Fake Corporate Social Responsibility against the financing of arms
Jordi Calvo Rufanges
Embodied by Milton Friedman and Friedrich A. Hayek, the Neo-liberal position proclaims that businesses fulfil the role of producing goods in order to maximise profits, their only commitment to society being to comply with the the law, which mainly means the payment of taxes. The goal of the business is to give the maximum return to its shareholders, with its only obligation to society being the efficient assignment of economic resources so that the business achieves the highest profit over the long term. The idea of social responsibility focuses on the way in which the company benefits from social and institutional development, from not only an economic perspective, but also a social and environmental point of view. From this perspective, the company maintains relationships with the whole of society, not only with its shareholders, in such a way that it is also accountable to the interest groups that surround it. In the current economic model, the effects of externalities (the negative effects that the company has upon its surroundings from a social and/or environmental perspective) are much more unpredictable and of greater quantitative reach. The actions of the companies are monitored by consumer organisations and watchdogs, activists and defenders of human rights. The companies know this and so they map out their interest groups, composed by those who could be negatively or positively impacted by their activities, as well as including those groups who could also have a positive or negative effect upon the companies' activities, image or reputation.
From within this framework comes corporate social responsibility (CSR), which merits a wider analysis of the behaviour of those who claim to apply it in order to confirm that there is a long way to go before companies, and particularly financial entities, are socially responsible. One example is the controversy that can be generated by links with the arms industry, whose externalities are obvious. In the face of the controversy caused in recent years by financial institutions' investments in the arms business, many banks have developed their own policies on dealings with this sector. Deutsche Bank claims to guarantee that they are not involved in transactions relating to the sale or purchase of anti-personnel mines or cluster, nuclear, biological or chemical munitions, though they do allow for a special audit to be carried out by the senior management in these cases. Barclays confirms that they do not finance the nuclear, chemical or biological weapons trades, and they explicitly prohibit the financing of the landmine business. ING says it complies with the application of the relevant laws and codes along with export licences issued by some Western governments. It confirms that it applies strict rules regarding companies that participate directly in the manufacture and sale of anti-personnel mines, cluster bombs, depleted uranium munitions and biological, chemical or nuclear weapons. BNP PARIBAS is committed to not invest its own capital in companies that produce anti-personnel mines or cluster bombs, nor finance companies that produce them or maintain assets related to their manufacture. HSBC says that it does not provide credit or any other forms of financial aid, including participation in debt markets or any advisory roles, to companies that participate in the production of chemical weapons. Rabobank is obliged to abstain from financing what are called controversial arms: cluster bombs, land mines, nuclear weapons and chemical or biological weapons. Intesa SanPaolo issued a policy which intends to prohibit financial operations related to the sale and manufacturing of arms and arms components, though it leaves open the possibility of doing so with the authorisation of the Director General. WESTLB opts to not finance commercial transactions related to arms or military equipment if their manufacture and sale violate national or international law, including the EU code of conduct on arms exports. It also completely prohibits any activity related to land mines or depleted uranium munitions. Banco Santander says that it does not finance the manufacture or distribution of nuclear weapons, anti-personnel mines or cluster bombs. BBVA confirms compliance with the principles of the EU Code of Conduct and rejects the financing of operations related to anti-personnel mines, cluster bombs or arms of mass destruction. The bank also prohibits the financing of arms exports to countries whose human rights records have been criticised by the UN or the EU. ABN AMRO says it doesn't invest in or finance 'controversial weapons' such as anti-personnel mines, cluster munitions, nuclear weapons or components for such weapons.
The policies of these banks show that they pay special attention to the most controversial arms (those with the worst reputations) and limit their prohibitions to concrete cases of financing. Above all, the policies mention the direct financing of the arms trade (using the bank's own funds) but nothing about using money belonging to consenting customers. There are even some that keep open the option of making some of these controversial investments if approved by the senior managers. Looking at the analysis of the above-mentioned banks' investments in the arms industry along with the latest reports (Worldwide investments in Cluster Munitions a shared responsibility (2012), Banks and Arms: Explosive investments (2012)), we can confirm that the investment in controversial arms continues. The CSR of these banks is mere social marketing which identifies a new market niche made up of ethically aware consumers, with the goal of making the bank in question appear attractive in the eyes of this growing market. Because if the institutions were sincere, they would refuse to finance the production of arms in any way, given the sector's obvious social irresponsibility and its devastating effects on people. The stakeholder focus sounds nice, but is an illusion within the current capitalist model.
Jordi Calvo Rufanges is a member of Centre Delàs d’Estudis per la Pau