International conventions that ban the production and sale of controversial weapons as well as the United Nation’s Arms Trade Treaty are increasingly adopted by national regulators. But even outside of these regulatory regimes, exposure to these types of holdings can result in substantial reputational damage.
Sustainalytics’ Defense Research enables investors to screen companies involved in controversial weapons and arms trade.
The research includes our Controversial Weapons Radar as well as our Arms Trade Research. Controversial Weapons Radar provides research on companies’ involvement in the direct or indirect manufacture, sale or support of controversial weapons, such as cluster munitions and nuclear weapons, while Arms Trade Research provides information on public companies selling arms to sanctioned countries or countries where there is a high risk of violence against civilians.
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Key Benefits
Compliance
Comply with relevant regulations and client mandates and align your portfolio to international treaties
Reputation Management
Manage reputational risk by expanding your Defense and Human Rights policies to cover controversial arms as well as the sale of arms to regimes where there is a high risk of violence against civilians
Deeper Insights
Gain clear oversight of the nature of involvement in controversial weapons and arms trade and dive deeper into the issues with links to supporting sources and references
Analyst Access
Speak directly to our Defense analysts who are able to provide more context and nuance as you dive into the issues
Global Coverage
Controversial Weapons Research
All public and private companies with involvement
Arms Trade
All public companies
Regulatory Drivers
Countries are increasingly signing up to international treaties and regulations that prohibit controversial weapons or restrict arms trade to controversial regimes.
1968
Non-proliferation Treaty
1972
Biological and Toxin Weapons Convention
1997
Chemical Weapons Convention
1999
Anti-personnel Mine Ban Convention
2008
Convention on Cluster Munitions
2014
United Nations’ Arms Trade Treaty
2021
Treaty on the Prohibition of Nuclear Weapons
Controversial Weapons Radar Report Insights
The report provides background information on the involvement of the companies included in the Controversial Weapons Radar such as sources used, estimates of revenues derived from activities in the defense sector, and relevant corporate relationships.
Arms Trade Report Insights
Identify companies that export arms to countries where they are used against civilians or where there is a high risk thereof. Learn about relevant arms embargos, which countries imposed them and read a description of the transaction with links to media sources.
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In the weeks following COP26, investors in the UK and worldwide face a myriad of upcoming climate-related regulations heading towards the implementation phase. In addition, major global coalitions such as the Glasgow Financial Alliance for Net Zero have sprung up to attempt to accelerate decarbonization via targeted investment.
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Reactions to the COP26 Conference and the resulting Glasgow Climate Pact have predictably run the gamut from claims of greenwashing to the celebration of progress in the fight against climate change. Ultimately, any judgement on COP26 may be premature, as the success of the conference will best be measured in time by the extent to which commitments made are put into motion. While we wait to see the concrete actions that materialize, the past two weeks have underscored the importance of several themes that will garner increasing attention and should be considered by sustainable investors.
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Despite the shifting timelines, we observe that the market momentum around PAIs is not diminishing, quite the contrary. Investors in the scope of the regulation are using the fourth quarter of this year to get acquainted with PAI data and set up their systems. Most investors we speak with want to be prepared in time to be able to monitor PAIs throughout 2022 and adjust their portfolios to boost their PAIs (or rather limit the downside, as these are adverse impact indicators). This means that PAIs may significantly impact stock selection and portfolio construction by fund managers keen to have ‘good’ PAI scores.
Related Solutions
Controversial Product Involvement
Screen for companies involved in specific product areas, such as tobacco and military contracting.
Human Rights Radar
Identify and understand companies’ involvement in countries and territories where there is a high risk of human rights violations.
Global Standards Screening
Identify companies in breach of the UN Global Compact to support your norms-based screening strategy.