Investors Fail to Engage on Israel Arms Exports
Amundi, NBIM and Union Investment are among the few to have taken heed of a UN call to cease weapon transfers to the country.
Only a fifth of investors and companies have responded to an engagement by the Business & Human Rights Resource Centre on their response to a UN demand to stop exporting arms to Israel.
This, the BHRRC said, highlights an ongoing failure by the private sector to engage on escalating human rights risk associated with the Israel-Palestine conflict, and the “risk of genocide” in Gaza.
“This is despite the UN experts’ characterisation of the ongoing Israeli military assault as ‘indiscriminate and disproportionate attacks on the civilian population and infrastructure, including through extensive use of explosive and incendiary weapons in densely populated areas’,” the BHRRC stated.
The BHRRC asked 15 companies and 21 investors about the measures they have taken to end the transfer of weapons, and any enhanced due diligence they may have conducted to ensure they are not contributing to ongoing violence in the region.
“The UN’s call to action on provision of arms to Israel highlights the urgent need for the private sector to reassess its role and responsibilities in the context of the war on Gaza,” said Phil Bloomer, Executive Director at the BHRRC. “In this light, we reached out to key investors and companies with operations linked to the region.”
The centre did receive some detailed responses from investors – including on the exclusion of weapons companies from their portfolios, and on expectations of heightened human rights due diligence in this context.
“We welcome investors’ commitment to ethical investment practices and the cessation of arms transfers,” Bloomer added.
The majority of them, however, ignored the BHRRC’s request – giving little clarity over whether they have addressed the UN’s call.
Setting the example – or not…
Among the investors who did respond to the BHRRC’s solicitation were French asset manager Amundi, Norges Bank Investment Management (NBIM) – which runs Norway’s sovereign wealth fund – and Germany’s Union Investment.
In its response, Amundi highlighted its “strong commitment” to responsible investing, pointing to the human rights approach set out in its Global Responsible Investment Policy – in line with the UN’s ten Global Compact principles and the Guiding Principles on Business and Human Rights.
“We recognise the need to respect the principles set up by the International Bill of Rights and the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work,” the asset manager stated.
Amundi’s responsible investment policy also excludes issuers operating in certain weapons sectors, with a particular impact on defence companies. In addition, the asset manager has also restricted investments in companies involved in the production of core and dedicated nuclear weapon components.
“Beyond exclusions, we aim to assess how investees take into account human rights and address abuses in their operations,” Amundi said. “[We do so] relying on internal research tools, and on our proprietary ESG rating tool that assesses issuers using available human rights data from our providers.”
Union Investment, for its part, stated that direct investment in weapons was incompatible with its ESG policy – and as such, wasn’t part of its sustainable decision-making. It also pointed out that BAE Systems, Boeing, General Dynamics, Lockheed Martin, Northrop Grumman and RTX – named in the UN expert statement – have all been excluded from its investment portfolios.
“We maintain a robust framework of clear standards and processes meticulously outlined in our guidelines for responsible investment and human rights policy statement,” Union Investment said in its response to BHRRC, shared with ESG Investor. “Beyond observing the relevant applicable laws and regulatory requirements, we are guided in our approach of responsible investment by leading national and international standards, which constitute the benchmark for our actions.”
Meanwhile, other investors have chosen to exclude specific entities for their involvement in the Occupied Palestinian Territory. One of them is Norwegian asset manager Storebrand, which earlier this year singled out First International Bank of Israel (FIBI) for its contribution to the establishment, expansion and maintenance of illegal Israeli settlements in the region through its direct financial activities.
In 2021, NBIM excluded Israel-based international conglomerate Elco and real-estate and infrastructure development group Electra, following recommendations from Norway’s Council of Ethics, which had found “unacceptable risk that the companies contribute[d] to systematic violations of individuals’ rights in situations of war or conflict”.
Corporate action
Four companies – BAE Systems, Maersk, Rolls-Royce Power Systems and thyssenkrupp – also responded to the BHRRC. Although the former two recognised the “terrible consequences” of the war in Gaza, neither provided specific information on whether or how they conducted enhanced due diligence in relation to this.
Meanwhile, Maersk stated that it carried out human rights due diligence when operating in conflict-affected areas, and applied standards and principles to ensure companies did not carry out any shipments of weapons or ammunition to countries and areas involved in armed conflicts or subject to an arms embargo.
“Despite some encouraging responses from investors and companies, the overall response rate has been disappointingly low,” Bloomer said. “Given the gravity of the situation in Gaza, it is deeply concerning that 29 companies and investors we reached out to have not yet acknowledged the need for immediate and decisive action.”
Those who fail to take immediate action are not only “risking the lives of millions”, but also endanger the personal liberty of individuals working for them and who may face criminal liability for alleged complicity in potential crimes against humanity, Bloomer argued.
“We need an urgent end to the sale of arms, ammunition, military equipment and dual-use technologies fuelling this appalling humanitarian suffering,” he added.
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