Why should a prohibition on financing be included in a ban treaty?
April 13, 2015
By Susi Snyder, PAX
Nuclear weapons are unacceptable weapons. They are designed to be indiscriminate, to cause catastrophic humanitarian harm. They are illegitimate and no one should possess them. In fact, continued possession of weapons designed to cause indiscriminate harm, including the possibility of catastrophic climate change, is something to be ashamed of. When nuclear weapons are outlawed, only outlaws will have nuclear weapons.
Increasing the stigma around nuclear weapons, and demonstrating whole of society opposition to possession of nuclear weapons helps negotiation efforts to make them illegal, which in turn facilitates their elimination. No weapon has ever been eliminated before it was outlawed. No weapon is outlawed without first becoming stigmatised. The stigma is more important than we may think. We know that nuclear weapons are bad, but we must be much louder in defining them as unacceptable, as illegitimate.
By following the money, we can cut it off, and while this isn’t the only thing necessary to make nuclear weapons extinct, it will help.
The nine nuclear-armed states are planning to spend more than USD 1,000,000,000,000 (1 trillion) over the next decade to maintain and modernize their nuclear weapons. While the majority of that money comes from taxpayers in the nuclear-armed countries, the Don’t Bank on the Bomb report shows that 411 banks, pension funds, and asset managers in 31 countries made more than 402 billion USD available between January 2011 and August 2014 to 28 companies that produce, maintain, and modernize nuclear arsenals in France, India, the United Kingdom, and the United States.
A wide range of financial institutions operate in our globalised world. These include privately owned companies and state-owned institutions, banks, insurance companies, investment funds, investment banks, pension funds, export credit agencies and many others. As a large majority of companies rely on the financial markets and financial institutions to provide them with operating capital, these financial institutions play a key role in every segment of human activity. In choosing which companies and projects they will finance and invest in, financial institutions play a significant role in the world. Choosing to avoid investment in controversial items- from tobacco to nuclear arms- can result in changed global policies, and reduces the chances of humanitarian harm.
Exclusions by financial institutions have a stigmatizing effect and can convince directors to decide to reduce reliance on nuclear weapons contracts and expand into other areas. 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 have a significant impact on a company’s strategic direction.
Let me give you an example from our sister campaign- Stop Explosive Investments. In that campaign, the focus is disinvestment 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 cluster bombs, and the disinvestment campaign has had a clear and significant effect.
Does anyone think that Lockheed Martin would listen or stop making weapons? Well, they did, and 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”.
This suggests that pressure from the financial world has had an impact. It stopped a producer from making an illegitimate weapon, even though those weapons were being sold to countries outside the treaty regime. In our conversations with financial institutions, there was clear feedback that the campaign and pressure from investors had contributed to Lockheed Martin’s decision to end its involvement.
It is clear that prohibiting financing and divestment campaigns can and do make a difference. As work continues to stigmatise, prohibit and eliminate nuclear weapons, cutting off the money from companies associated with nuclear weapons is key.