Swedish banks’ financial links to companies involved in controversial arms trade
The seven largest Swedish banks continue to provide financial support to companies involved in controversial arms trade, including export to the parties in the Yemeni armed conflict. This is demonstrated by the follow up report Deadly Investments – Swedish banks’ financial links to companies involved in controversial arms trade, published by Diakonia and Fair Finance Guide Sweden.
The report assesses the financial links* between the seven largest Swedish banks and 15 listed companies involved in controversial arms trade. The objective of the report is to look into whether the banks have made any changes in their policies and practices since 2016, when Diakonia and Fair Finance Guide published a similar report.
The report concludes that all seven banks have made investments in the companies at the total value of 4.6 billion SEK (at the beginning of 2019). Four of the banks (Danske Bank, Nordea, SEB and Swedbank) also provided loans or underwriting services to the companies at a total value of 20.7 billion SEK (during the period 2014-2018).
The banks have provided some type of financial support at a total value of almost 23 billion SEK to companies involved in controversial arms trade linked to the parties in the Yemeni armed conflict.
Improved policies on controversial arms trade
On the positive side, the report demonstrates that the banks have improved their policies concerning controversial arms trade since the previous study in 2016. All banks now have a policy in place that at least to some extent addresses this issue. Also, the total investments have gone down compared with 2016.
However, the analysis clearly demonstrates that the problem remains. The banks continue to invest in and provide loans to companies that for example have provides engines to fighter aircraft in Saudi Arabia, a country involved in the armed conflict in Yemen.
– It is positive that the banks have taken steps to improve their policies. However, they need to do more to ensure they do not finance controversial arm trade which fuels conflicts and contributes to human rights abuses, says Penny Davies, Policy Adviser at Diakonia.
The banks assessed in the report:
Danske Bank, Handelsbanken, Länsförsäkringar, Nordea, SEB, Skandia and Swedbank.
The report makes the following four recommendations to the banks:
Adopt a comprehensive policy that bans investments in and the financing of companies involved in controversial arms trade.
Develop a method for assessing to which countries arms trade would violate the principles in the policy.
Develop tools for screening companies that include human rights due diligence policies and procedures of the companies.
Report publicly on excluded companies and inform the companies about the decision and reason behind it.
*The financial analysis looks into both the investments i.e. equity investments and bond holdings, as well as loans and underwriting services to the selected companies. The equity and bond holdings are limited to the banks’ investment funds. The data is from turn of the year 2018/2019.
Read our previous report
Swedish banks invest in controversial arms tradeSweden's seven largest banks invest nearly five billion SEK in companies that export arms to countries that violate human rights and are involved in armed conflicts. This is revealed in a new report from Fair...