Nuclear weapon producers
The nuclear weapon producers listed in this report are involved directly in the development, testing, production or maintenance of nuclear weapons related technology, parts, products or services. The company’s involvement is related to warheads, or to specifically designed nuclear capable delivery systems such as missiles. This includes ‘dual use’ (military and civilian) technology but excludes technology that is not specifically designed for, but can be adapted or configured for use in nuclear warfare. The list of nuclear weapon producers investigated was compiled through a wide variety of sources, including financial institution exclusion lists, civil society reports, media reports, etc. The list of selected nuclear weapons companies in this report is not exhaustive.
State owned or controlled nuclear industries are outside the scope of this research, as are companies not publicly listed. Our research uncovered a number of universities involved in nuclear weapons programmes, but these are also outside the scope of the report.
Hall of Shame
The research on financial transactions for this report was commissioned by PAX to the Dutch economic research consultancy Profundo. Profundo is an economic research consultancy analysing commodity chains, financial institutions and corporate social responsibility issues.
Which financial institutions are involved in the financing of the selected nuclear weapon companies was researched using annual reports, stock exchange filings and other publications of the companies concerned, archives of trade magazines, local newspapers and the financial press as well as specialized financial databases (Thomson ONE, Bloomberg, Refinitiv). Used resources are clearly mentioned.
Definitions
Financial Institutions are companies “engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange”.2
Financial institutions are listed at the parent group level, and the total amounts listed include any investments found for the financial institution’s subsidiaries.
Scope
Investments include loans and other forms of credits (commercial banking), underwriting of share and bond issuances (investment banking), investments in shares and bonds (asset management) and other financial services. These investments can be made by financial institutions on their own behalf or on behalf of third parties.
Financial institutions can be involved in financing companies by providing corporate loans, by assisting companies with share- and bond issues, and by (managing) investments in shares and bonds of these companies. For asset managers and pension funds, the only relevant type of financial involvement is (managing) share- and bondholdings of the selected companies.
In this report, we have focussed on the financial institutions which were found to have the most significant financing relationships with one or more of the selected nuclear weapon companies. To select these financial institutions, the following criteria are used:
- All financial institutions involved in underwritings of share and bond issuances for one or more of the companies since January 2018;
- All financial institutions which own at least 0.5% of the outstanding shares or bonds of at least one of the companies based on the latest date available.
All loans outstanding during the research period are included, not just new loans provided. This provides a fuller picture of the overall investments in nuclear weapons producing companies. Therefore, also included in the current study are loans and credit facilities of which the closing date lies before January 2017, but that mature after September January 2020.
All figures presented in the report are in US$ millions. Commas are used as thousands separators, points to indicate decimals. Total might have adjusted due to rounding.
The report shows investments in those nuclear weapon producers at the group level, regardless of the other activities of the company or the percentage of turnover it derives from nuclear weapons-related activities. All of these financial links are included, because it is impossible for a financial institution to be sure that the financial services it provides to a company will not be used to produce (key components of) nuclear weapons. There is no way to prevent a company from legally reallocating capital within a group. Clauses in a general corporate loan contract that prohibit companies from using borrowed or invested funds to manufacture nuclear weapons, or that restrict a company’s use of the financing to civilian projects will not prevent the money from being used to manufacture nuclear weapons.
The financial institutions can be banks, pension funds, asset managers, insurance companies and others. Substantive involvement is formulated for this report as: providing corporate loans, project finance or working capital facilities; underwriting share or bond issuances; and (managing) investments in shares and bonds of the selected producing companies. For ‘substantive’ holdings of bonds and shares, a threshold was set of 0.5% of all outstanding holdings. As a result, all financial institutions with only bonds or share holdings below 0.5% involvement are excluded from this report. It is important to take note of the fact that this threshold excludes many institutions. And while it allows us to focus on the substantively involved institutions, it also means that the aggregate holdings of all financial institutions world wide are much larger than what this report examines.
Policy research financial institutions
Financial institutions can be banks, pension funds, asset managers, insurance companies and others. To identify financial institutions with a policy on nuclear weapons, a variety of sources were used: NGO reports, screening-agency information, financial institution reports and websites, information from campaigners and other public sources. The list of institutions in the Hall of Fame and Runners-Up is not an exhaustive overview of all financial institutions with policies on nuclear weapons worldwide. We welcome additional information and recommended policies to profile from those able to provide them.
Minimum requirements
To qualify for inclusion in the report, there are a number of minimum requirements. If these criteria are met, additional criteria determine whether a financial institution is listed in the Hall of Fame or Runners-Up section.
- The institutions has a publicly available policy or policy summary
- The policy applies at group level
- The institutions has participated in the research
Hall of Fame and Runners-Up
If these requirements are met, the following criteria are used to determine whether a financial institution’s policy is comprehensive and therefore merits a place in the Hall of Fame. Policies that do not meet one or more of the criteria are listed in the Runners-Up.
1. Exclude all nuclear weapon associated companies
The policy excludes:
- whole companies, not only nuclear weapons related projects
- companies associated with nuclear weapons including through joint ventures
- companies regardless of their country of origin
- companies regardless of their country of operation
2. Exclude all nuclear weapon associated activities
The policy excludes companies associated with:
- development, testing, production, maintenance or trade of nuclear weapons related technology, parts, products or services.
- delivery systems such as missiles, that are specifically developed for nuclear tasks. This includes technology that is designed for ‘dual use’ (military and civilian) but excludes technology that is not designed for, but can be used in nuclear warfare. It does not include delivery platforms such as bombers and submarines.
3. Apply to all the institution’s products and services
The institution applies the policy:
- across all entities within the group, including all subsidiaries
- in all markets
- to all types of financing and investments, including passive and active, internally and externally managed assets.
- to all existing and future investments.
4. Implementation check
Each of the financial institutions listed in the Hall of Fame underwent an implementation check to find out whether the institution has any investments in any nuclear weapon producers, as any investment in a nuclear weapon producer can be evidence of poor implementation of the exclusion policy. When evidence of financial links with nuclear weapon producers was found, the institution was contacted to check the findings. Outstanding investments in nuclear weapon producing companies require reclassification to the Runners-Up.
Four star ranking system
Institutions listed in the Hall of Fame have in place comprehensive policies to deal with nuclear weapon producers and meet all the criteria described above. Institutions in the Runners-Up fail to meet one or more of the criteria. They are ranked on a four-star scale to illustrate the comprehensiveness of their policies. One star is awarded for each of the fulfilled criteria.