KBC Group is a Belgian banking and insurance group focusing on retail, small and medium enterprises (SME) and midcap customers. It concentrates on its home markets of Belgium, Czech Republic, Slovak Republic, Hungary, Bulgaria and Ireland.[1] KBC serves over 11 million clients worldwide and had €213 billion in assets under management at the end of 2016.[2]
In 2016, KBC updated its Sustainability Policies and for the first time also referenced nuclear weapon producers in its credit and insurance. KBC’s “Group Policy on Blacklisted Companies” explains that companies are blacklisted when they are involved with controversial weapons. Controversial weapons cover both weapon systems which are prohibited by international (and national) law and those for which there is a broad consensus that they should be banned.[3] However, KBC also states that “[a]lthough there might be some arguments to consider nuclear arms as controversial due to their indiscriminate effect and the likelihood of civilians being injured, nuclear weapons have a different character than other controversial weapons: ownership, production and proliferation are heavily regulated and monitored by the international community and are currently not fully banned by this international community.”[4]
Following from this, KBC excludes companies from investment when they produce, develop or maintain nuclear weapons for countries that are not member of NATO or the NPT. For other nuclear weapon companies, investments are still possible under the policy, although KBC requires a written confirmation that the credit provided will not be used for nuclear weapon related activities.[5] In addition, companies involved in a joint venture that produces nuclear weapons are only excluded when they are majority shareholder.
The policy applies to all corporate banking and investment banking activities, including loans and underwriting. It also applies to most KBC asset management funds, but execution-only products and index funds are not covered by the policy.[6]
KBC uses a publicly available exclusion list to implement its policy. As of September 2017, almost 100 companies were excluded for involvement with controversial weapons.[7]
We commend KBC for having a nuclear weapon policy. We recommend KBC improve its policy to fully exclude all nuclear weapon producers. The policy should also cover all types of investments, including all types of asset management. We look forward to engaging with KBC, so a strong and comprehensively applied policy may be listed in the Hall of Fame in a future update of this report.
More about KBC-
8 June 2018: KBC announced it will exclude all nuclear weapon producers from investment
Notes
[1] KBC, “Our market position”, KBC website (https://www.kbc.com/en/belgium), viewed 23 January 2018.
[2] KBC, “About Us”, KBC website (https://www.kbc.com/en/about-us), viewed 23 January 2018; KBC, “Annual Report of KBC Group 2016”, page 5, available at https://www.kbc.com/en/system/files/doc/investor-relations/Results/JVS_2016/JVS_2016_GRP_en.pdf, viewed 23 January 2018..
[3] KBC, “KBC Group Policy on Blacklisted Companies”, September 2016, page 1, KBC website (https://www.kbc.com/en/system/files/doc/sustainability-reponsability/FrameworkPolicies/CSD_KBCGroupPolicyonBlacklistedCompanies.pdf), viewed 23 January 2018.
[4] KBC, “KBC Group Policy on Arms-Related Activities”, September 2016, page 1, KBC website (https://www.kbc.com/en/system/files/doc/sustainability-reponsability/FrameworkPolicies/CSD_KBCGroupPolicyonArms-relatedActivities.pdf), viewed 23 January 2018.
[5] KBC, KBC Group Policy on Arms-Related Activities”, September 2016, page 1, KBC website (https://www.kbc.com/en/system/files/doc/sustainability-reponsability/FrameworkPolicies/CSD_KBCGroupPolicyonArms-relatedActivities.pdf), viewed 23 January 2018.
[6] KBC, written response to PAX, 21 December 2017; KBC, written response to PAX, 2 February 2018.
[7] KBC, “Blacklist”, September 2017, KBC website (https://www.kbc.com/en/system/files/doc/sustainability-reponsability/FrameworkPolicies/CSD_KBCBlacklist.pdf), viewed 23 January 2018.
Last updated June 2018