As the norm against nuclear weapons is growing, financial institutions have an opportunity to get ahead of potential reputational or regulatory risk concerns by ending financing relationships with the companies involved in nuclear weapon production.

What are nuclear weapons? | What companies produce nuclear weapons? 
 Human Rights Due Diligence & UNGPs | Examples

Institutional investors can also join others in supporting the Treaty on the Prohibition of Nuclear Weapons by signing onto this statement.

What are nuclear weapons?

There is a settled understanding of what the terms 'nuclear weapons' or 'other nuclear explosive devices' mean. As described in the Nuclear Ban Monitor, "A nuclear explosive device is an explosive device whose effects are derived primarily from nuclear chain reactions. A nuclear weapon is a nuclear explosive device that has been weaponized, meaning that it is contained in and delivered by, for example, a missile, rocket, or bomb. Thus, all nuclear weapons are a form of nuclear explosive device but not all nuclear explosive devices are nuclear weapons."

What companies produce nuclear weapons?

The following list are the major companies involved in the production of nuclear weapons. 

For a company to be included in this list, it must be open to private investment and produce goods or services that specifically contribute to nuclear weapon development, testing, production, manufacture, possession, stockpiling or use. These activities are outlawed under the Treaty on the Prohibition of Nuclear Weapons.

Human Rights Due Diligence & UN Guiding Principles

The human rights risks associated with nuclear weapons are severe and irremediable. The detonation of a nuclear weapon would cause “massive death and destruction, trigger large-scale displacement, and cause long-term harm to human health and well-being, as well as long-term damage to the environment, infrastructure, socioeconomic development and social order”.

The UN Guiding Principles on Business and Human Rights, provides a mandate for companies to “Seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.” 

The European Commission has committed to tabling an EU-wide human rights due diligence law. There are strong indications that the proposed law will have a wide scope (with the potential to apply to non-EU domiciled companies) and contain sanctions for non-compliance. Asset managers, particularly those with global footprints, and their compliance teams must be aware of existing legislation in this area and continue to monitor regulatory developments. For consistency, establishing group policies facilitate compliance regardless of jurisdiction. 

What are examples of comprehensive policies?

Policies that exclude all financial links with companies involved in the production of nuclear weapons. Investment makes production possible. This means that no exceptions will be made for financial services on behalf of third parties, for funds that follow an index, for project finance for civil purpose of a company that is also involved in nuclear weapons, nor should it be a policy that only excludes project financing for nuclear weapons.

The policy should be applied to all activities: commercial banking, investment banking and asset management. All of these activities actively assist a company in the production of nuclear weapons. In case this requires a policy change for investment funds, investors should have a deadline to sell their participation in these funds after notification of this policy change.