Divestment is intended to create an incentive for companies to stop producing nuclear weapons by cutting off their access to financing. This incentive is created when financial institutions adopt a comprehensive policy that prohibits any financial involvement with nuclear weapons producers.
Comprehensiveness is key. Why? Banks sometimes make money available to a company on the condition that it is not used for nuclear weapons activities, but “[t]here is no way to prevent a company from reallocating money once it’s been invested”.[1] Therefore, “[t]he only way to make sure the investments do not facilitate the production of nuclear weapons or key components of nuclear weapons is to exclude the company as a whole”.
If a bank has a policy which only prohibits the financing of specific nuclear weapons projects, or if the policy only covers some of the bank’s activities, nuclear weapons producers will still be able to access financing. This will not create enough of an incentive for them to stop producing nuclear weapons.
Don’t Bank on the Bomb defines a comprehensive policy as one that meets the following criteria:[2]
1. Excludes all nuclear weapon associated companies
The policy excludes:
- whole companies, not only nuclear weapons related projects
- companies associated with nuclear weapons, including through joint ventures
- companies regardless of their country of origin
- companies regardless of their country of operation
2. Excludes all nuclear weapon associated activities
The policy excludes companies associated with:
- development, testing, production, maintenance or trade of nuclear weapons related technology, parts, products or services
- delivery systems such as missiles, that are specifically developed for nuclear tasks. This includes technology that is designed for “dual use” (military and civilian) but excludes technology that is not designed for, but can be used in nuclear warfare. It does not include delivery platforms such as bombers and submarines. As an exception to this general rule, Don’t Bank on the Bomb Scotland’s includes Rolls Royce and Babcock as companies that should be excluded by the policies of Scottish organisations due to the key role that they play in the production and maintenance of the UK’s nuclear weapons delivery platform, submarines (see section 2).
3. Applies to all the institution’s products and services ̶ commercial banking, investment banking and asset management
The institution applies the policy:
- across all entities within the group, including subsidiaries
- in all markets
- to all types of financing and investments, including passive and active, internally and externally
- to all existing and future investments.
According to Don’t Bank on the Bomb’s research, 36 financial institutions from a range of countries currently have comprehensive policies.[3]
NOTES
[1] https://www.dontbankonthebomb.com/no-excuses-for-profiting-from-armageddon/.
[2] M Beenes, Beyond the Bomb: Global Exclusion of Nuclear Weapons Producers (PAX, 2019): https://www.paxforpeace.nl/publications/all-publications/beyond-the-bomb.
Don't Bank on the Bomb Scotland 