Frequently Asked Questions

 

Is your question about:

NUCLEAR WEAPONS

Q: ARE NUCLEAR WEAPONS ILLEGAL?

A: Nuclear weapons are not yet subject to a universal treaty-based ban. Nonetheless, under international humanitarian law, it is illegal to use and threaten to use them, and all nations must pursue and conclude negotiations for nuclear disarmament.

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”.

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 producers 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 financing of nuclear programmes in China, Israel, the Democratic People’s Republic of Korea (North Korea), Pakistan and the Russian Federation remain largely invisible.

Q: SHOULD NUCLEAR ARMS MAKERS BE BOYCOTTED?

A: Consumer boycotts against nuclear weapons companies are not very likely to be effective, because most nuclear weapons companies are not involved in the production of consumer goods which could be boycotted. One exception is Honeywell International, which sells fans, heaters and thermostats in addition to working on nuclear weapons. The Don’t Bank on the Bomb project however focuses on divestment

FINANCIAL INSTITUTIONS

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

A: 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 the negotiation efforts to make these weapons illegal, 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 2012, 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.

Q: DO ANY FINANCIAL INSTITUTIONS EXCLUDE NUCLEAR WEAPONS COMPANIES?

A: Yes. In addition to ethical funds, many mainstream 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 some 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. These financial institutions are preparing for the necessary advancement in international law which will finally outlaw nuclear weapons. In highlighting these financial institutions, we aim to show that institutions can and do decide to ban investments in the nuclear weapon industry, and that policies in the financial sector are an important contribution to the global debate on inhumane weapons.

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 in order to pressure the financial institutions to divest.

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.

First, they might not be aware of all the activities of all the companies they invest in, as FIs invest in lot of companies. Second, they might not know that the company they are invested in also produces key components for nuclear weapons. Third, 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. Fourth, 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: 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”.

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.

DIVESTMENT

Q: WHAT IS DIVESTMENT? AND WHAT DO ALL THESE FINANCIAL TERMS MEAN?

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. Also see our Financial Terms Lexicon for explanations of other financial terminology – like shares and bonds.

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 negotiations on a universal nuclear weapons ban.

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 divest. In some countries, disarmament campaigners have forced 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.

For example, in the Stop Explosive Investments campaign, the focus is divestment from cluster munitions producers. Granted, cluster munitions, unlike nuclear weapons, have been clearly outlawed through a specific international treaty. Nevertheless, 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.