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Divesting from producers of controversial weapons: a guide for local authorities

More and more people are moving to cities. The growing trend towards urbanization means that the traditional role of Mayors and City Councils is expanding. To protect their citizens, municipal leaders must embrace a wide range of approaches towards securing their cities. This new reality is reflected in the UN Sustainable Development Goals, particularly Goal 11: Make cities and human settlements inclusive, safe, resilient and sustainable.

In taking up their responsibility to make cities and human settlements safe and to protect their citizens from harm, municipal leaders can avoid financing the production of some of the worst weapons ever created. Weapons like cluster munitions or biological weapons have such indiscriminate and inhumane effects, they do not have a place in modern militaries. Despite being widely considered to be controversial and often prohibited by international treaties, these weapons are still produced in some parts of the world. Considering the changing nature of warfare towards more urban conflict, cities and other local authorities can take a stand and make sure they are not themselves linked to the production of controversial weapons through their finances. This guide provides some useful tools for cities that want to make sure they are not connected to the producers of controversial weapons.

Controversial weapons

Some types of weapons are designed to operate in such a way that they cause indiscriminate effects and disproportionate harm. The principles of ‘distinction’ and ‘proportionality’ are key concepts in International Humanitarian Law, which regulates the methods as well as the means of warfare. Some of these weapons are also prohibited under specific international treaties and conventions. Based on these principles, controversial weapons include at least biological weapons, chemical weapons, antipersonnel landmines, cluster munitions and nuclear weapons.

Despite widespread rejection of these controversial, they are still produced by a few state militaries and private companies. Research by PAX shows that at least 33 private companies are involved in the production, development and maintenance of nuclear weapons and cluster munitions.

Why divest?

Public exclusions by investors, including municipalities, governments and financial institutions, have a stigmatizing effect on companies associated with illegitimate activities. There are numerous examples, from child labor to tobacco, climate change, and South African apartheid, for which
divestment had a profound impact. Divestment generates stigma by drawing attention to inhumane practices and mobilizing the public against the offending companies, pressuring them to change their behavior. Any financial support delivered by an investor to a company demonstrates tacit approval of what that company does, including producing controversial weapons. In choosing how to invest, and how not to invest, investors can have a significant impact on a company’s strategic decisions.

Divestment is an important and integral part of humanitarian disarmament because it helps further stigmatize and delegitimize indiscriminate weapons. Almost nobody wants to be known as a nuclear weapons investor, just as financial institutions don’t want to be known for investing in prostitution or child labor. Choosing to exclude producers of controversial weapons from portfolios sends a clear message that such activities are unacceptable. If even a few institutions or states divest from a company using the same justification, they can impact a company’s strategic direction and involvement in illegitimate activities. Here are some examples:

General Electric
During the cold war, General Electric was participating in nuclear weapons production. After a campaign lead by Corporate Accountability International, GE “caved under enormous public and financial pressure and officially moved out of nuclear weapons business.”

Lockheed Martin
US company Lockheed Martin, the world’s largest arms manufacturer, announced an end to its involvement with the production of rockets, missiles or other delivery systems for cluster munitions and stated it will not accept such orders in the future. The arms manufacturer expressed the hope that its decision would enable it to be included in investors’ portfolios again, suggesting that pressure by financial institutions had something to do with its decision.

Orbital ATK
After ceasing its involvement in the production of a key component of cluster munitions, Orbital ATK explained its decision in [] by saying: “[…] a number of governments have taken formal action aimed at slowing down and eradicating investments in companies profiting from the sale and use of cluster munitions. The list is composed primarily of European states but includes nations from other regions of the world, a display of the Convention’s reach and an illustration of the direct threat being issued by governments with the ability to exercise control over the financial mechanisms underpinning CM production.”

Around the world, consumers seek ways to fund and participate in socially responsible activities, whether by purchasing fair-trade products or shifting their investments towards socially responsible funds. Citizens want to know that their municipality reflects their shared values and principles.
Joining this wave of enthusiasm helps to show that a city is exercising all options to make the city safe and protect citizens from harm.

Examples of local authority divestment

Research by PAX shows examples of over 100 financial institutions that have already adopted policies restricting investment in nuclear weapons and/or cluster munitions. At the local level, municipalities and cities are also taking action. Examples include the cities of Ojai, Cambridge, and Takoma Park in the United States that have each adopted resolutions to divest from nuclear weapon producers. The West Midlands Pension Fund (United Kingdom) decided in 2017 to divest from the only cluster munition producer in which it held assets.

Cities already taking action to avoid investment in nuclear weapon producers

Existing Decisions

The United States of America

Arcata, CA, USA
Arcata Nuclear Weapons Free Zone Act,  1991

One of the purposes of this ordinance is to minimize the City of Arcata’s contracts for and purchases of the products and services of nuclear weapons contractors, and to phase out investments of public funds in nuclear weapons contractors, within the constraints of state and federal law.

Berkeley, CA, USA
Nuclear Free Berkeley Act, 1986

The City of Berkeley declared itself in 1986 to be a Nuclear Free Zone and prohibited, under the Nuclear Free Berkeley Act, any work on nuclear weapons, contracts with companies working on nuclear weapons, and investments with those companies from taking place within the City of Berkeley.

Cambridge, MA, USA
Policy Order #68, 2016

The Cambridge City Council decided to go on record opposing investing funds from the Cambridge Retirement System in any entities that are involved in or support the production or upgrading of nuclear weapons systems.

Northampton, MA, USA
Executive policy order, 2019

Northampton Mayor David Narkewicz issued an executive policy order establishing a city policy barring, to the extent practical and permitted by law, Northampton from investing and contracting with nuclear weapons companies.

Oakland, CA, USA
Oakland Nuclear Free Zone Ordinance, 1992

The ordinance dictates that the City of Oakland shall refrain from making any investments in stocks, bonds, securities, or other obligations issued by nuclear weapon makers. Furthermore, within two years after the effective date of this section, the City shall divest itself of any and all investments in stocks, bonds, securities or other obligations issued by nuclear weapons makers, unless the Director of Finance determines, and so reports to Council, that such divestment would result in substantial and immediate losses of investment income, or would require the City to sell investments at prices materially below their fair market value.

Ojai, CA, USA
Resolution No. 18-10, 2018

The City Council declared the City of Ojai a nuclear-free zone and adopted a socially responsible investments policy with respect to participation in investment, cash management funds, and financial services institutions by requesting said organizations to disclose any investments in businesses which knowingly engage in work related to the production, transportation, storage, processing, use, or disposal of nuclear weapons or the components of nuclear weapons with no non-military applications.

Takoma Park, MD, USA
The Takoma Park Nuclear Free Zone Act, 1983

The Act prohibits production of nuclear weapons as well as facilities, equipment, components, supplies, or substance used for their production; requires that the City develop a socially responsible investment policy, specifically addressing any investments the City may have or may plan to have in industries and institutions which are knowingly and intentionally engaged in the production of nuclear weapons; and, prohibits the City from granting any award or contract to a nuclear weapons producer or purchasing or leasing products produced by a nuclear weapons producer.

The United Kingdom

East Ayrshire, UK
Resolution, 2019 

East Ayrshire Council passed a resolution calling on Strathclyde Pension Fund to divest from nuclear weapons.

Inverclyde, UK
Motion by Councillor Jim McEleny, 2021

Inverclyde Council passed a resolution that highlights the Treaty on the Prohibition of Nuclear Weapons and calls on Strathclyde Pension fund to eliminate financial exposure to arms companies.

Midlothian, UK
Motion Lothian Pension Fund (motion 7.3), 2019

Resolution encouraging Lothian Pension Fund to divest from companies involved in the
production, maintenance or development of nuclear weapons in the UK or other Nuclear
Weapon States.

Refrewshire, UK
Motion 11 by Councillors Audrey Doig and Paterson (item 14), 2019 

The Council calls on Strathclyde Pension Fund to work towards eliminating current and future financial exposure to companies that are involved in the production or maintenance of nuclear weapons and their delivery systems, giving due regard to fiduciary duty. The Council also asks the Chief Executive to write to the convener of Strathclyde Pension Fund pension committee to urge them to take full consideration of this resolution.

West Dunbartonshire, UK
Motion by Councillor Jim Bollan, 2019

The Council requests Strathclyde Pension Fund that it divest from companies involved in the production, maintenance and development of nuclear weapons in the UK or other nuclear weapon states.

Pending Decisions

New York City, NY, USA
Res. No. 976, 2020

Resolution calling on the New York City Comptroller to instruct the pension funds of public employees in New York City to divest from and avoid any financial exposure to companies involved in the production and maintenance of nuclear weapons, reaffirming New York City as a Nuclear Weapons Free Zone, and joining the ICAN Cities Appeal and calling on the United States to support and join the Treaty on the Prohibition of Nuclear Weapons.

New York City, NY, USA
Int. No. 1621, 2020

Creating a nuclear disarmament and nuclear weapons-free zone advisory committee.

Call to join TPNW

More generally, municipalities are also calling on their governments to join disarmament treaties. In 2018, 322 local authorities in Japan called on the Japanese government to sign the Treaty on the Prohibition of Nuclear Weapons. Over 150 municipalities in Italy including Turin, Padua and Bergamo, the cities of Melbourne and Sydney (Australia) and the US state of California did the same.

How to divest

Cities and municipalities that want to make sure they are not linked to controversial weapons companies, can put in place a responsible investment policy. The following is a brief overview of the steps needed for local authorities.

1. Announce

Municipal leadership can announce the intent to join the ICAN City Appeal or to direct appropriate authorities to bring together a policy preventing city finances from being linked to the controversial weapons sector.

2. Adopt

The City Council or other municipal leadership can adopt a resolution explicitly prohibiting investments in companies involved in the production, development, testing, maintenance or trade of nuclear or controversial weapons and the key components of such weapons.

3. Assess

The responsible authorities in the municipality can assess if there are any current controversial or nuclear weapon holdings in the existing city portfolios, and a timeline for divestment.

4. Apply

The new policy can be applied by instructing any city investment managers to put in place negative screening criteria to make sure that no controversial or nuclear weapon producers are part of the municipal portfolio.

5. Amplify

It is important to promote and supplement divestment efforts: tell companies why you’re divesting and share the experience with other municipalities.

Adopt a resolution

Nuclear weapons are among the most controversial weapons ever developed. They pose an unacceptable threat to people everywhere. This is why, on 7 July 2017, 122 nations voted to adopt the Treaty on the Prohibition of Nuclear Weapons. All national governments are now invited to sign and ratify this crucial global agreement, which prohibits the use, production and stockpiling of nuclear weapons and lays the foundations for their total elimination.

Cities and towns can help build support for the treaty by endorsing the ICAN Cities Appeal. Cities and municipalities can send a strong signal that no activity related to nuclear weapons is acceptable, by adopting a resolution or city order on divestment.

This can be done in different ways, including a city council resolution, a city order, a statement or press release by the mayor, or an instruction by the mayor to divest the city’s funds from nuclear weapon producers. A sample directive is included below. The text can be adapted to best suit the local context and the type of action (order by the mayor, resolution by the city council, or other appropriate forms of action) chosen. Key elements to include are the adoption of a socially responsible investment policy for the city; a prohibition on new investments in nuclear weapons producers; a divestment plan for any current investments; and an oversight mechanism to ensure effective implementation of the policy in the future. It is also important to make the investment policy publicly available, for example on the city council’s website.