Twenty-six financial firms in London have been accused of funding a “new nuclear arms race” including investment funds with links to the UK Government, The Ferret can reveal.
A campaign group report, Perilous Profiteering, has named hundreds of companies involved in the nuclear weapons sector and their financial backers. An analysis by The Ferret found that 26 were based in London and six have links to the Conservative Party, which plans to increase Britain’s nuclear weapons arsenal.
They include Schroders UK which holds shares in the arms giant, BAE Systems. Schroders chair is Lord Geidt, who was an advisor to BAE Systems until April this year. He is now an advisor to Prime Minister Boris Johnson, whose plan to produce more nuclear weapons has been condemned by peace organisations.
Netherlands-based peace group, PAX, produced the study with the International Campaign to Abolish Nuclear Weapons (ICAN). Their report warns that financial institutions continuing to invest in companies involved with the nuclear weapons industry could face “regulatory risks” because of the Treaty on the Prohibition of Nuclear Weapons, which came into force in January 2021.
The treaty – which the UK has not ratified – bans nuclear weapons and has been signed by 86 states so far.
The UK Government — which claims it is “committed to the long-term goal of a world without nuclear weapons” — said in March it would lift the cap on its nuclear arsenal by 40 per cent, from 180 to 260 warheads. In a statement in November the government claimed it had “played a leading role by pioneering work in nuclear disarmament”.
Perilous Profiteering says that Schroders UK had investments in 2020 worth $125.3 million (£93.97m) in BAE Systems which is building new Dreadnought submarines that will be armed with nuclear missiles. The company also provides logistics support for the US Trident and Minuteman missiles. BAE Systems stressed that it does not make nuclear warheads.
The report also names Royal London Group UK which had shares in 2020 worth $98.6m (£74m) in BAE Systems. In June the insurance company appointed Ruth Davidson, former leader of the Scottish Tories , as a non-executive director. Davidson is now a peer.
Others with links to the Tories include the Children’s Investment Fund Management (CIFF) which has shares in Safran, a French firm. Safran owns 50 per cent of ArianeGroup which has contracts for French nuclear weapon production.
CIFF’s investment assets are managed by TCI Fund Management, where Rishi Sunak MP, chancellor of the exchequer, was a partner from 2006 to 2009.
Investment firm Janus Henderson, which has shares in General Dynamics, L3 Harris and Leidos, gave the Tories £3,500 in 2018, a payment which was registered in the House of Commons as required. General Dynamics, L3 Harris and Leidos all operate within the nuclear sector, says the new report.
According to the new report, the entry into force of the Treaty on the Prohibition of Nuclear Weapons in January 2021, is an “historic shift” in the way the world “deals with nuclear weapons”. It points out that while nuclear weapons are controlled by governments, their production is often contracted to private companies.
“They (nuclear weapons) are now comprehensively outlawed, as is any assistance with producing, manufacturing or developing them,” the report says.
“Financial institutions that continue investing in companies building nuclear weapons face regulatory risks as more countries join the treaty. They also face an increased reputational risk as clients learn of their support for weapons of mass destruction and terminate their relationships.”
The report also reveals that 338 institutions have financing or investment relationships with the 25 nuclear weapon producing companies, down from 390 the previous year – a fall of 52, which the authors welcomed.
They added: “Financial institutions are racing to demonstrate their efforts to reduce their impact on the climate. Wealth generation isn’t enough, customers and shareholders are looking for ways to reduce the harm to our shared environment and ecosystem.
“Stopping the production, development, manufacture and financing of nuclear weapons is a way to protect people and the planet from this existential threat.”
Other critics of the nuclear weapons industry include Emma Cockburn, Scotland co-ordinator for Campaign Against Arms Trade (CAAT). She said the report provides a “damning insight to the endless billions available for the nuclear and arms manufacturers.”
“It is unsurprising that the same financial institutions who continue to pour funding into companies like BAE Systems also have close links with senior Conservative party members and is yet another example of the cosy relationship between the arms industry and the UK government,” she added.
Scottish Greens external affairs spokesperson Ross Greer MSP aimed criticism at the UK Government. He said: “Instead of putting up with this corrupt, warmongering regime Scotland could lead international efforts on nuclear disarmament as an independent nation, including recognising the international treaties that render these weapons illegal.”
Lynn Jamieson, chair of Scottish CND, said: “Financial interests in nuclear arms industries among members of the UK government and their cronies, are vested interests in continuing to pour money into projects that threaten life on earth and maintaining the delusion that nuclear weapons are ‘security’.”
The Ferret asked the Cabinet Office to comment but it declined to do so and instead referred us to comments by Lord Geidt in May, when he was questioned by a Westminster committee after being appointed as Independent Adviser on Ministers’ Interests to Boris Johnson. He was asked about any potential conflicts of interest, given his past roles.
Lord Geidt replied: “That was a very important consideration as I approached appointment, and I spoke at length to the Cabinet Secretary. Of course, I have an advantage over my predecessor, Sir Alex Allan, in the sense that my interests are, as a parliamentarian, already declared in the register in the House of Lords.
He continued: “But it was important also to ensure that those interests could be actively examined by the Cabinet Secretary in the event that we were to identify an actual conflict of interest. We did not identify that but, equally, I was very willing to accept any mitigation that would include not having contact with Ministers.
“That is a self-evident potential problem in the role, and I asked to ensure that my interests might be kept under active review by the Cabinet Secretary to ensure that I could stay abreast of his views on either real, or indeed perceived, conflicts of interest.”
A BAE Systems spokesperson said: “We do not produce or manufacture nuclear weapons. We’re building the Royal Navy’s new Dreadnought submarines but are not involved in manufacturing the Trident missile system nor nuclear warheads.”
Children’s Investment Fund Management told The Ferret it is an “independent philanthropic organisation and a UK charity registered with the Charity Commission” and pointed out its investments are managed by TCI Fund Management, where Sunak was previously a partner.
“CIFF has restrictions on the management of our endowment, including a restriction on investing in businesses that generate 25 per cent or more of turnover from the development, production, manufacture, distribution, stockpiling, transfer or sale of arms,” a CIFF spokeswoman added.
TCI Fund did not reply to our request for a comment.
A spokesman for Safran confirmed it was “involved as a sub-contractor in the development, manufacture and maintenance of solid rocket motors for strategic missiles M51 in France’s nuclear deterrent force”.
He added: “All Safran’s military launchers activities (including the propulsion activities related to the M51 strategic missile) were contributed to ArianeGroup in June 2016. Therefore Safran’s involvement is only indirect.”
A spokesperson for Royal London said: “Like many other UK investors, we do invest in BAE Systems. It is a large part of the UK stock market and a large employer in the UK.
“BAE’s involvement in nuclear weapons is fully transparent, legal and strictly regulated by the UK Government. Currently five per cent of BAE’s revenues come from nuclear weapons components, with the vast majority of their business activity devoted to other technologies.”
In its statement in November on nuclear weapons, the UK Government said it “remains committed to the long-term goal of a world without nuclear weapons where all states share in the peaceful uses of nuclear technologies.”
He added: “We have previously identified risks to the UK from major nuclear armed states, emerging nuclear states and state-sponsored nuclear terrorism. Those risks have not gone away; some have increased.
“We face a deteriorating nuclear security environment. The increase in global competition, challenges to the international order, and the proliferation of nuclear weapons pose a significant challenge to strategic stability.”
Janus Henderson declined to comment. The other companies named did not respond to requests to comment.
Photo Credit: iStock/Worawee Meepian