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Sunday, March 1, 2015
Cluster munitions ban aims to spark human rights discussions in Canada’s investment community
Originally published on RIA Canada website
Critics might say it’s nothing more than a
symbolic gesture. But it could have wide-ranging implications for
Canada’s investment industry.
Last week, two of Canada’s investment firms announced
they were banning companies involved in cluster munitions. The
companies involved, NEI Investment and Desjardins, have SRI fund
families, which already exclude cluster munitions. But this move goes a
step further, banning cluster munitions manufacturers in all of their
The companies decided to publicize the move, after studying the Canadian government’s Cluster Munitions Act,
which contains a provision banning the “aiding and abetting” of the
manufacturer of cluster munitions, says Michelle de Cordova, Director of
Corporate Engagement & Public Policy at NEI Investments.
“We read this and thought, wow, that’s
pretty unusual, it’s not every day that the government appears to be
attempting to forbid everybody from investing in something,” she says.
As well, there has been little discussion
of the clause in the Canadian investment industry, de Cordova adds. “How
many people even know that that this is the will of the Parliament?”
“We hadn’t seen any discussions, we hadn’t
been involved in any discussions on this topic, that’s the point we
decided we needed to go live on this and tell as many people as possible
that this provision is in the act and that Parliament also thinks it
means investment,” she adds.
In addition to drawing attention to the issue, NEI’s cluster munitions policy could be a blueprint for other companies interested in making a similar move, she adds.
The next step for NEI is writing to all
cluster munitions manufacturers around the world, explaining to them
that they have been excluded from Northwest funds, NEI’s mainstream fund
family, and explaining why, at the same time encouraging them to get
out of that area of manufacturing.
De Cordova admits banning cluster munitions
in investments might be a challenge for some Canadian financial firms,
particularly those who do not have an in-house ESG team, or any type of
RI policy. But the ban could at least get a discussion started, de
“What do you do if you are running index
funds, does this apply in that situation? It’s trying to get some
clarity on what a Canada-wide prohibition on cluster munitions would
actually look like.”
Carol Smith, an advisor with Desjardins
Financial Security Investments in Mississauga, Ont., says she strongly
supports the cluster munitions ban.
“When I saw commercials with kids with
their limbs blown off, I was horrified,” Smith says. “So when I saw that
Desjardins and NEI Investments have decided to ban these from their
entire investment lineup, I thought that was very admirable.”
“It’s encouraging that they have taken this stand. I tip my hat to them; I think it is great.”
Human rights agenda
NEI’s de Cordova says the Canadian
government’s move to make cluster munitions illegal raises questions
about other human rights-related issues.
”Making sure that you
are not implicated in human rights abuses, or if someone in your supply
chain is implicated, that you should take steps and use the leverage you
have to try and address that issue.”
“If there is an absolute duty on companies
to respect human rights, the implication there is that there might be
some issues where on the ESG side, where an investor has to take action
on the issue,” she says. “Maybe it’s not exclusion, maybe it’s
engagement, but some type of action. We haven’t really had a
satisfactory answer to that question.”
Still, opening a dialogue on cluster
munitions is a good start, de Cordova says, particularly for those
investment companies who have yet to even consider whether they are
onside with Canadian law.
“I think we might find new issues emerging, we are right at the beginning of this discussion.”