Sustainable investing has never been static. It has evolved over the decades to include a wider range of asset classes and approaches. A certain set of beliefs has tended to underpin all approaches though, tied to the concept of environmental protection and inter-generational equity, and aligned with identification of the most important topics. The arrival of the Sustainable Development Goals (SDGs) in 2015 further helped to provide a common, albeit imperfect, reference framework for sustainable investors.
But now, one of the longest-standing tenets of sustainable investing has been challenged – the exclusion of weapons from sustainable portfolios. Weapons exclusion has never been a simple binary issue, since investors have always had to make decisions, such as should all weapons be excluded, or just those sold to the military? And should just the manufacturers of weapons be excluded, or also the retailers? And do we put firearms for sports in the same category as cluster bombs?
Most sustainable investors generally agree on the basic principles though, and the practice of avoiding the most controversial types of weapons is not limited to ethical or sustainable investing. In Switzerland, the Federal Act on War Material prevents all Swiss banks and pension funds from investing in equipment that has been specifically designed for military combat. This is a relatively narrow range of activities though, and consequently the industry body Swiss Sustainable Finance does not include funds with only the minimal legally required weapons exclusions in its estimate of sustainably managed assets.
The war in Ukraine has triggered a debate over weapons exclusions, with some investors and commentators calling for reconsideration of the near-universal exclusion of weapons from sustainable portfolios. The catalyst for the discussion is whether weapons are in fact a necessary tool to protect peace and democracy; could weapons actually contribute to, or even be necessary to achieve, SDG16: Peace, justice and strong institutions?
The debate is further fuelled by the proposal in February for an EU Sustainable Finance Social Taxonomy that only explicitly deems highly controversial weapons to be fundamentally opposed to social objectives. This is a similarly narrow definition to that in the Swiss regulation, raising the possibility that non-military firearms could play a role in helping to achieve other social aims, such as protecting human rights.
Thus far, the strength of feeling about weapons seems too deep to meaningfully shift sustainable portfolios in the short term. More weapons are not a guarantee for safer and more peaceful societies; in fact, it’s probably the opposite, given the close link between high rates of gun violence and weak gun control laws. Investors in public companies have no guarantee that weapons sold by investee companies would only be used for ‘good’, nor can they control where they end up. And while the goals of SDG 16 may be difficult to achieve, its first target cannot be ignored: “Reduce all forms of violence and related death rates everywhere”.
This discussion will no doubt re-emerge in future, as many topics do that involve a trade off between possible positive and negative outcomes. These challenges to generally accepted views are valuable, even if we disagree, or think that we do.
Considering different points of view forces us to pay attention to changes in the world and to reassess whether our decisions are still valid and evidence based. We emerge either with greater conviction, or with a new outlook that is more relevant.
The information contained on these pages is for marketing purposes and solely intended for Qualified Investors in accordance with the Swiss Collective Investment Schemes Act of 23 June 2006 (“CISA”) domiciled in Switzerland, Professional Clients in accordance with Annex II of the Markets in Financial Instruments Directive II (“MiFID II”) domiciled in the European Union und European Economic Area with a license to distribute / promote financial instruments in such capacity or herewith requesting respective information on products and services in their capacity as Professional Clients.
The Funds are domiciled in Luxembourg and The Netherlands. ACOLIN Fund Services AG, postal address: Affolternstrasse 56, 8050 Zürich, acts as the Swiss representative of the Fund(s). UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zurich, postal address: Europastrasse 2, P.O. Box, CH-8152 Opfikon, acts as the Swiss paying agent. The prospectus, the Key Investor Information Documents (KIIDs), the articles of association, the annual and semi-annual reports of the Fund(s) may be obtained, on simple request and free of charge, at the office of the Swiss representative ACOLIN Fund Services AG. The prospectuses are also available via the website www.robeco.ch. Some funds about which information is shown on these pages may fall outside the scope of the Swiss Collective Investment Schemes Act of 26 June 2006 (“CISA”) and therefore do not (need to) have a license from or registration with the Swiss Financial Market Supervisory Authority (FINMA).
Some funds about which information is shown on this website may not be available in your domicile country. Please check the registration status in your respective domicile country. To view the RobecoSwitzerland Ltd. products that are registered/available in your country, please go to the respective Fund Selector, which can be found on this website and select your country of domicile.
Neither information nor any opinion expressed on this website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco Switzerland Ltd. product should only be made after reading the related legal documents such as management regulations, prospectuses, annual and semi-annual reports.