Controversial weapons: What does your defense policy cover?
Many leading financial institutions have special requirements for financing the defense sector. These requirements may address business relationships with state military, producers of weapons and other defense equipment, military contractors, or others. Most often, policies addressing the defense sector focus on “controversial weapons”.
Controversial weapons is a catch-all term that leaves room for interpretation. For this reason, we consider it good practice when a financial institution’s defense policy has a clear definition of what is meant by “controversial weapons”. In most cases, the term refers to weapons that are banned or regulated under widely adopted international treaties and conventions, and usually includes:
- Nuclear weapons
- Biological and chemical weapons
- Anti-personnel mines
- Cluster munitions
Sometimes depleted uranium and white phosphorus are added to this list. A few institutions also place selected new technologies such as military drones within their definition of controversial weapons.
Our research on Peer Policies has revealed that among large international banks with strong environmental and social risk management, about two thirds have policies that prevent them from financing and investing in nuclear weapons, biological and chemical weapons, anti-personnel mines, and cluster munitions.