Investors connected with faith communities filed shareholder resolutions with Northrop Grumman and Lockheed Martin. The resolutions call on the companies to be more transparent about how they are meeting their human rights obligations, especially in light of the continued production of outlawed nuclear weapons.
Lockheed Martin perpetuating harm
On April 22nd, the Sisters of Charity of Elizabeth (New Jersey), School Sisters of Notre Dame Cooperative Investment Fund, and Sisters of St. Francis of Philadelphia urged Lockheed Martin to report on their human rights due diligence process. The proposal for shareholders to consider notes that “Failure to meaningfully assess the Company’s human rights impacts may expose Lockheed Martin to material risks, including negative legal, financial, and reputational risks.” The proposal goes further and recognizes “Lockheed Martin’s business is also connected to controversial weapons that are illegal under international law and pose a legal, reputational, and regulatory risk to the Company and its investors.” Lockheed Martin Corp. is involved in both UK and US nuclear weapon production as a provider of key services and components for nuclear arms.
During the shareholder meeting, Lockheed Martin responded by reaffirming its commitment to continue manufacturing nuclear weapons as long as the U.S. asked for them. Still, shareholders who supported the Catholic Sister’s proposal should keep faith. Demonstrating substantial and valuable backing of the proposal, the resolution managed to gather 31.6% of present shareholders’ votes (66.5% against, 1.9% abstained). Likewise, Lockheed once said the same thing about cluster munitions, though because of pressure from shareholders and ongoing blacklisting by other investors, it soon changed its story.
Northrop Grumman tries to dodge responsibility
Northrop Grumman also wants to discourage shareholders from supporting a similar proposal by claiming it already ‘thoroughly’ implemented anti-nuclear weapon pointers in its human rights policy. Likewise, they do not believe that their share in the production of nuclear weapons is significant enough or that they carry some responsibility in the encouragement of governments to purchase their weapons or build new ones.
But the Treaty on the Prohibition of Nuclear Weapons prohibits the production, manufacture and development of nuclear weapons. As well as any assistance or encouragement of the production of nukes. Companies involved with producing integral nuclear weapons components may also be required to demonstrate that they are not conducting prohibited activities in jurisdictions that ratified the Treaty, a potentially costly endeavor. Growing divestment pressure targeted at large funds, religious institutions, and universities limits the pool of potential shareholders, and may negatively impact the company’s access to capital.
The financial sector’s responsibility
The Sisters of St. Joseph (Brentwood) and the Sisters of the Humility of Mary (Ohio) appealed to PNC Financial Services’ shareholders to vote in favor of their proposal on Risks Associated with Financing the Nuclear Weapons Industry at their annual shareholders’ meeting on April 27th. They point out the severe impact on human rights and global security that result from PNC’s failure to acknowledge the changes in international law. PNC lends over $1.6 billion to nuclear weapons companies, including General Dynamics and others, a tiny fraction of their overall lending.
Shareholder action made more challenging
Due to intense lobby work by powerful trade associations seeking to limit shareholder engagement, new rules have made it much more difficult to (re)file proposals and to make an impact on corporate responsibility. Among others, like General Dynamics and Raytheon Technologies Corporation (which were successful in omitting the filing of a comparable proposal due to a technicality), these companies are clearly showing their active ignoring of the fact that the Nuclear Ban Treaty (TPNW) has entered into force. In doing so, it “faces them with increasing regulatory, legal and reputational risks”, Sisters of St. Joseph (Brentwood) say.