Many institutions already prevent financial exposure to controversial weapon producers or engage with companies in the defence sector as part of their due diligence processes, embedded in sustainability frameworks or responsible investment policies. 

Human Rights approach

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 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”, and is recognized as contrary to the right to life enshrined in the International Covenant on Civil and Political Rights.

What should be in a policy?

Group wide policies preventing financing and exposure to the companies involved in the production of nuclear weapons should consider the following criteria:

• Scope
  • A policy should apply to the whole company, not only to project finance.
  • Policies should also apply to all companies involved in the production of nuclear weapons, no matter what their country of origin.
  • Policies should also apply to companies involved in joint ventures. 
  • Policies should take the prohibitions in the Treaty on the Prohibition of Nuclear Weapons as a basis.
    • The Treaty prohibits the development, testing, production, manufacture, acquisition, possession and stockpiling of nuclear weapons or other nuclear explosive devices. (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 weaponised, 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.)
• Application
  • The policy should be set at group level and apply to all subsidiaries. It should apply in all markets and to all asset management classes. The policy should also provide for termination of existing financing agreements.

Examples of existing policies:

The Norwegian Global Pension Fund- Global (national oil fund) is one of the world's largest investors. Their policy takes a broad framework approach and states:

“the fund assets shall not be invested in companies that, themselves or through entities they control: produce weapons that violate fundamental humanitarian principles through their normal use.” 

Deutsche Bank avoids entering into, or continuing, any kind of business relationship with entities with clear, direct links to the following types of Controversial Weapons business:

• Cluster Munitions (CluMu)
• Anti-Personnel Mines (APM)
• Chemical, Biological, Radiological, Nuclear Weapons (CBRN)
• Controversial Conventional Weapons (CCW)

And it defines Controversial weapons as those that “cause undue suffering and have a disproportionate humanitarian impact on civilian populations.”

Intesa Sanpaolo’s “Rules Governing Transactions With Subjects Active In The Armaments Sector” states that “Intesa Sanpaolo expressly prohibits any type of banking and/or lending activity related to the manufacture and/or marketing of weapons that are controversial and/or banned by international treaties”, including nuclear weapons.

In choosing to end investment in nuclear weapon producers, ABP revised its exclusion criteria to enable disinvestment “if a worldwide treaty exists for the purpose of eliminating the product”. In this way, ABP embedded nuclear weapons in its sustainable and responsible investment policy in a clear and decisive manner.