Secondly, I'm a bit surprised to see Hermes mentioned in there (by the way Hermes is a fund manager not a pension fund as the article suggests). Although they are definitely a very activist fund manager, and totally committed to good corporate governance (far more than any other fund manager), I don't think I'm telling tales out of school by saying they haven't been that impressive on social responsibility issues in the past. Maybe the issue simply has a bit of momentum.
Cluster bombers face City boycott
Sunday August 19, 2007
Leading UK institutions have told The Observer they are about to withdraw hundreds of millions of pounds from firms linked to the manufacture of controversial cluster bombs.
The move will be seen as a major breakthrough for campaigners such as Handicap International, the International Campaign to Ban Landmines and Human Rights Watch.
Last month French insurer Axa announced it was pulling its investments from companies that manufacture cluster bombs, which can lie unexploded for decades and have a devastating effect on civilians in war zones. Now a number of fund managers in Britain have indicated that they view the issue as a pressing ethical concern on a par with investment in Sudan and Burma.
The pension fund Hermes has recently written to the board of BAE to establish whether it plays a part in the industry. The move was revealed by online magazine Responsible Investor
Cluster munitions work by dispersing several smaller submunitions, often referred to as bomblets or grenades, over a wide area. A significant proportion of the bomblets do not explode and remain dangerous decades after a conflict has ended. Cluster bombs have been widely used in Iraq, Afghanistan and in Israel's air strikes in the Lebanon.
Giant arm firms such as EADS, BAE, Raytheon and Lockheed Martin are expected to face a battery of questions from fund managers in coming months over whether they are involved in cluster bomb manufacture.
Other firms linked to the production of cluster bombs include GenCorp, whose subsidiary Aerojet produces cluster munitions for Lockheed Martin.
However, a spokesman for Lockheed Martin this weekend said: 'We don't currently produce cluster bombs or any other explosive warheads used in rocket and weapon systems. We do develop systems that improve the accuracy of munitions.'
Raytheon, which campaigners say produces an air-delivered bomb with some cluster variants, denied involvement in the trade.
Last February 46 countries, including the UK, committed to banning cluster bombs by next year. But the US was not one of them. A number of Dutch institutions have pulled out of investing in cluster bomb manufacturers after criticism in a television documentary. And Norway's Oil Fund has also left this market.
Millions of people will be endangered by up to 132 million cluster bomblets that have not yet exploded, causing lasting economic and social harm to communities in more than 20 countries for decades to come, Handicap International warned earlier this year.
The vast majority of cluster bomb casualties occur while victims are carrying on their daily lives, according to the report Circle of Impact: The Fatal Footprint of Cluster Munitions on People and Communities.