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Hermes probes BAE and EADS on cluster bombs
UK pension clients examine reputation risks
Hermes, the £70bn (€103bn) UK fund manager, is pressing some of the world’s largest arms manufacturers to review their production of cluster bombs after pension clients voiced concerns about the reputation risk to their investments.
Colin Melvin, chief executive of Hermes Equity Ownership Services, said it was lobbying BAE Systems in the UK and EADS, the Franco-German company, to ensure neither were involved in the manufacture of types of cluster bombs that may not explode on release. It is believed to be the first time UK pension funds have followed European pension funds in assessing links with cluster bomb producers.
Speaking at a recent conference in Copenhagen, Melvin said: “We have been asked by clients about the issue of cluster bombs. We are asking these companies to look at the sorts of cluster bombs they produce and make any necessary changes to what they do. We have to remember though that the armaments trade is a legal business.”
Melvin said Hermes’ main objection was to the production of what he termed ‘unexploded’ cluster bombs that do not always detonate on release and can
remain on the ground in combat zones endangering civilian lives. He said: “The new generation of cluster bombs does not do this. In this area, there is a significant cluster bomb treaty being put forward by the Norwegian government and we are talking to BAE and EADS to see if they are aware of the reputation issues.”
Hermes, one of the UK’s biggest asset managers, invests money on behalf of over 240 clients including pension funds, insurance companies, government entities and charities. Its biggest client is its owner, the £36bn BT pension scheme.
“We have to remember though that the armaments trade is a legal business.”
Dutch pension giants ABP and PGGM recently announced they would stop investing in companies making landmines after coming under fire in a Dutch current affairs programme that prompted thousands of complaints from pension scheme members. PGGM said it would also divest from cluster bomb manufacturers.
The €237bn Norwegian Government Pension Fund last
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