Advantage Capital Strategies identifies industries that have detrimental environmental, social, and economic effects and takes action to mitigate risk both through screening and advocating for change
The Weapons Industry Explained
We define the weapons industry as including companies involved in the manufacture and sale of guns, missiles, other arms, warplanes, warships, tanks, and other related military technologies. We do not invest in companies that derive roughly 10% or more of their revenues from producing weapons that threaten human life.
Advantage SRI does not include all military-related purchases in the weapons industry, as some are related to search and rescue, peacekeeping, and other activities that do not pose a risk to human life. For example, many satellite manufacturers have small military contracts. In these cases, the company’s products continue to be used for communications purposes in a military setting, and these contracts represent a small portion of the company’s total revenues.
The Economic Rationale for Divestment
There is not as clear of a ‘stranded asset’ case to be made in divesting from the weapons industry compared to the coal industry, for example. Stranded assets are assets that “have suffered from unanticipated or premature write-downs, devaluations or conversion to liabilities .” These assets may be affected by environmental factors such as climate change and the social response to such factors, including the implementation of new legislation.
However, the manufacture and sale of weapons is an industry dependent on many external factors, including government regulation. It can also be affected by public pressure and international governing bodies such as the United Nations. For example, the debate surrounding gun control legislation in the United States poses an economic risk for gun and ammunition manufacturers and retailers. The industry can therefore be greatly impacted by changes in government policy, which introduces a risk factor in investment.
The Social Rationale for Divestment
Advantage Canada SRI believes that the manufacture and sale of weapons inherently threatens the safety and wellbeing of our communities both locally and globally. To produce a weapon is to imply its future use and the risk of loss of human life.
Gun violence has reached epidemic proportions in the United States. It is estimated that 100 Americans are killed by guns every day, and many more are injured . Furthermore, gun violence disproportionately affects children: firearms are the second leading cause of death for American children and teens and the first leading cause of death for Black children and teens . This loss of life is completely preventable.
Gun violence has become so prevalent that the majority of American adults have been affected either directly or know someone who has experienced gun violence . According to evidence compiled by Politico, it is a myth that guns sold for consumer use do more harm than good; guns are rarely used successfully in instances of actual self-defense .
Advantage Canada SRI is divesting from other weaponry such as missiles and tanks for much the same reason as explained above for guns. While missiles and tanks may not directly affect our local communities, they are created with the intent to cause destruction and harm to human life in warzones and global communities.
The Environmental Rationale for Divestment
The use of weapons can also prove destructive for our environment. The 1992 United Nations Rio Declaration on Environment and Development states that “warfare is inherently destructive of sustainable development.” Furthermore, it acknowledges the fact that “peace, development and environmental protection are interdependent and indivisible .” This statement indicates that warfare inherently distracts from environmental progress.
In addition, evidence published in the journal Environmental Reviews indicates that military activity including the use of weapons negatively impacts the environment through “dramatic habitat alteration, environmental pollution, and disturbance [contributing to] population declines and biodiversity losses .”