Frequently Asked Questions

 

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NUCLEAR WEAPONS

Q: ARE NUCLEAR WEAPONS ILLEGAL?

A: In July 2017, one hundred and twenty-two (122) countries voted to adopt the Treaty on the Prohibition of Nuclear Weapons. This new treaty comprehensively prohibits the making, having and using of nuclear weapons. It will significantly change the context of the nuclear weapon debate, and add to the stigma surrounding nuclear weapons. In addition, Article 1 of the treaty prohibits states parties from assisting with other acts prohibited under the treaty. Financing is understood by many to be a form of assistance contributing to the production of illegal weapons. The treaty also has implications for the nations possessing or deploying nuclear weapons on their territory. Nations hosting nuclear weapons can join the treaty, if they agree to remove those weapons by a deadline negotiated with states parties. Nations possessing nuclear weapons can also join the treaty, if negotiate a verifiable disarmament and dismantlement plan for their weapons and their nuclear weapon programs. Any country can remain in a military alliance with nations possessing nuclear weapons, as it is not specified in the treaty.

Q: ARE THERE LAWS PROHIBITING INVESTMENTS IN NUCLEAR WEAPONS COMPANIES?

A: Article 1(e) of the Treaty on the Prohibition of Nuclear Weapons prohibits any state from ‘Assist, encourage or induce, in any way, anyone to engage in any activity prohibited to a State Party under this Treaty’.

Investment is a form of assistance, and therefore also prohibited: without investment, there can be no production. Most nuclear armed states rely on private companies for the production, maintenance and modernization of their nuclear weapons. Financial institutions provide crucial and necessary support to these companies, so that they are able to carry out projects like producing key components for nuclear weapons.

This interpretation of assistance is increasingly common. During the negotiations for the TPNW, around 20 states explicitly indicated they supported either the explicit inclusion of a prohibition on financing/investments in the treaty, or the prohibition of these activities as part of assistance. Another example in international law comes from the Convention on Cluster Munitions, where 39 states have indicated that they consider the similar prohibition on assistance in that Convention to mean that investments are prohibited.

Some countries already have far reaching national policies regarding the prohibition to manufacture or assist in the manufacturing of nuclear weapons.

For instance, it’s already crime in Australia and New Zealand for a person or company to facilitate nuclear weapons manufacture anywhere in the world. In both countries, a company is also prohibited from providing services, including lending money, to another company if it can reasonably suspect that the services provided will contribute to a WMD program, however the application of these laws is inconsistent.

In Switzerland, the Swiss War Materials Act (updated 2013) prohibits direct investment in nuclear weapons producers, however, there are outstanding questions as to the implementation of the legislation. In addition, some regional nuclear-weapon-free zones (Latin America, South Pacific, Africa and Southeast Asia) also prohibit states from assisting or encouraging the manufacture of nuclear weapons. This prohibition could be interpreted to cover investments.

In Australia and New Zealand it is a crime for a person or company to facilitate nuclear weapons manufacture anywhere in the world. In both countries a company is also prohibited from providing services, including lending money, to another company if it can reasonably suspect that the services provided will contribute to a WMD program, however the application of these laws is inconsistent

In Switzerland, the Swiss War Materials Act (updated 2013) prohibits direct investment in nuclear weapons producers, however, there are outstanding questions as to the implementation of the legislation. In addition, some regional nuclear-weapon-free zones (Latin America, South Pacific, Africa and Southeast Asia) prohibit states from assisting or encouraging the manufacture of nuclear weapons. This prohibition could be interpreted to cover investments, depending on the nature and size of the investments.

PRODUCERS

Q: WHY ARE COMPANIES INVOLVED IN THE MANUFACTURE OF NUCLEAR WEAPONS?

A: Governments provide contracts to companies to carry out work on nuclear weapons largely for economic reasons. They consider the use of private contractors to be the most efficient way to modernize and build up their nuclear forces.

Q: EXACTLY WHAT WORK DO THESE COMPANIES DO?

A: The companies examined in this report play different roles in nuclear weapons production. Some are involved in designing and manufacturing nuclear warheads, while others work solely on the production of ballistic missiles, submarines and bomber aircraft to deliver the nuclear warheads. For more detailed information on the activities of these companies, you can refer to the producer’s section on this website.

Q: IS THE LIST OF NUCLEAR WEAPONS COMPANIES INCLUDED EXHAUSTIVE?

A: No, this is not an exhaustive list. The total involvement of financial institutions in the nuclear weapons industry is much larger than what is identified in this report, which attempts to identify the privately-owned companies that are most involved in the nuclear weapon industrial complex. There are numerous other companies involved on a different scale or more indirectly. For example, companies involved in the production of small parts used in the assembly or maintenance of nuclear devices. State owned or controlled nuclear industries, companies not publicly listed and Universities involved in nuclear weapons programmes are also outside the scope of the report. The private sector financing of nuclear programmes in China, Israel, the Democratic People’s Republic of Korea (North Korea), Pakistan and the Russian Federation remains largely invisible.

Q: SHOULD NUCLEAR ARMS MAKERS BE BOYCOTTED?

A: Most nuclear weapon manufacturers don’t have many consumer goods on the market, making a boycott movement less effective for most companies. This is why Don’t Bank on the Bomb focuses on divestment instead of boycott. However, there are some exceptions like Honeywell International, which sells fans, heaters and thermostats in addition on working on nuclear weapons.

FINANCIAL INSTITUTIONS

Q: WHY SHOULD FINANCIAL INSTITUTIONS DIVEST FROM NUCLEAR WEAPONS COMPANIES?

A: With the signing and upcoming ratification of the Treaty on the Prohibition of Nuclear Weapons, countries have the opportunity to reconsider national policies and prohibit the investment in nuclear weapons. There is an opportunity now to get ahead of the curve and prepare by divesting now. Besides the Treaty, there are two other important factors playing a major role in the disinvestment movement.

First, public exclusions by financial institutions have a stigmatizing effect on companies associated with illegitimate activities. While it is unlikely that divestment by a single financial institution would create sufficient pressure on a company for it to end its involvement in nuclear weapons work, divestment by even a few institutions based on the same ethical objection can impact a company’s strategic direction.

Second, divestment as part of whole of society opposition to nuclear weapons increases the stigma around these weapons. This stigma helps efforts towards the entry into force of the Treaty Prohibiting Nuclear Weapons, which in turn will facilitate their elimination.

Divesting from nuclear weapons producers supports disarmament and non-proliferation efforts.

Q: WHICH FINANCIAL INSTITUTIONS INVEST MOST HEAVILY?

A: In 2014, the financial institutions most heavily involved in financing nuclear weapons producers included Bank of America, BlackRock and JP Morgan Chase in the United States; BNP Paribas in France; Deutsche Bank in Germany; and Mitsubishi UFJ Financial in Japan.

Q: ARE ALL INVESTMENTS IN NUCLEAR WEAPONS COMPANIES INCLUDED IN THIS REPORT?

A: No. The report identifies only those financial institutions that have provided loans or participated in bond or share issues since in the three years leading to the report, along with institutions that own more than 0.5 per cent of outstanding bonds or shares in the companies. The report only includes investments made by publicly traded financial institutions, and as such also does not include investments made by governments, universities or churches. For more information about the report and the methodology surrounding it, there is a methodology page on the website./toggle]

A: Yes Many financial institutions have adopted policies excluding nuclear weapons companies from their investment portfolios. The most comprehensive policies we’ve found have been analysed and placed in our Hall of Fame. However, in some cases policies allow room for investments below a certain threshold. These policies are listed in the Runners-up category, together with other policies that contain loopholes. These loopholes can differ in significance. Some financial institutions in the Runners Up have a policy that is close to the Hall of Fame, whereas others only have a severely limited policy.

Financial institutions, by adopting public policies prohibiting investment in the nuclear weapons industry, actively implement the stigma associated with these weapons of mass destruction. In highlighting these financial institutions, we aim to show that institutions can and do decide to ban investments in the nuclear weapon industry.

Q: SHOULD FINANCIAL INSTITUTIONS BE BOYCOTTED?

A: If financial institutions refuse to divest from nuclear weapons companies, then it is likely that some customers will choose to put their money elsewhere. They are free to encourage their friends, family members and colleagues to do the same to pressure the financial institutions to divest. Divestment movements are more and more growing and seem more and more effective as the FossilFree and the BDS movement are both showing conclusive results. Don’t Bank on the Bomb use similar technics such as naming and shaming through social media outlets like Twitter or Facebook besides lobbying efforts in order to remind governments of the urgency to divest from nuclear armament.

Q: WHY DO FINANCIAL INSTITUTIONS STILL INVEST IN NUCLEAR WEAPONS?

A: There are a number of reasons financial institutions might still invest in nuclear weapons producers.

  • They might not be aware of all the activities of all the companies they invest in, as FIs invest in lot of companies and they might not know that the company they are invested in also produces key components for nuclear weapons.
  • They might be asked by their clients to invest in the companies that produce nuclear weapons, and do not want to/are legally not allowed to deny their clients this service.
  • They might believe that investing in these companies brings a good return and makes them money. The purpose of investing is making money, and not everyone is driven by ethical considerations when investing. Still, investing in these companies does not provide a particularly good return, and divesting does not necessarily harm the performance of an investment portfolio.

These are just some of the reasons financial institutions have for investing in nuclear weapons producers. For more reasons financial institutions give for their investments, and how you can counter them, you can take a look at our Campaigner Guide.

HOW CAN A FINANCIAL INSTITUTION BE IN BOTH THE RUNNERS UP AND THE HALL OF SHAME?

A: Although the Financial Institutions listed in the Runners Up have a policy limiting investments in nuclear weapons producers, their policy contains loopholes or is not fully implemented. Therefore these FIs often still make investments in producers. If that is the case, they appear in the Runners Up chapter for their policy and in the Hall of Shame for their investments.

GOVERNMENTS & LEGISLATION

Q: HOW MUCH DO GOVERNMENTS SPEND EACH YEAR ON THEIR NUCLEAR FORCES?

A: It is estimated that the nine nuclear-armed nations spent a total of US$105 billion on their nuclear arsenals in 2011. More than half that amount (US$61 billion) was spent by the United States. Expenditure is expected to increase as weapons modernization programmes are ramped up.

Q:HOW MUCH WILL THE US NUCLEAR MODERNIZATION PROGRAM COST?

Normally the US spends annually 12 to 14 billion dollars, or 3% of the total defense budget, on nuclear weapons. However, with the modernization program, the costs will increase from 3 to 6%. This is however a mild estimation, as Todd Harrison’s report showed that the spending on nuclear weapons will account for 12 to 19% of total modernization costs over the next fifteen years. Under Trump’s presidency we’ve seen a massive increase in the budget spent on nuclear weaponry, as he requested 10.24 billion dollars to fund US nuclear weapon activities. This increase in nuclear investments seems to be counter intuitive as the international community – states and non-state actors – have delegitimized and made the possession, use and deployment of nuclear weapons illegal.

Overall, the expected costs of the USA’s nuclear forces and related infrastructure will be about 400 billion $ over the next ten years.

Q: HAVE ANY GOVERNMENTS DIVESTED FROM NUCLEAR WEAPONS COMPANIES?

A: Yes. In 2004 the Norwegian Ministry of Finance divested funds from a number of nuclear weapons companies on ethical grounds. Two government funds in New Zealand – the Accident Compensation Fund and the Government Pension Fund – have also divested from some nuclear weapons stocks. However, the investments of governments are generally outside the scope of this report.

Q: ARE THERE LAWS PROHIBITING INVESTMENTS IN NUCLEAR WEAPONS COMPANIES?

A: In some countries, it is an offence to assist the manufacture of nuclear weapons. However, it is not always clear whether “assisting” includes investing. Whilst it is not explicitly stated, the prohibition on assisting in Article II of the nuclear Non Proliferation Treaty (NPT) could be interpreted to prohibit investments in nuclear weapon producers regardless of whether that production takes place in a recognised nuclear armed state or not. Providing financial assistance and financial services to companies producing nuclear weapons is a type of assistance”. The Treaty on Prohibition of Nuclear Weapons says that any making, having, getting or using nuclear weapons is illegal.

On a national level, some countries created a set of rules giving them the chance to outlaw nuclear weapons on their territory. For instance in Australia and New Zealand it is a crime for a person or company to facilitate nuclear weapons manufacture anywhere in the world. In both countries a company is also prohibited from providing services, including lending money, to another company if it can reasonably suspect that the services provided will contribute to a WMD program, however the application of these laws is inconsistent

In Switzerland, the Swiss War Materials Act (updated 2013) prohibits direct investment in nuclear weapons producers, however, there are outstanding questions as to the implementation of the legislation. In addition, some regional nuclear-weapon-free zones (Latin America, South Pacific, Africa and Southeast Asia) prohibit states from assisting or encouraging the manufacture of nuclear weapons. This prohibition could be interpreted to cover investments, depending on the nature and size of the investments.

Q: WHAT IS THE INTERNATIONAL TREATY ON PROHIBITION OF NUCLEAR WEAPONS?

The treaty was adopted on the 7th of July 2017 and opened for signature on 20 September 2017. The treaty was negotiated at the UN headquarters in New York between March and July 2017 with the participation of more than 135 nations, as well as members of the civil society such as PAX. The treaty bans the making, having, getting or using of nuclear weapons. It also distinctly prohibits any type of assistance that might be provided towards nuclear possession, development or manufacture as well. Many countries also stated their understanding that the prohibition on assistance includes a prohibition on financing.

DIVESTMENT

A: Divestment is the act of selling assets, such as shares, for ethical or financial reasons. It is the opposite of investment, and can be used as a tactic to put pressure on companies or governments to change their policies and practices. See our Financial Terms Lexicon for explanations of other financial terminology – like shares and bonds.

Q: HOW IS DIVESTMENT DIFFERENT FROM DISINVESTMENT?

A: Divestment is the act of selling assets, such as shares, for ethical or financial reasons. Disinvestment, also known as divestiture, occurs when an organization liquidates or sells parts of its assets or an entire division without the intent of reinvesting in it.

Q: HOW IS DIVESTMENT DIFFERENT FROM BOYCOTTING?

A: A boycott calls on consumers to stop purchasing the products of an unethical company, whereas a divestment campaign calls on individuals, organizations and financial institutions to stop investing in an unethical company.

Q: WHAT ARE THE AIMS OF DIVESTMENT?

A: An effective global divestment campaign has the potential to help put a halt to nuclear weapons modernization programmes, strengthen the international norm against nuclear weapons, and build momentum towards universalizing the Treaty on the Prohibition of Nuclear Weapons.

Divestment sends a clear signal “not with my money, not in my name”. Divestment makes it clear to companies that as long as they are associated with nuclear weapons programmes they will be considered illegitimate themselves, and a bad investment. Divestment efforts can cause multiplier effects and impact defence contractors, the financial sector and governments. Divestment most often occurs as a result of pressure by the clients of financial institutions – ordinary people- who believe their money should represent their moral or ethical standards.

Divestment sends a clear signal “not with my money, not in my name”. Divestment makes it clear to companies that as long as they are associated with nuclear weapons programmes they will be considered illegitimate themselves, and a bad investment. Divestment efforts can cause multiplier effects and impact defence contractors, the financial sector and governments. Divestment most often occurs as a result of pressure by the clients of financial institutions – ordinary people- who believe their money should represent their moral or ethical standards.

Q: IS DIVESTMENT AN EFFECTIVE STRATEGY?

A: Yes. Other divestment campaigns have had successes in making financial institutions end investment and implement good policies. In some countries, disarmament campaigners have successfully engaged with financial institutions to stop investing in companies that manufacture cluster munitions and anti-personnel landmines. This has helped with the implementation of the treaties banning those two categories of inhumane weapons. It has also led to national legislation and interpretative statements building towards a shared understanding that to assist in the manufacture or production of a weapon includes financing the companies that produce the weapon.

In the Stop Explosive Investments campaign, the focus is divestment from cluster munitions producers. Not every country has stopped making or buying cluster bombs, yet the campaign has had a clear and significant effect.

One of the best examples is also one of the largest weapons producer in the world: Lockheed Martin. They said in a letter to PAX: “I hope our cessation of the activities in the area of cluster munitions would enable our removal from prohibited investment firms and allow investors to consider Lockheed Martin for inclusion in their portfolios”.

Another good example is the fossil fuel divestment campaign. This campaign has been very successful in making make both publicly traded financial institutions and private investors (like universities and religious organisations) divest from fossil fuel companies. For more information see www.350.org.

These examples suggest that pressure from the financial world has had an impact. It stopped a producer from making an illegitimate weapon, even though those weapons were still being sold to countries outside the treaty regime. As efforts continue to stigmatise, prohibit and eliminate nuclear weapons, cutting off the money from companies associated with nuclear weapons will force their elimination from arsenals, as the components necessary to keep them operational may no longer be built. 

Q: what can I do to help the campaign?

There are multiple ways to get engaged in the divestment campaign. For example, you can write your bank, pension fund or insurance company and tell them you don’t want them to invest your money in nuclear weapons. You can also target your financial institution through social media campaigns or publicity stunts. Another way to take action is to lobby your national government or parliament. To help campaigners, we have developed a Campaigner Guide which includes ideas for actions. You can download it here.