Stricter criteria on weapons contribute to changes in behaviour
01-05-2010 | Triodos Sustainability funds do not invest in weapons producers. Triodos Bank applies very strict rules in this respect. Companies are excluded from investment even if only a very small proportion of their activities is weapons-related. But what about financial institutions that in turn invest in the weapons industry? We would prefer to exclude all financial companies that have any relationship whatsoever with weapons producers, but given the size of these companies and the complex nature of the production chain and the companies involved this does not prove entirely feasible.
Triodos Sustainability Research does apply strict upper limits when assessing the relationships between financial institutions and weapons producers. In 2009 the standards were made even stricter: relationships with producers of antipersonnel mines and cluster weapons are not tolerated at all. For both types of weapons there is a worldwide consensus that these may not be used because they claim many innocent victims. In 1997 the United Nations proclaimed a ban on antipersonnel mines and in 2008 this was followed by a ban on cluster weapons. Many countries have since ratified these conventions, resulting in the prohibition of the use and production of and trading in both types of weapons in these countries. Unfortunately a number of superpowers, including the United States, Russia, China and Israel, have not yet signed these treaties, but international pressure on these countries is intensifying.
In 2009 Triodos Sustainability Research held extensive discussions with a large number of financial institutions about their potential relationships with producers of antipersonnel mines and cluster weapons. Our zero tolerance policy applies to the bank’s own funds as well as to funds that are invested for clients, for instance via investment funds. Our questions caused a significant number of companies to modify their policies. For instance, three banks sold their equity holdings in weapons producers partly in order to meet our requirements. 44 financial institutions now meet them. These include ING, Rabobank, KBC and Svenska Handelsbanken, as well as the Dutch public sector agency BNG and the European Investment Bank. The large US, UK, German, French and Swiss banks did not pass our screening process.
This issue now has a high priority for many financial institutions. We have frequent contact with banks that are addressing this issue, such as the large UK bank HSBC and Westpac in Australia. We expect that in the next few years more banks will introduce stricter policies. Banks in Belgium and the Netherlands have been focusing on this issue for longer, partly because of the activities of pressure groups such as the Belgian NGO Netwerk Vlaanderen and Pax Christi. In Belgium legislation that prohibits funding of antipersonnel mines and cluster weapons has already been implemented and in the Netherlands discussions about such legislation are in full swing.
Looking back, we are pleased with the results: partly because of probing questions from social organizations and from Triodos Bank, financial institutions have started to act. In addition, large companies are also proving able to meet the stricter criteria.