3 Questions to Amandine Rave, Policy & Ethical Analyst at Handicap International Foundation, on investment in the production of cluster munitions | June 23, 2016
On 16 June, the non-governmental organisation PAX published its 7th report on investment in the production of cluster munitions. On this occasion, we asked A. Rave to highlight the issues at stakes. In its Worldwide Investments in Cluster Munitions: A Shared Responsibility report, PAX reveals that 158 financial institutions, seven more than in the previous […]
On 16 June, the non-governmental organisation PAX published its 7th report on investment in the production of cluster munitions. On this occasion, we asked A. Rave to highlight the issues at stakes.
In its Worldwide Investments in Cluster Munitions: A Shared Responsibility report, PAX reveals that 158 financial institutions, seven more than in the previous report published in 2014, provided loans and financial services to seven cluster munition producers. Most of them are based in the United States (74), China (29) and South Korea (26). Financial institutions invested US$28 billion in the production of these weapons in the period covered by the report, 2012-2016.
Handicap International is alarmed by the fact that institutions continue to make investments in the production of these barbaric and banned weapons. Twenty of the financial institutions spotted come from States Parties to the Cluster Munition Convention: Germany, Canada, Spain, France, Japan, the United Kingdom and Switzerland. Amandine Rave, Policy and ethical Analyst at Handicap International Foundation, gives us some insights into the concrete measures that should be taken.
What kind of policies should financial institutions develop to exclude all financial links with companies involved in cluster munitions production?
Handicap International supports PAX recommendations and calls financial institutions to quickly inform producers of their decision to end investment because of the producers’ involvement with cluster munitions. Financial institutions should set clear deadlines with a limited time frame within which a company must cease production of cluster munitions if it wishes the disinvestment decision to be reversed. When a company persists in producing cluster munitions after the deadline, the financial institution must disinvest until such time as the company terminates production of cluster munitions.
When financial institutions do not have a clear policy on their own position regarding investments for the benefit of cluster munitions producers, they must set up such a policy and develop the capacities to control its concrete implementation. Financial institutions must make no exceptions for third-party financial services for which they are also responsible, or for funds that follow an index. They must apply their disinvestment policy to all activities: commercial banking, investment banking and asset management. All such activities contribute and abet a company’s production of cluster munitions and are contrary to international law.
Some would argue that the Oslo Convention does not ban investing in cluster munitions per se, why is that assertion specious?
The Oslo Convention categorically bans the use, production, stockpiling and transfer of cluster munitions, since 2010. There are 100 States Parties to the convention and 19 State Signatories. The convention states that: “Each State Party undertakes never under any circumstances to assist, encourage or induce anyone to engage in any activity prohibited to a State Party under this Convention.” Investing in a company that produces or sells cluster munitions is similar to assisting, encouraging or inducing someone to engage in an activity prohibited under the Convention and as a consequence is a serious violation of the spirit of the convention.
How should States be held accountable? What kind of legislation can States put into place to prevent these practices?
PAX report shows the impact of policy and government’s leadership on the issue. So, first and foremost, States should sign the Convention on Cluster Munitions. It would be a positive stimulus for financial institutions and an environment conducive to implementing a comprehensive policy to disinvest from cluster munitions producers. States that have already joined the Convention on Cluster Munitions should make clear in their national legislation that in prohibiting assistance, the convention also prohibits investment for the benefit of cluster munitions producers. States must also closely monitor the implementation of their national legislation. It is a necessary step to provide concrete guidelines and a conducive environment for financial institutions, in the spirit of the Treaty and its Action Plan (Dubrovnik Action Plan).