If you have your pension with one of the Danish pension funds, your money is probably taking part in financing weapon companies who produce and deliver weapons and military equipment for war. This blog post is a part of our series: Exclude, please, where we are taking a closer look into the industries and types of companies we actively choose to exclude at Matter.
In this blog post, we elaborate on what it actually means when your pension is invested in weapon companies. What weapons are we talking about? And which consequences do investments in weapon have for people around the world? The idea is to argue why we at Matter find it completely unacceptable to invest your pension in this industry. We explain what we do, but also why we find it crucial that the rest of the pension industry in Denmark and all over the world start to do the same.
Do we understand the consequences?
There is a crucial fact that the Danish pension industry, and the pension industry at large, needs to recognise - we don’t need to invest in violence to invest in our pensions. Cluster munitions, nuclear weapons, weapons of war and personal weapons all cause untold damage to populations around the world and hold the potential to cause infinitely more. Our recent analysis of 12 of the largest Danish pension companies shows that between them, they are invested in all ten of the largest global weapons manufacturers and distributors. In addition to this, all 12 are invested in companies that contribute to the production of nuclear weapons.
Political and social attitudes to all types of weapons are changing. Now it is time for pension companies to take action to consolidate this stigmatisation by withdrawing their support for weapons producers and distributors through divestment. At Matter, we take a no tolerance stance to weapons in our investment approach. This means going beyond the existing divestment strategies (which are few and far between) which exclude only controversial weapons (cluster munitions and landmines), to all companies with ties to weapons production and distribution, both for military and personal use.
Let’s start with a positive story.
Public pressure can stop investments
Significant progress was made in 2008, when over 100 countries signed the Convention on Cluster Munitions which prohibited the production, distribution and stockpiling of cluster munitions. Denmark is a leader in terms of complying with the 2008 Convention on Cluster Munitions, which was signed by over 100 countries. Denmark announced that it had destroyed its entire stockpile of cluster munitions in 2014, four years ahead of the treaty-mandated deadline. The convention and widespread political and public condemnation of cluster munitions was accompanied by a significant drop in investment.
Cluster munitions include a wide array of bombs, rockets and artillery shells that scatter many smaller bombs. Up to one-fifth of them do not detonate, leaving large expanses of land contaminated by these smaller bombs. More than 90% of people killed by cluster munitions are civilians.
According to PAX, investments in cluster munitions have fallen from $31 billion to $9 billion in the past three years. Additionally, Lockheed Martin, the world’s largest arms manufacturer, announced its ceased involvement with the production of rockets, missiles or other delivery systems for cluster munitions, expressing the desire to be included in investor’s portfolios again.
This is evidence of the power of policy and public pressure in impacting the investment decisions of financial institutions, including pension providers. Progress still needs to be made in this area, however. Only 11 of the signatories of the Convention on Cluster Munitions have made it clear to financial institutions that supporting investments in cluster munitions is illegal. Denmark is not one of them. Our research into the portfolios of Danish pension companies shows that, although the majority of them have divested from cluster munitions producers, some of them still invest in Hanwha Corporation and Poongsang Holdings Corporation and Hanwha Corporation. Both are known producers of cluster munitions.
We find it incomprehensible that any pension providers still invest Danish citizens savings into cluster munitions, and we at Matter treat cluster munition divestment as fundamental to our no weapons approach.
Danish pensions are still invested in nuclear weapons
While the progress made in reducing investments into cluster munitions, we see this as only the first step. Our research finds that almost all of the 12 Danish pension providers analysed have investments in companies who contribute to the production of nuclear weapons.
Nuclear weapons pose an existential risk to humanity, and the issue has been brought to the political forefront after North Korea’s nuclear missile tests in 2016. This has led to a widespread international discourse on the need for nuclear disarmament, culminating in The Treaty on the Prohibition of Nuclear Weapons in the United Nations in July 2017. This treaty prevents the production, stockpiling, distribution and use of nuclear weapons, however, similar to the cluster munitions treaty, it does not prohibit financial institutions from supporting them.
The financing of companies contributing to the build-up and modernisation of nuclear arms undermines efforts to achieve nuclear disarmament. We believe that financial institutions don’t want to be associated with nuclear weapons, and therefore there is a need within Denmark to raise awareness and generate stigma around the issue. The success of the cluster munitions treaty could be replicated in the aftermath of the UN treaty on nuclear weapons, but only with a widespread stigmatisation and pressure on the financial institutions that invest in them. To the same extent, if the treaty has the same impact on nuclear weapons production as the cluster munitions treaty achieved, then the long-term financial performance of nuclear weapon production stocks may be set to fall, meaning that not only is nuclear divestment morally sensible, but possibly financially sensible for your pensions savings.
This is why we see it as essential to vocally raise awareness of this issue and divest from all companies connected to the production of nuclear weapons.
It doesn’t stop with nuclear weapons and cluster munitions
Cluster munitions and nuclear weapons have received the most international attention in the divestment debate but are not the whole story. We also divest from military contractors who fuel the international arms trade, providing weaponry used in wars around the world. Our analysis of 12 of the largest Danish pension providers found that between them, almost all of them are invested in all of the top ten largest weapons producers in the world. This includes Lockheed Martin, who alone received more than $36 billion in military contracts in 2016. Despite some positive signs in the investment space, with a Swiss group of pensions and insurance funds representing roughly $150 billion divesting from 15 defence companies, there has been little stigmatisation of the arms trade in the investment world. We at Matter believe this has to change, otherwise Danish pension savings will continue to fund weapons used in wars around the world.
Gun violence is also an issue
In addition to cluster munitions, nuclear weapons and the military arms trade, we also divest from companies with connection to the production or distribution of firearms for personal use. The use of personal firearms is particularly prevalent in the U.S., with 93 Americans being killed by gun violence on an average day. The issue has jumped to international attention after a series of mass shootings across the U.S. Our analysis of Danish pension providers found that PKA invests in Sturm Ruger, the biggest gunmaker in the U.S., and six pension funds invest in Walmart, the biggest gun retailer in the U.S. The aftermath of the Parkland shooting in February 2018 saw some positive reaction from the investment community, with Blackrock launching two gun-free funds (although Blackrock is also the largest investor in Sturm Ruger). Nonetheless, the personal firearm industry continues to thrive. We believe that attitudes towards investing in personal firearms, as well as military weapons, need to change, which is why we divest from all companies connected with the production or distribution of firearms for personal use.
Time for change
We believe that any financial support given by an investor to a company demonstrates tacit approval of what a company does. Danish pensions companies continue to invest citizens savings heavily into weapons. The time to change this is now. By excluding weapons as part of our investment strategy, we want to provide Danish citizens an opportunity to get a pension that is invested transparently and in line with their values. In addition to this, there is an urgent need to raise awareness about where your pension savings are going, and by doing this we hope to generate a stigma around investing in weapons. The stigmatisation of cluster munitions has shown that this can be done. This now needs to be broadened to include all forms of weaponry, both for military and personal purposes.
If you want to read more about the topic, Dagbladet Information brought an article about the topic on March 27 2019. You can also check your own pension company and what investments they are making on behalf of you (in Danish): Read it here