GLOBAL - Twenty-one investors with over $1.2trn (€847bn) in assets under management have called for a strong, legally binding and comprehensive Arms Trade Treaty (ATT) amid ongoing negotiations at the United Nations (UN).
The investors believed that the irresponsible supply of conventional weapons can increase conflicts, contributing to political instability, insecurity and lower economic growth, specifically in emerging economies.
They therefore argued that the ATT was "directly relevant" to the long-term financial interests of investors.
With support from three financial service providers, the 21 investors - all of whom are signatories to the UN-backed Principles for Responsible Investment (PRI) - have released a Global Investor Statement on the Arms Trade, highlighting the need for establishing common international standards on the transfer of conventional arms.
Tim Goodman, associate director at Hermes Equity Ownership Service (EOS) said that the defence industry had faced "very difficult challenges", noting that the supply and use of its products could lead to "acute" human rights abuses.
"We encourage companies to manage these risks appropriately but we also believe that international law can play a role in improving standards within the industry.
"We therefore welcome the investor statement on the Arms Trade Treaty as such a treaty will help investors' efforts to support the development of a more responsible defence industry," Goodman added.
Investors said they view the ATT as a risk-reduction mechanism for arms producers to help prevent corporate complicity in human rights and humanitarian law violations.
François Meloche of Bâtirente, a Canada-based pension fund, said: "Investors support a strong ATT because it makes long-term financial sense, but also because it will help defence companies, in which they may be investing, to implement stronger corporate human rights policies and practices."
The investors include the Church of Sweden, Danske Bank and its Swedish subsidiary, asset managers F&C, Hermes Fund Managers, Legal & General Investment Management and Mn Services, as well as the North East Scotland Pension Fund, Northern Ireland Local Government Officers' Superannuation Committee and Railpen Investments.