Ethical Investing and Weapons

Ethics-based investing is a big deal these days. Individuals and institutions know that the money they invest isn’t an abstraction, but actually amounts in some way to participating in the production of goods and services, and so plenty of them care what sorts of companies and what sorts of industries they invest in. If you wouldn’t work for Haliburton, why would you invest in them? If you wouldn’t take tobacco-company money, why would you give the tobacco industry your money?

The latest news on this front: U.S.-based aviation & defense industry giant Textron is under fire from a large Norwegian fund for making cluster bombs.

Here’s the story, from Defense News: Defense Stocks and Ethics: Norwegian Pension Fund Objects to Cluster Bombs

Textron has become the latest defense firm to be blacklisted by Norway’s $380 billion Government Pension Fund-Global (GPFG), the largest of Norway’s sovereign wealth funds.

The decision to divest $36 million in Textron shares, announced by the GPFG’s administrative board Jan. 31, was based on a report and an exclusion recommendation from the fund’s Ethics Council, said Kristin Halvorsen, Norway’s finance minister.

“Textron produces cluster weapons, which are banned pursuant to the Convention on Cluster Munitions,” Halvorsen said. “We cannot participate in the funding of this type of production.”

The convention was signed Dec. 3 by more than 100 countries, but not the United States, China or Russia.

(FYI, here’s the Wikipedia page about the Convention on Cluster Munitions.)

Now, $36 mil is a lot of dough. But to put this into perspective, that amount constitutes about 1/3 of 1% of Textron’s $12 billion market capitalization. So it’s not like Textron is likely to care much. But then, the GPFG’s goal can’t plausibly be to punish Textron, anyway, or to change the way the company does business. The fund’s goal is surely symbolic, and perhaps an attempt to keep its hands clean. How to keep one’s hands clean in a complicated world is clearly a big topic. For now, I’ll just point back to my posting from last week, about bulldozers, and ask: which company is “dirtier”? A hypothetical company that makes 99 civilian products and one nasty weapon, or a hypothetical company that makes only civilian products, 1% of which end up being used for military tasks?

5 comments so far

  1. A voice in the wilderness on

    Last time I checked, Textron was not releasing any corporate shares so the fund is only buying and selling hares between private parties. I’m not sure how this impacts Textron.Not participating in a business you find objectionable is always your choice, but don’t expect that taking steps that have no direct impact on the business to affect how the company conducts itself. The boycotts against companies doing business in South Africa during apartheid only changed the companies business practice because the boycott was large enough to cost those companies some profits.If the fund’s goal is to only be part of acceptable, in their opinion, businesses Bravo for their decision.

  2. Anonymous on

    Interesting facts. Textron’s cluster munition has been fired in combat and left less than 1% unexploded ordnance (UXO). All of the UXO failed safe. The Cluster Munition Convention permits cluster munitions of the kind produced in Germany and Sweden. These have never been fired in combat. Additionally, the Convention places no quality standards on those permited cluster munitions, just design requirements. So, which is better, a prohibited munition that has been demonstrated as safe, or a permitted munition which may be worse?

  3. Chris MacDonald on

    Anonymous:Interesting. But not enough info.I don’t know what it means when you say that the unexploded ordnance “failed safe,” or what kind of safety it is that you say the Germany & Swedish bombs lack.Chris.

  4. Ron Robins on

    I agree with your opening statement: If you won’t work for a particular company, why invest in them. I have some futher thoughts on this.I believe that when we invest in a company, or many companies in the case of a mutual fund/ETF, we share in the responsibility for the activities of those companies as well as participate in the outcomes of their corporate activities. So, anyone valuing their personal or spiritual growth has to take these things into account when investing.Also, if everyone invests according to their personal values, then, since so many of our core values are alike — and are supportive of higher ideals — that in the long run, only companies employing these higher values will truly prosper. And there is real evidence of this now.I advocate, teach and write on the subject of ethical investing — and have a popular website that has unique information which might interest you. It includes the latest global green and ethical investing news and research. My site is at < HREF="http://investingforthesoul.com/" REL="nofollow"> http://www.investingforthesoul.com <>Best wishes, Ron Robins

  5. Anonymous on

    “Spiritual investing??” I am more interested in blogs and websites that debate whether a company’s activities are moral because I am more than aware of the great numbers of people who are “ethically challenged”, “immoral”, “poorly catechized” etc. Just advocating investing according to your “spiritual beliefs” is so milquetoast. Plus, the percentage of Canadians who consider themselves “spiritual” as opposed to “religious” is tiny. More attend a weekend service at a house of worship than are “spiritual” and hang a dreamcatcher or crystal etc. around a rear-view mirror. I don’t buy it. It is just telling people to “do what you believe or are comfortable with”, My church challenges you to find out if what you believe is good and true, and at least this site makes you think through the issues and alternatives too. In fact, I think the Vatican may have officially or unofficially condemned clusterbombs or at least called for their limiting. I remember some comments after the last Israeil invasion of Lebanon. But then most priests are semi-socialistic and in a “seminary to grave” protection mode. They rarely see eye to eye with lay Catholics on defense and military issues. “Rome never saw a war it liked” my father always warned me. – Kevin “Krupp Works” McDonald, Halifax, Nova Scotia


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