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Almost one year on from the historic signing of the Convention on Cluster Munitions in Oslo in December 2008, 138 financial institutions still provide over US$ 20 billion worth of investments and financial services to eight producers of cluster bombs. These are the findings of the most comprehensive report to date on global financial investments in these banned weapons, ‘Worldwide investments in cluster munitions; A shared responsibility'. The report authors are calling public and private financial institutions to support the ban and disinvest from cluster bomb producers.
"There is a clear ethical, business and legal case for financial institutions to disinvest from cluster munitions and we are calling on them to do so now" said Roos Boer, from IKV Pax Christi and one of the report authors. "We are also calling on states that have signed the Convention on Cluster Munitions to draw up legislation to ban investments in cluster munitions and to provide clear guidelines for financial institutions," she added.
Since 2007 the human and economic cost arising from the use of cluster munitions have been widely acknowledged and documented. Like landmines, cluster bombs have killed and injured thousands of civilians during the last 40 years and continue to do so long after a conflict has ended. Once the treaty enters into force, the legal obligations, including the prohibition of assistance becomes legally binding on all parties to the treaty.
The publication by IKV Pax Christi and Netwerk Vlaanderen categorizes retail banks, investment banks, asset management companies and private and public pensions into a "Hall of Shame," a "Hall of Fame" and "Runners-Up", based on their investment policies and practices. The report also looks at legislative initiatives to prohibit investment in cluster munitions.
Leading in the Hall of Shame for:
- Investment banking services to companies producing cluster munitions: HSBC, Goldman Sachs, Merril Lynch, Deutsche Bank and JP Morgan Chase provided the largest amount of investment banking services since Jan. 2007
- Loans to companies producing cluster munitions: Twelve of the largest banks provided 58% of the loans. Bank of America, Citigroup, JP Morgan Chase, Barclays and Goldman Sachs provided the largest amount of loans since Jan. 2007
- Asset management services that invest in companies producing cluster munitions: Fidelity, Vanguard Group, AXA, BlackRock and T Rowe Price Group provided the largest asset management services based on their portfolio (by summer 2009).
The report found that since January 2007 at least 138 financial institutions from 16 different countries have invested in eight producers of cluster munitions. These companies include: Alliant Techsystems ATK (USA), Hanwha (South Korea), L-3 Communications (USA), Lockheed Martin (USA) Poongsan (South Korea), Roketsan (Turkey), Singapore Technologies Engineering (Singapore) and Textron (USA.
Leading financial institutions provided the following services and investments to these eight selected producers of cluster munitions:
- Investment banking services worth over US$ 4.2 billion.
- Loans amounting to at least US$ 5 billion
- Owned or managed shares and bonds for at least US$ 11.8 billion
The Hall of Fame includes: Government-managed pension funds, ethical banks and some private financial institutions. The Norwegian Pension Fund has excluded producers of cluster munitions since 2004. The Irish National Pensions Reserve Fund, the New Zealand Superannuation Fund and the Swedish Pension Funds AP 7 also top the Hall of Fame, so do the ethical banks ASN Bank and Triodos Bank of the Netherlands and Banca Etica of Italy. Storebrand is one of the private financial institutions listed in the Hall of Fame. In addition, many private financial institutions have installed a public policy to end investments and are commended for this by the report authors.
"National policies banning investments clearly help, but are not the only solution and financial institutions must also take action" said Esther Vandenbroucke, of Netwerk Vlaanderen and one of the report authors. "The responsibility to ban cluster munitions is a shared responsibility. It requires courage, and it requires an effort. We are just months away from an international treaty entering into force and it is time for signatory states to the CCM, for non-signatory states and for financial institutions to act now", she concluded.
Read more about the report at the website of Netwerk Vlaanderen.