The largest U.S. mutual fund managers, which are responsible for funds found across thousands of corporate 401(k) plans, have significant investments in nuclear and other controversial weapons, like white phosphorus and cluster bombs, according to an analysis by As You Sow, an environment and social shareholder advocacy group.
“Many investors, given a choice, would not want to profit from companies that manufacture weapons of mass destruction,” said Andrew Behar, the CEO of As You Sow, in a statement. “Yet nearly every retirement plan has nuclear and other controversial weapons embedded in their plan. Our new ratings empower investors with the tools to know what they own so they can invest their money in alignment with their values.”
The United Nations Secretary-General António Guterres recently said the world has entered “a time of nuclear danger not seen since the height of the Cold War,” driven by Russia’s invasion of Ukraine and recent nuclear threats, prompting investors to re-evaluate their investments in companies profiting from nuclear weapons and global conflict.
The U.S. recently announced it is planning to deliver cluster munitions to Ukraine, prompting investor concerns about profiting from these controversial weapons. While nations have the right to the legitimate use of weapons for self-defense and national security, having investor-owned arms manufacturers in retirement plans puts people in the position of profiting from bloodshed, As You Sow said.
The group’s analysis compared the top 25 largest fund firms to the 25 largest sustainable fund managers. Among the largest fund managers, those commonly found in corporate 401(k) plans were among the most exposed to weapons makers. All of the 25 largest managers were found to have large weapons holdings.
“Concerns about the social impact, human rights, reputation risk and regulatory risks are just a few of the reasons weapon-free investing has been a common component of sustainable investing for decades,” the advocacy group said.
“These risks are amplified when companies are involved with nuclear weapons and controversial weapons like cluster munitions, antipersonnel land mines, incendiary weapons and depleted uranium. Sustainable investing has traditionally avoided weapon investments not only for moral reasons, but with the goal of avoiding the financial risk inherent in the business models of arms manufacturers. Research shows that sustainable indexes that screen out nuclear weapons largely track or outperform comparable non-sustainable indexes,” the organization added.
The group has recently added a new tool to its fund screens called the “Fund Manager Military Weapon Ratings.” For this tool, As You Sow uses research from non-profits and ethical investment firms to identify investor-owned companies involved with arms manufacturing, nuclear weapons and cluster munitions, then cross-references this data with the holdings of thousands of mutual funds and exchange-traded funds. The new offering includes a tool kit people can use to help shift their investments, including their company 401(k) savings, away from weapon investments, As You Sow said.