The Scottish organisations that choose to invest in nuclear weapons are on the wrong side of international law and out of step with the international community. In July 2017, 122 countries adopted the UN Treaty on the Prohibition of Nuclear Weapons (TPNW). The International Campaign to Abolish Nuclear Weapons (ICAN) led the push for the treaty and was awarded the 2017 Nobel Peace Prize for its efforts.
The treaty prohibits the development, testing, possession, acquisition and use of nuclear weapons. States parties also agreed not to “assist, encourage or induce, in any way, anyone to engage in” a prohibited activity. This provision is widely understood to apply to the financing of nuclear weapons.
All nine nuclear weapons states boycotted the treaty negotiations, including the UK. The British government says that it “does not intend to sign, ratify or become party to” the treaty. However, as at 4 August 2018, 60 countries have signed the treaty and ratification is proceeding at the same rate as similar treaties, meaning that it will likely enter into force by 2020.
The TPNW and an increased risk of nuclear conflict have pushed nuclear weapons towards “the top of the (responsible) investment community agenda”. Thirty financial institutions have ceased investing in nuclear weapons since the treaty was adopted in July 2017, suggesting that an international norm against nuclear weapons is being established.
There is a financial risk investing in companies that are involved in the production of illegal weapons. As progress on ratification of the TPNW advances and the stigma attached to nuclear weapons grows, Scottish financial institutions which fail to divest will find themselves increasingly isolated, risking damage to their reputation and their business.