issue. Below you can find a few tips on how to react to their arguments and how to ask the right questions.

Referring to general principles

Banks often refer to general principles when asked to their involvement with weapons producers: The UN Principles of Responsible Investment, their Code of Conduct, the Equator Principles, the Sustainable Report, etc. These documents show the bank’s commitment to ethical financing. Yet, subscribing to codes of conduct or principles does not mean they are implemented. These statements of intent are no guarantee for ethical investment. Asking how they implement this concretely can help. Conducting research on their investment practice can provide you with hard evidence as to whether these principles are fully implemented or not, and referring back to the ideals that encouraged them to sign up to the principles in the first place can encourage them to establish policies about nuclear weapons as well.

Corporate loans are not intended to finance nuclear weapons

Some financial institutions say that their nuclear weapons policy doesn’t apply to commercial banking services by stating that “a working capital facility is not intended to finance nuclear weapon production itself”. This means that their policy does not apply when they provide money for general corporate purposes, or that they have some sort of agreement with the producer that their money will not be used for these questionable activities . This is a major flaw, because a financial institution cannot guarantee that the financial services it provides to a company will not be used to produce nuclear weapons. It is common for weapons producers to finance their nuclear activities from their general corporate capital.

There is no way to prevent a company from reallocating capital. Adding stipulations to a general corporate loan prohibiting the companies’ use of the funds to produce nuclear weapons, or restricting the financing of a company to civilian projects, does not prevent the release of other funds which could then be used to finance nuclear weapons production.

Moreover, we have rarely come across project financing identified specifically for nuclear weapons facilities. Excluding only project financing specifically for nuclear weapons is therefore a hollow excuse, nuclear weapon producers can work around these policies by saying the funds will be used for general corporate purposes – freeing up other money for nuclear weapons production. A company producing nuclear weapons with the potential to cause devastating humanitarian, environmental and developmental consequences should not be a business partner.

Banks are neutral

Some financial institutions argue that financing or investing is a neutral activity. They claim to be neutral, therefore not able to choose sides, and obligated to offer the services their clients ask for. Investing in a company is clearly an active and supportive effort to raise the capital that is needed to fulfil the plans this company has made. Any financial service delivered to a company by a financial institution demonstrates approval of their activities. Moreover financial institutions provide crucial and necessary support to the company, so that it is able to carry out its projects. Investments are not neutral. In addition, it should be noted that prohibiting certain financial involvements is not something new or remarkable. Institutions are frequently bound by law to divest from companies that violate certain laws or regulations. For example regulations on child labour, environmental standards etc.

Nuclear weapon production is a marginal activity of the company

“Only 2% of the company’s turnover is related to the production of nuclear weapons”. The fact that it is only a marginal activity makes the company eligible for financial services and loans according to the policies of some financial institutions. But 2% of a company’s turnover can be a huge amount of financial support depending on the size and overall turnover of the company. Most companies that produce nuclear weapons are also involved in civil projects so this argument will mean that the majority of nuclear weapon producing companies would be eligible for investment from financial institutions under this policy. There is no such thing as proportional ethics!

It is impossible to check which companies are nuclear weapon producers

Asset managers sell and buy shares and bonds in many companies and claim that they do not have the means to check quickly and cost effectively if these are nuclear weapon producers. Close cooperation and information sharing with financial institutions with comprehensive policies, NGOs and non-financial or Socially Responsible Investment (SRI) advisors can result in clear and updated lists of companies showing which companies produce nuclear weapons. National legislation which includes a black list of companies that is updated frequently is another solution to this problem

The investments are made by subsidiaries, not by us.

It is important to look at the investments made by the group and the policy of the group. The investment policy is usually stipulated by the group. Revenues made by subsidiaries contribute to the revenue of the group. Moreover, it is difficult to control where money from the group is invested. In short, a banking group is responsible for the investments of all their subsidiaries. As a banking group always presents itself as a group in its communication to customers, it’s logical we look at them the same way.

The investments are for third parties, not for our own account

Several banks have a policy that only takes into account their own involvement, meaning that the policy only applies to the money a bank invests on its own behalf and does not apply to the money invested on behalf of its clients. This is a major flaw because a large amount of the money that a financial institution invests belongs to third parties.

It is also inconsistent for a financial institution to profit from selling investments in nuclear weapon producers to others, while not wanting to invest its own funds in nuclear weapon producers. By investing money that belongs to third parties banks facilitate the financing of producers of nuclear weapons.

Banks argue that they do not want to make ethical choices on behalf of their clients. This is a weak argument, considering that most banks refuse to be transparent about the companies they invest in. When a client is not informed about the companies a bank invests in, the client cannot make an informed choice.

We only allow investments by funds following an index

Most financial institutions make an exception for financial institutions following an index. These funds track a certain index and thereby invest in companies of this index. They argue that it is impossible to implement a divestment policy on these funds. Still, some financial institutions have a policy that follows index funds, showing that nothing is impossible.

Bank secrets

“We are bound by a duty of confidentiality. We can’t publish the names of the companies we’re investing in”. The duty of confidentiality is a duty that banks impose on themselves. There is nobody who forbids the publication of the names of the companies they invest in. Banks like Triodos and ASN stipulate the publication right in their contracts with companies. Banks like ASN have made a specific commitment to transparency and publish a list of companies on their website. Moreover, for investment funds, there is an obligation to publish investments included in the fund.

We engage with companies

Financial institutions argue that engagement is a positive approach towards harmful companies, and financial institutions often claim that setting up a dialogue with the company provides an opportunity for change. It is difficult to check the effectiveness of this policy, as most of the time there is no transparency about efforts to engage, which means it is impossible to know whether and in what way the engagement procedure is going.

The difficulties with these procedures are:

• In general, it is not clearly stated how a company needs to change, and more importantly by what deadline.
• Engaging with companies is fruitless without defined consequences if there is no change, and this is not always clear.
• Being an active shareholder so far hasn’t changed much in the company’s policy. Active ownership of banks often does not go further than asking for the company’s sustainability report, asking for more general information and asking for independent governors. These actions are far from demanding good policy or ending the production of nuclear weapons, or from threatening to restrain their money if nothing changes.
• Engagement can be used as an excuse to continue investment in companies that do not fit a bank’s policy on nuclear weapons.

We do not have a mandate from our clients

“Clients ask us to get the biggest revenue possible. They do not ask us to stop financing companies involved in nuclear weapons”. The reality of the situation is that banks decide where they invest their money, and since they are often not transparent about their investments, it is difficult for clients to know which companies are being financed. In reality, the majority of customers don’t want their money to be invested in producers of weapons of mass destruction. Financial institutions should implement transparent policies which enable customers to make an informed choice.

Referring to the person/committee responsible for implementing the policy

Having a person or committee responsible is a good sign. A good policy is still needed, since only comprehensive policies provide guidelines and procedures. Furthermore, implementing a policy is a way to be transparent to clients. Without a policy it is difficult to be accountable for your actions.

Clients have the option to choose sustainable products

Having a big supply of sustainable products does not restrain a bank from having investments in nuclear weapons. This argument means that a bank still considers investments in nuclear weapon producers as clean investments: a client can ask for nuclear weapon-free investments, but for the bank as a whole, it is still acceptable to invest in nuclear weapon producers. Even if the bank has sustainable products, that does not mean that those products do not invest in nuclear weapon producers, as they may not have clear and comprehensive policies either.

A lot of sustainable products invest in our institution

“Our institution is considered best in its class by several sustainable researchers”. This argument is not valid. Screening agencies of sustainable products often don’t set strong enough standards by the social, ecological and ethical components of the investment policy of the bank. The screening is mostly focused on the internal social and ecological policy of the bank for their own CO2 reduction, their staffing policy, etc. There are even some Socially Responsible Investment (SRI) products that don’t exclude investments in nuclear weapon producers at all.

Most importantly:

Please keep us informed about your actions and activities, so that we can share with other campaigners on the www.DontBankontheBomb.com website.

Private companies and the nuclear weapons industry

Research shows at least at least US$ 116 billion (€ 102 billion) in contracts between governments and private companies in France, India, Italy, the Netherlands, United Kingdom, and the United States for production, development and stockpiling of nuclear weapons. State owned companies in China connected to nuclear weapon production are starting to raise money through bond issuances, while Israeli, Pakistani, North Korean, and Russian nuclear programmes are still not transparent.

2019  (PDF)  | Complicit Companies | New Arms Race | US Bombs in Europe

---

Recent changes to the list:

Aecom is no longer listed. Here’s why.

---

Complicit Companies

Most of companies are involved in the US arsenal, as the contracting system in the US is quite transparent. However, there is also information available on companies connected to the French, Indian and UK arsenals. In reviewing the analysis, you’ll find brief profiles of other companies, including a Chinese company, whose nuclear weapon related activities are outside the scope of the research but are still relevant while painting the picture of the global nuclear weapons industry.

This is the first time a Chinese company has been included. China National Nuclear Corporation is outside the general scope of this research (it is state owned), as they have recently done a bond issuance, some information is included to draw attention to the growing transparency and interconnectivity of even Chinese State-owned nuclear weapon associated companies.

There are a few companies that stand out in terms of their overall nuclear weapon related activities, with billions in outstanding contracts. For example, Huntington Ingalls Industries which is connected to several facilities in the US nuclear weapons enterprise, is part of more than US$ 28 billion in outstanding contracts. Lockheed Martin is a close runner-up, connected to more than US$ 25 billion in contracts.

Airplanes and submarines are outside the scope of the research. However, companies involved in producing airplanes and submarines designed to deliver nuclear weapons are often involved in other parts of nuclear weapon production. For example, Lockheed Martin, which is currently producing the F35 (Joint Strike Fighter), one variant of which will be certified to drop nuclear weapons, is included due to more than US$ 7.9 billion (€ 6.9 billion) in outstanding contracts for nuclear armed missiles for the US and UK.Go to top

New Nuclear Arms Race

Despite global calls for restraint and nuclear disarmament, new nuclear weapons are being developed in all nuclear armed countries. The company profiles provide information about a few new types of weapons, including the US Ground Based Strategic Deterrent and Long-Range Standoff weapons, the French ASMPA-successor the ASN4G, and the Indian efforts to expand to submarine launched ballistic missiles. In addition, efforts to build hypersonic submarine launched ballistic missile capabilities, like those planned in a US$ 109.5 million (€ 95.9 million) contract with the Charles Stark Draper Laboratory, are discussed.

Some of the lower yield weapon options outlined in the 2018 US Nuclear Posture Review are also now under development. For example, the US National Nuclear Security Administration has started building the first low-yield, submarine-launched ballistic missile warhead W76-2, at the Pantex Plant in Texas. The conversion of W76-1 warheads into W76-2 warheads will cost a minimum of US$ 125 million (€ 110.1 million).¹ The private contractors involved in this work are part of Consolidated Nuclear Services LLC (CNS), a Bechtel -led joint venture including Leidos, ATK Launch Systems (now part of Northrop Grumman), SOC, and Booz Allen Hamilton ² as a teaming subcontractor.³

Many of the outstanding contracts identified in this report were granted around 2015 and are set to expire in 2020. However, some nuclear weapon associated contracts were awarded with much longer time frames in mind. For example, a contract for a key component necessary to launch US Intercontinental Ballistic Missiles (ICBMs) was designed to keep the missiles ready to launch until at least 2075. Some Trident contracts are designed to keep the system fully functional until at least 2042. Generally, though, most contracts are arranged in five to ten-year increments, and are modified regularly to meet cost overruns, delivery delays and add-on projects. Contracts are constantly changing, and a contract that is initially set for one amount may be adjusted by an order of magnitude within a month.

In 2018, there were surprising contracts awarded that prepare the ground for future US fissile materials production. Ostensibly for Tritium extraction, the US$ 505 million (€ 427.5 million) contract awarded in September 2018 to a subsidiary of BWX Technologies was for activities described by the US government to “provide a reliable and economical source of unobligated enriched uranium”, free from peaceful use restrictions, until at least 2025.⁴

After years of complaints about the previous contractors, Huntington Ingalls Industries took over the management and operations for the Los Alamos National Laboratory in 2018 with a five-year contract estimated at US$ 2.5 billion (€ 2.2 billion) annually.⁵ However, the same contractors that have been previously reprimanded for poor performance, including BWX Technologies, remain in place at the Lawrence Livermore National Lab in California.Go to top

US nuclear weapons in Europe

An estimated 180 B61 nuclear gravity bombs are currently deployed by the US at airbases in five European countries (Kleine Brogel AB in Belgium, Buechel AB in Germany, Aviano AB and Ghedi AB in Italy, Volkel AB in the Netherlands, and Incirlik AB in Turkey). Despite a majority of those populations objecting to this stationing, work is under way to replace the B61 bombs with a new version, the B61-12. The Federation of American Scientists reports, however, that there are 2-5 year delays on the B61-12 project as a whole, while new bomb plans (B61-13) are meant to start in 2038.⁶

Three of the contractors named in the report are involved in production activities for the B61-12. Boeing is producing the tail-kit assembly under a US$ 185 million (€ 163 million) contract. Honeywell International operates and manages the Sandia National Laboratory which designed the new hardware for the bomb, and Huntington Ingalls Industries provides nuclear operations and manufacturing. According to the contract terms, the Boeing designed B61-12 tail kits are meant to be ready by May 2019.⁷ These are the weapons the United States deploys outside their territory, it is yet unclear when the new bombs will be delivered to their European locations. Another company, Atlantic CommTech got a contract in 2016 to modernize the Weapon Storage and Security System at the hosting bases in Europe, but that work is only meant to conclude by October 2020.⁸

The new contracts, the new types of weapons, the new allocation of resources all show that the new nuclear arms race is happening.Go to top

---

Notes

1. Leone, D., “NNSA Has Started Building Low-Yield Sub Warhead”, Nuclear Security & Deterrence Monitor, 25 January 2019, (www.exchangemonitor.com/nnsa-started-building-low-yield-sub-warhead/), viewed in January 2019.
2. Research indicated that SOC provides security services only, while Booz Allen Hamilton is a broad consulting firm who work is not integral to maintain the nuclear arsenal.
3. Bechtel National, “Team Will Manage and Operate Facilities Within Nuclear Security Enterprise”, Website Bechtel National, 8 January 2013 (www.bechtel.com/newsroom/releases/2013/01/bechtel-led-team-awarded-contract-y12-pantex/); Power Engineering, “Consolidated Nuclear Security to manage US Nuclear Facility Management”, Website Power Engineering, 7 March 2014 (www.power-eng.com/articles/2014/03/consolidated-nuclear-security-to-manage-us-nuclear-facility-management.html).
4. National Nuclear Security Administration, “NNSA, TVA Announce Interagency Agreement for Down-Blending Highly Enriched Uranium”, Press Release NNSA, 23 August 2018 (www.energy.gov/nnsa/articles/nnsa-tva-announce-interagency-agreement-down-blending-highly-enriched-uranium); Huotari J., “Twenty tons of uranium could be used to produce tritium for nuclear weapons”, Website Oak Ridge Today, 14 September 2018 (oakridgetoday.com/2018/09/14/twenty-tons-uranium-used-produce-tritium-nuclear-weapons/); Miller, F. and Harvey, J., “Commentary: The looming crisis for US tritium production”, Website Defense News, 6 March 2017 (www.defensenews.com/opinion/commentary/2017/03/06/commentary-the-looming-crisis-for-us-tritium-production/); World Nuclear News, “USA awards HEU downblending contract”, Website World Nuclear News, 1 October 2018 (www.world-nuclear-news.org/Articles/US-awards-HEU-downblending-contract).
5. Los Alamos National Laboratory, “NNSA awards Los Alamos National Laboratory management & operating contract”, Press Release LANL, 8 June 2018 (www.lanl.gov/discover/news-stories-archive/2018/June/0608-new-contractor.php); NNSA, “Los Alamos National Laboratory contract”, Website NNSA (www.energy.gov/nnsa/los-alamos-national-laboratory-contract), viewed in January 2019.
6. Hans M. Kristensen, “NNSA Plan Shows Nuclear Warhead Cost Increases and Expanded Production”, Federation of American Scientists, 5 November 2018. Available at: https://fas.org/blogs/security/2018/11/ssmp2018/. Accessed March 2019.
7. U.S. Department of Defense, “Daily contracts – Modification P00007 to contract FA2103-16-C-0061”, Website U.S. Department of Defense, 16 June 2016 (dod.defense.gov/News/Contracts/Contract-View/Article/798095/).
8. Contracts for September 9, 2016 (2016) U.S. DEPARTMENT OF DEFENSE. Available at: https://www.defense.gov/News/Contracts/Contract-View/Article/939786/ (Accessed: 11 March 2019).

Shorting our security- Financing the companies that make nuclear weapons

Who is trying to profit from weapons of mass destruction?

Our report: Shorting our security- Financing the companies that make nuclear weapons provides the answer.

Key findings

Total invested in top nuclear weapon producers: $748 billion

When examining the top companies involved in the nuclear weapon industry, we found over 748 billion USD invested in these companies by 325 financial institutions between January 2017 and January 2019. This reflects investments in the top 18 nuclear weapon producing companies, and is a snapshot provided for comparison purposes.These investments do not include loans that have expired or matured as of 1 January 2019 and reflect a threshold of 0.5% outstanding stocks and bonds.

Which financial institutions are included?

Visit the main Don’t Bank on the Bomb page for the complete list of 325 financial institutions.

10 Financial Institutions made more than half of all investments

More than half of all investments were made by ten financial institutions: Vanguard, BlackRock, Capital Group, State Street, Verisight (now known as Newport Group), T. Rowe Price, Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup.

Comparison to previous analysis shows 42% increase in financing

The total amount invested increased by 42% from US$ 525 billion in the previous report to US$ 748 in this report. The most significant changes were increases in investments in Boeing (192%) and Thales (300%), while investments in Bechtel and Serco dropped.

The amount of outstanding stock for Boeing has increased dramatically in the past year. In the last report, total Boeing shareholding amounted to US$ 59,650 million, whereas this report is showing total outstanding Boeing shares in the amount of US$ 254,296 million. The financial research period for this report concluded before the latest Boeing 737 Max airplane crash, and the subsequent challenges the company faced. Boeing ended 2018 with earnings of $10.46 billion or $17.85 per share on revenue of $101.13 billion, and Boeing continues to capitalise on contracts for drones and planes, as well as for other technologies (including nuclear missiles). The increase in the total amount invested in Boeing is due mostly to the rising share price of Boeing that started late 2016: Boeing has seen a roughly 40% share price increase since the publication of our previous report.

When examining the overall comparison excluding Boeing, there is still an increase in the overall amount of money invested, but it is not nearly so dramatic: 494 billion in 2019 vs 438 billion in 2018, a change of only 13%.

Don’t Bank on the Bomb does not list every single investment into the companies listed as part of the nuclear weapon industry. The report does not include investments made by governments, universities, or churches, only financial institutions. This selection of financial institutions is limited by a reporting threshold. Only share and bond holdings larger than 0.5% of the total number of outstanding shares of the nuclear weapon producing companies are listed. The reason for this is practical: a threshold of 0.1% for example would have resulted in a report profiling nearly 3,000 financial institutions, with mostly minuscule investments. Instead, this report focuses on the institutional investors that choose every day where to put their clients’ money.

The information is also limited to information available in the public domain. Although the sources on which the information is based are reputable and well-known, they are themselves not comprehensive. The numbers provided in the report are therefore a conservative estimation of the total global investments in the nuclear weapons industry.

Who Divests?

Our research shows more and more financial institutions are saying no to nuclear weapons.

The Don’t Bank on the Bomb report, Beyond the Bomb, profiles 77 banks, pension funds, insurance companies and other financial institutions with policies to not invest in nuclear weapons producers. This is an increase of 14 since the 2018 report.

Executive Summary

More financial institutions than ever are refusing to finance the nuclear weapons industry. And they are not alone: the movement rejecting the legitimacy of nuclear weapons continues to grow. In 2017, states from around the world voted to adopt the Treaty on the Prohibition of Nuclear Weapons; a comprehensive prohibition on the most destructive weapons ever created. As more and more states sign and ratify this Treaty moving it closer to entry into force, it becomes increasingly clear that nuclear weapons are not a part of the security system of the future.

Financial institutions can use their position in the global economy to contribute to nuclear disarmament. Enacting comprehensive policies on nuclear weapons provides an incentive to companies to end production of materials designed to commit mass murder. This contributes to the stigma on nuclear weapons. Refusing to invest in companies that produce nuclear weapons is also an accurate reflection of public opinion, as most recent polls show a clear rejection of nuclear weapons. 

Excluding companies involved in the production of controversial weapons, including nuclear weapons but also other inhumane and illegal weapons such as cluster munitions, landmines and chemical weapons, is the new normal. The number of financial institutions with (comprehensive) policies listed in Don’t Bank on the Bomb reports has grown from 35 in 2014 to 77 in this report. And this is only the tip of the iceberg.

Summary findings:

36 institutions have in place comprehensive policies. These are listed in the Hall of Fame. Their policies are best-practice and an example to the rest of the financial sector. The report also profiles 41 financial institutions whose policies are not yet comprehensive enough and may still have investments in nuclear weapons producers. They are listed in the Runners-Up section because by adopting a policy restricting investments in nuclear weapons, they demonstrate a shared understanding that nuclear weapons are controversial.

Find out more:

Access the full report here.

Read the executive summary here.

Checklist for a Good Financial Institution Investment Policy

Create a nuclear weapons free investment policy

Once financial institutions make the decision to put a nuclear weapons free policy into place, there are some key aspects to consider. The following checklist gives a brief overview of the different elements to include in nuclear weapons policies.  Does your institution have an investment policy?  Let us know.

Why make a policy at all?

• Nuclear weapons are inhumane
• There is a stigma attached to financing the bomb
• Consumers are going green
• Nuclear weapons producers don’t generate more profit than other industries
• Nuclear weapons are prohibited by international treaty

3 steps to be nuclear weapons free

1. Announce the intention to end involvement with nuclear weapons (or announce that currently no known investments exist)
2. Develop a comprehensive policy preventing investment in nuclear weapon producers
3. Prepare a timeline for divesting from existing holdings (if applicable)

Get into the Don’t Bank on the Bomb Hall of Fame

MAKE SURE THE POLICY EXCLUDES ALL NUCLEAR WEAPON ASSOCIATED COMPANIES

• Whole companies, not only nuclear related projects
• Companies associated with nuclear weapons including through joint ventures
• Companies regardless of their country of origin
• Companies regardless of their country of operation

MAKE SURE THE POLICY EXCLUDES ALL NUCLEAR WEAPONS ASSOCIATED ACTIVITIES

• Developing, testing, production, maintenance or trade of nuclear weapons related technology, parts, products or services
• Delivery systems that are specifically developed for nuclear tasks, including ‘dual use’ technology

MAKE SURE THE POLICY APPLIES TO ALL THE INSTITUTION’S PRODUCTS AND SERVICES FOR THE ENTIRE GROUP, INCLUDING SUBSIDIARIES

• In all markets
• To all commercial banking, investment banking activities and to all asset management classes – passive and active, internal and external
• To all existing and future investments

For more detailed information, please visit www.dontbankonthebomb.com

Download the checklist

Engaging the Media

Divestment campaigns present an interesting opportunity to engage financial and business media as well as political media, including radio, print media, journals and online publications.

Engaging media through the angle of a divestment campaign can help to bring attention to other issues related to nuclear weapons, to talk about how these weapons are not only not providing a great return on investment, but can potentially cause untold human suffering through their use.

Media attention is a great way to engage financial institutions and put enourmous pressure on them to enact or strengthen policies around nuclear weapons. Financial institutions do not want bad press and they are extremely sensitive to media reports. Media attention also affords campaigners an opportunity to commend those financial institutions that are divesting from nuclear weapons producers and create a positive “race to the top”.

Media and networking

Social media, networking, multimedia and blogging are useful tools to engage a broad audience and inspire people to take action in a quick and effective way. Tools such as Facebook, Twitter and YouTube can provide useful forums to share campaign messages and calls to action. These forums offer good opportunities to promote online email and web-based actions such as online petitions and email actions.

Facebook is useful for sending out links to online actions, short pieces of news and information as well as campaign messages. It can be sent out via groups and causes such as International Campaign to Abolish Nuclear Weapons (ICAN) or by setting up new groups specifically on the divestment campaign in your country and recruiting supporters to it. Messages and actions can also be sent out to your friends on Facebook asking them to take part in an action or event.

Twitter is similar to a blog and can be used to send short campaign messages and news as well as links to actions (within the limit of 140 characters) to ‘followers’ of a particular twitter feed. It is helpful to also retweet useful items to your own followers from the ICAN twitter feed. You can also get your tweets picked up and retweeted by tagging financial institutions, or using hashtags. Make room for a hashtag in your post. That will add your tweet to an existing thread, given that Twitter now turns hashtags into links. When used strategically, hashtags are definitely worth the precious extra characters. Here are some hashtags to consider:

• #SocialGood | Highlights businesses, nonprofits, and individuals creating positive social progress
• #SoCap | Primarily for investors, news, and resources for making profits while making an impact.
• #CSR | Corporate Social Responsibility
• #SRI | sustainable and responsible investment/ socially responsible investment

And of course, make sure to use the ICAN hastag:  #goodbyenukes.

It is also useful to specifically tag the financial institutions or nuclear weapons producing company you are targeting. Check their website, or click here for a list of twitter adresses.

Examples of tweets:

Good to see @UniCredit_Bank policy that says #goodbyenukes! Maybe next year it will even make the Hall of Fame? www.dontbankonthebomb.com

Oh no! Why does @WellsFargo invest in #nuclear weapons producers? They should have a #CSR or #SRI policy to say #goodbyenukes!

You can also retweet from the @DontBankonBomb account.

YouTube can be used to post short films about divestment and the nuclear weapons campaign to raise awareness and promote calls to action.

Online and web-based actionsincluding petitions and email actions can be set up to target decision-makers in financial institutions and governments. Standard emails calling on banks and governments to divest from nuclear weapons can be set up online and promoted to hundreds or thousands of people to take the action within just a couple of minutes.

Cartoons

Cartoonists have helped to raise awareness on nuclear weapons. It’s a topic that can be effectively conveyed through the use of cartoons and helps to reach a wide audience. Cartoons can also summarise complex issues and encourage popular action.

Op-ed pieces

Opposite the Editorial is what “op-ed” stands for and they are generally pieces contributed to newspapers featuring opinions on issues the editorial staff find relevant to their readers. They also often contain responses to recent events. Often an op-ed has a better chance of getting published if it is authored by a prominent person. Consider preparing key talking points and then asking a local official (Mayor for Peace, Red Cross/ Crescent leader, Member of Parliament, Ethical Bank, etc) to submit it together with you.

Press conferences and traditional media outreach

Holding press conferences and reaching out to both financial and political media can help to get coverage of the divestment issue in your country. Don’t Bank on the Bomb is also a way to connect with journalists that might not otherwise cover the nuclear issue at all. Securing media coverage of investments in and divestments from nuclear weapon producers has been an important tool for all campaigners who have organised divestment campaign actions. There are also really useful tips in the ICAN Campaigners Guide.

Some things to keep in mind when reaching out to the media:

–       Give someone a scoop: Consider sending the press announcement and executive summary of the report to a reporter you have worked with before under embargo

–       Know your journalist. Make sure you reach out to journalists that cover the issue- don’t just send things blindly to every email address at the newspaper you can find!

–       KISS– Keep It Short and Sweet, if you can’t get your pitch across in less than 200 words, rethink it.

–       Connect with what’s happening. When translating the press announcement, make sure you fit it to the local context.

–       Call, call, call. Follow-up on emails sent by phoning the journalist, and speaking with them directly. Leaving a message isn’t enough- make sure you talk to a human.

There are lots more tips about ways to connect with the media available- if you’re doing a local action at an ATM, you can include pictures in your press release. Be creative, clear, and concise- and the media will return your calls!

Call Your Bank for Divestment

Time to call customer service!

If your bank, insurer or pension-fund is listed in the report, you can help increase the pressure on them to drop their investments in nuclear weapons by giving Customer Service a call, and letting them know that you, as a client or shareholder, are watching and expect better of them.

Here are some tips on what you might say:

• Start by letting them know who you are, so that they know they are accountable to you: Do you hold a bank account with them? Are you a member of their pension or investment plan? Do you own shares in their company?
• Then, let them know you are aware of their investments in nuclear weapons companies, and ask them uncomfortable questions about it. For example:
  • “I just learned through PAX’s Don’t Bank on the Bomb report that NAMEOFYOURBANK is investing AMOUNT in nuclear weapons producing companies like LIST3COMPANIES. This is unacceptable to me as nuclear weapons could cause catastrophic humanitarian harm.
    
  • Could you tell me more about how NAMEOFYOURBANK, as a responsible actor, justifies this investment?”
• Chances are that they will try to wave you off by talking about their general policies on being responsible with their investments and how they have to make the money long-term, but always bring it back to nuclear weapons. Here are two things you can say:
  • “I understand, but what I would like to know is if you have a policy on investing in the arms industry, and if so, how this AMOUNT invested in companies producing nuclear weapons tie in with that? Surely it’s not acceptable by policy to profit off weapons designed to mass murder millions of civilians”
  • “I understand, but how is investing in weapons of mass destruction a safe investment product? And I’m not just talking about the deadly danger they pose, but about that fact that, under the new UN Treaty that bans nuclear weapons, these investments will soon be completely illegal! Surely that’s a major financial and reputational risk?”
• Finally close it off by telling them what you expect: change and a written response.
  • “ I would really like to hear back from you – by post or email – about how these can be justified under your existing policies. I am very disappointed that NAMEOFYOURBANK has these investments, and as a CUSTOMER/SHAREHOLDER, I would like to see your policies updated, and NAMEOFYOURBANK divest from nuclear weapons altogether.”

And remember, being confident in what you have to say, but always remaining friendly and calm will take your message a long way!

Steps to Take Action for Divestment

This page provides the basis for coordinated campaigning to discourage financial institutions from investing in nuclear weapons companies. Taking action can involve meeting with bank representatives, organizing protests outside their headquarters or branches, raising public awareness, finding allies and promoting legislation prohibiting investment. You can also use social media, like twitter.

Download the Campaigner Guide.

Give your bank a call!

I’ve decided to divest, what now?

Why Campaign on Divestment?

Open the debate! Disinvestment campaigns attract media attention and re-open discussions as to what is acceptable and what is not. Showing that there is less interest in financing the bomb shows that nuclear weapons are less legitimate. This can help to sway politicians and civil servants and reactivate the debate about nuclear weapons in a different way.

Build new norms! Once financial institutions change their policies to ban investment in nuclear weapons, they start developing new investment standards and norms. Financial institutions represent a huge influence on producers of nuclear weapons, and have the power to directly influence and engage with producers of nuclear weapons. Working with financial institutions is a powerful way to directly influence companies practices and demonstrate that nuclear weapons are not a feasible long term business interest.

Reach the whole of society! This activity lets you reach out to financial institutions, ministries of finance, companies, ethical advisor firms- a whole new range of actors to generate and demonstrate whole of society support for a ban!

Everyone can act! Often, nuclear weapons are a vague and distant idea- they are not real or connected to day to day life, and acting for abolition feels like something for policy experts only. But almost everybody has a bank account. By building a “not with my money!” feeling, we can encourage people to contact their banks or pension funds and take useful action to ban (investments) in the bomb. It brings the issue closer to people’s day to day life, with an opportunity to act.

Get creative! This type of campaigning is focused, targeted, empowering and effective. Divestment efforts also give you a chance to get creative and use an all inclusive approach to reach out and speak out against nuclear weapons.

No party excuses! Divestment efforts are not tied to one political party or political side of the spectrum. Divestment is a way to reach across party divides and build broad inclusive relationships in the campaign to outlaw and eliminate nuclear weapons.

It Works! In recent years the financial industry has become increasingly aware of the importance of Socially Responsible Investment (SRI) practices. Since these SRI go beyond legal obligations, campaigners can demonstrate success for the cause before any legal international framework compels financial institutions to act.

Engage the Public

Engage the Media

Engage the Government

Engage Financial Institutions