Leading financial institutions are continuing to invest billions of dollars in companies producing cluster munitions

25^th May 2011, London

Leading financial institutions, both in the UK and worldwide, are continuing to invest billions of dollars in companies producing cluster munitions, despite these weapons being banned under international law, according to a new report released today.

The report by Cluster Munition Coalition (CMC) members IKV Pax Christi and Netwerk Vlaanderen¹ shows that worldwide, 166 private and public financial institutions from 15 countries continue to invest in companies that produce cluster munitions. Since the Convention on Cluster Munitions was adopted in May 2008, the global amount invested in companies that still produce cluster munitions totals US$39 billion.

The human and economic cost of cluster munitions is well-documented. The weapons cause widespread harm on impact and unexploded submunitions pose a threat to civilians for decades to come. Over the last 40 years, cluster munitions have killed and injured thousands of civilians and continue to do so today.

In the UK, 12 financial institutions are listed in the report’s ‘Hall of Shame’. The Royal Bank of Scotland (RBS), a UK bank which is 83% state-owned² following the recent financial crisis, is number four in the list, making it the only EU-based financial institution remaining in the top five investors in cluster munition producers worldwide.

For Handicap International, it is unacceptable for any financial institutions in the UK to still be financing, either directly or indirectly, a weapon that has been officially banned under UK and international law, especially in the case of banks financed by public money. The organisation is urging the UK government to take strong action and make clear to all UK banks and financial institutions, including those mentioned in the report, that they must respect the UK’s obligations under the Convention on Cluster Munitions.

To date, 108 countries, including the UK, have joined the 2008 Convention on Cluster Munitions which bans the use, production, stockpiling and transfer of cluster munitions. Article 1(c) of the Convention bans "assistance", stating 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”.³ Despite this, financial institutions in 15 countries are still investing in cluster munition producing companies, including financial institutions in nine countries that have joined the Convention. As a member of the CMC, Handicap International believes that financial investment in the production of cluster munitions is a form of assistance, and is calling on all States to ban all investment in the production and trade of cluster munitions.

According to the IKV Pax Christi and Netwerk Vlaanderen report ‘Worldwide Investments in Cluster Munitions: A Shared Responsibility’⁴:

• 166 financial institutions from 15 countries are investing in cluster munition producers.
• The majority of these financial institutions (128) are from five countries that have not yet joined the Convention: China, Russia, Singapore, South Korea, and the United States, plus Taiwan.
• However, 38 financial institutions are from countries that have joined the Convention on Cluster Munitions and are continuing to invest in cluster munition producers. These nine countries are: Australia, Canada, France, Germany, Italy, Japan, the Netherlands, Switzerland and the United Kingdom.

Some countries, including Belgium, Ireland, Luxembourg and New Zealand, have taken the lead in banning investment in these illegal weapons by passing national legislation. The UK government previously stated in 2009 its intention to work with the financial sector, NGOs and other interested parties to promote a voluntary code of conduct to prevent indirect financing of cluster munitions.⁵ Many leading banks have also changed their policies to reflect the growing international rejection of cluster munitions. Worldwide, CMC members are calling on other countries to follow this example by passing national laws banning investments, and calling on financial institutions to disinvest from these weapons.

“Only a few years ago, many people said it was an impossible dream to ban cluster bombs,” said Branislav Kapetanovic a CMC spokesperson who lost all four limbs to a submunition in Serbia. “What this treaty shows is that ordinary people, including cluster bomb survivors like me, can be a part of extraordinary changes that bring real improvements to people’s lives all over the world.”

Footnotes

[1] The report ‘Worldwide Investments in Cluster Munitions: A Shared Responsibility’ by IKV Pax Christi and Netwerk Vlaanderen will be available from 25 May 2011, 10.00 Central European Time (CET) at: http://www.ikvpaxchristi.nl/stopexplosiveinvestments

2 The total economic ownership of the UK Government is 83% of the RBS Group. http://www.investors.rbs.com/equity_statistics   

3  The full text of the Convention on Cluster Munitions can be found at http://www.stopclustermunitions.org/the-solution/the-treaty/

4 Profundo, a Dutch research company, provided IKV Pax Christi and Netwerk Vlaanderen with the financial research for their report.

⁵ Written Ministerial Statement, 7th December 2009, ‘The Financing of Cluster Munitions Production’. The full text can be found at: http://www.stopexplosiveinvestments.org/uploads/pdf/UK%20Ministerial%20statement.pdf

For more information, please contact:
Tom Shelton, Handicap International UK. Tel: +44 (0)870 774 3737, Mob: +44 (0)7719 194 437, tom.shelton@hi-uk.org

The report ‘Worldwide Investments in Cluster Munitions: A Shared Responsibility’ by IKV Pax Christi and Netwerk Vlaanderen will be available from 25 May 2011, 10.00 Central European Time (CET) at: http://www.ikvpaxchristi.nl/stopexplosiveinvestments

The CMC’s ‘Stop Explosive Investments’ campaign http://www.stopexplosiveinvestments.org

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