UN Convention against Cluster Munitions in Force August 2010

On 16 February 2010 the United Nations (UN) Convention on Cluster Munitions obtained the 30 ratifications necessary to bring it into force. The convention will enter into force on 1 August 2010, which is a major development in international law and will prohibit the use, stockpiling, production and transfer of cluster munitions.

Cluster munitions are containers designed to disperse or release multiple ‘bomblets’, whose use has been found to cause severe humanitarian problems. According to UN sources, some 98% of victims are civilians and cluster bombs have claimed over 10 000 civilian lives, 40% of whom are children. Increased public awareness of the harm to civilians caused by cluster munitions has led governments to demand alternative ‘precision’ weapons from manufacturers, also in those countries that have not signed the convention. 

Ethix SRI Advisors has been closely following the process that has given rise to the new status of the UN convention and participated in the debate about its implications for investors. Our research indicates that the number of stock market-listed companies involved in the production of cluster munitions has declined by more than 60% over the past four years. This trend is expected to continue in light of the entry into force of the convention.

A significant number of defence companies have discontinued involvement in cluster munitions or are completing their commitments under old contracts. While companies in Western Europe were quick to terminate involvement, companies in other regions, and especially in those countries that have not yet committed to banning cluster munitions, have taken longer to act. Remarkably, a significant number of companies have discontinued involvement even before their home states formal commitment to the convention. Company statements suggest that responsible investors have played a role in accelerating this development.

To support the investment community in developing a consensus on implementation Ethix SRI Advisors is convening an expert workshop in Brussels in spring 2010. The workshop will focus on national legislation in the field and explore the ramifications for investors of the UN Convention against Cluster Munitions as well as other international instruments relating to controversial weapons.

For more information contact Reinhilde Weidacher at +46 8 407 00 15.