Concerns raised over pension investments in nuclear weapons

A report by the UK Nuclear Weapons Financing Research Group has raised concerns about the number of pension providers investing in companies that are producing nuclear weapons.

The report, Banks, Pensions and Nuclear Weapons: Investing in Change, found that among pension providers, policy on restricting investment in nuclear weapons is generally limited to ethical funds.

The report emphasised that as these funds typically cover only a small proportion of investments, this can somewhat limited the overall value of the exclusion.

However, it acknowledged that this does mean pension providers will have had to think about how to define nuclear weapons and related activities, and how to screen companies to ensure compliance.

The group stated that knowledge around nuclear weapons was “patchy” within the industry, adding that whilst several firms had achieved 'low scores', the issues around investment in nuclear weapons were rather new for some.

However, there was a “growing recognition” that nuclear weapons should be included under the category of ‘controversial weapons’ and excluded from mainstream investment.

Furthermore, several respondents stated their willingness to listen to members on the subject, and to review their policies.

Nest for instance, has promised to "look to develop" a position on nuclear weapons for the
default fund, especially if members showed interest in this, while The People’s Pension (TPP) has also committed to raising it as an issue in future member correspondence.

The group emphasised that this could give pension fund members an opportunity to "challenge investments" in nuclear weapons at a "pivotal time”.

The report rated banks and pension providers on three key aspects: policy, practice and transparency.

It emphasised that pension providers have a "particular responsibility" to be transparent to their members, highlighting the work of Nest and TPP in particular, for their commitment to consult on the issue.

The group also stated that the majority of respondents had stated that they value customer engagement around environmental, social and governance (ESG) aspects, emphasising that as a result, that there appears to be “significant potential” for customers to effect change.

Commenting in the foreword of the report, Parliamentarians for Nuclear Non-Proliferation and Disarment member, Baroness Susan Miller, stressed that the debate around nuclear weapons had reached “a critical point”.

She explained: "Long-term treaties are facing non-renewal and some nuclear-armed states are using alarming rhetoric featuring nuclear weapons.

"Meanwhile threat of low yield nuclear weapons could change the threshold at which states could contemplate using nuclear arms.

"The prospect of further states seeking to possess nuclear weapons is equally concerning. However there is hope for real change.

She continued: “The UN Treaty on the Prohibition of Nuclear Weapons (TPNW) was agreed in 2017.

"Once this is ratified by 50 states and comes into effect as a new piece of international law, the implications will be significant for nuclear armed states and financial institutions alike.

"The biggest banking corporations have a global reach and cannot disregard international law."

Indeed, several respondents explicitly highlighted the UN TPNW in their decision to cease nuclear weapon investment, including ABP, the fifth largest pension fund in the world.

Miller concluded: “We must ensure that the current, apparent legitimacy of nuclear weapons is brought to an end.

"Parliamentarians have an important duty here, but governments are slow to act. Consequently, it is vital that citizens make their voices heard, particularly within the UK and other nuclear-armed countries and their allies."

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