Learn

Weapons Research Methodology

13th Oct. 2023

The Weapons category encompasses a wide array of issues that significantly impact society and global well-being. At Mindful Money, we identify companies involved in the production and distribution of weapons, which can contribute to the perpetuation of armed conflicts and pose risks to global peace and security. Our approach considers various dimensions, allowing investors to make informed choices that align with their ethical values and societal responsibility.

What are weapons and why should investors care?

Weapons, including nuclear weapons, controversial weapons, firearms, and military weapons, have profound implications for society and the world at large. These issues extend beyond financial considerations, making them essential for investors to consider.

These industries directly affect global safety, with the potential for immense harm to societies and nations, often exacerbated by their use in conflicts. The proliferation of arms can escalate conflicts, lead to loss of life, displace communities, and hinder economic and social development. The weapons sector comprises distinct facets, varying in their impact, but all perpetuating inherent violence and harm:

  • Nuclear weapons: Companies linked to nuclear weapons raise global security concerns and the spectre of nuclear conflicts.
  • Controversial weapons: Involvement in weapons like landmines, cluster munitions, and chemical weapons raises ethical and humanitarian issues.
  • Firearms: This industry's role in firearm manufacturing and distribution directly influences gun violence and safety, with firearm accessibility being a major public safety concern.
  • Military weapons: Companies producing military weapons exert influence on global conflicts and peacekeeping, with direct consequences for societal safety and stability.

Many companies profit from the sale of weapons, raising ethical questions about the role of businesses in perpetuating harm. Companies in the weapons industry also face reputational risks and potential regulatory scrutiny due to societal concerns and evolving regulations.  Investments in these companies may inadvertently support the continuation of conflicts and violence, making it imperative for investors to consider the broader societal impact of their choices.

You can find out more about funds that don't invest in weapons companies here.

How does Mindful Money find and categorise these companies?

Mindful Money aims to make consistent decisions and uses a range of credible sources and ongoing engagement with recent research to maintain a comprehensive list of companies engaged in the production or retail of weapons or components and services thereof. Mostly, we use a structured framework supported by data from Sustainalytics, a global screening service (covering 30,000 global companies), to collate and understand to what extent companies produce and/or retail weapons. We also review decisions from major global responsible investors such as the NZ Super Fund and the Norwegian Pension Fund (NBIM), and material produced from credible NGOs.

In our definition of weapons, we categorise companies into sub-categories based on four critical issues: Nuclear Weapons, Controversial Weapons, Firearms, and Military Weapons. If a company's practices align with more than one of these issues, they may be included in both sub-categories.

Further information on Mindful Money's overall methodology can be found here.

Nuclear Weapons

Within our definition of nuclear weapons, we include companies engaged in various aspects related to the manufacturing, sale, and support of nuclear weapons or their components and services. These companies span a wide spectrum, from major defence contractors involved in the production of nuclear weapons and their components, to research and development organisations contributing to nuclear weapon technologies. Additionally, we consider companies providing services and technologies that directly support the nuclear weapons industry, including those involved in nuclear weapon testing, maintenance, and security.

Our materiality definition includes a 0% revenue threshold for the production or retail of nuclear weapons. 

Company profile: Lockheed Martin Corporation is a global aerospace, defence, arms, and security company headquartered in the USA. The company is involved in the development and maintenance of nuclear weapons systems, and the possession and proliferation of nuclear weapons pose existential threats to humanity and the environment. The company has also been criticised for profiting from the sale of arms to governments involved in conflicts with questionable human rights records. These sales often contribute to violence, instability, and civilian casualties in conflict zones.

Controversial Weapons

Within our definition of controversial weapons, we include companies involved in various aspects related to the manufacturing, sale, and support of controversial weapons or their components and services. Examples of controversial weapons include landmines, cluster munitions, and chemical and biological weapons. As with nuclear weapons, these companies range from those producing weapons and their components to companies providing services and technologies that directly support the controversial weapons industry.

Our materiality definition includes a 0% revenue threshold for the production or retail of controversial weapons. 

Company profile: Bharat Dynamics Ltd (BDL) is a state-owned defence and aerospace company based in India. The company specialises in the manufacturing of missile systems and strategic defence equipment. As a key player in India's defence industry, BDL is responsible for the production of surface-to-air missiles, anti-tank guided missiles, underwater weapons, heavyweight torpedoes, air-to-air missiles, and other allied equipment. While BDL primarily serves the Indian Armed Forces, it has also engaged in arms exports to other countries. The export of arms, especially to regions with conflicts or human rights concerns, can be ethically and politically contentious. Arms sales to volatile regions may exacerbate conflicts and pose risks to global security.

Firearms

Within our definition of firearms, we include companies engaged in the manufacturing, sale, and support of firearms, including guns, rifles, pistols, and their components and services. These companies can vary widely, ranging from firearms manufacturers that produce a wide range of weaponry to businesses that retail firearms. Additionally, we consider companies providing services and technologies that directly support the firearms industry, such as firearm accessories, ammunition, and firearms training.

Our materiality definition includes a 0% revenue threshold for the production or retail of firearms and their key components, both civilian customers (assault weapons) and military/law enforcement customers.

Company profile: Walmart is the USA’s largest retailer by sales, selling a variety of general merchandise and grocery items. Walmart retails shotguns, pistols and ammunition at some of its stores in the USA, as well as components for firearms such as scopes. In recent years, there have been countless incidents of public safety events in the USA related to firearms, some of which have been purchased from Walmart. We do acknowledge Walmart has lobbied for tougher gun control, stopped selling some types of weapons and that the sale of firearms and related products such as ammunition account for around 0.5-1% of their company's total revenue. However, our threshold for the production or retail of firearms is 0%, so therefore, Walmart exceeds our threshold.

Military Weapons

Within our definition of military weapons, we include companies that derive revenue from the manufacturing of weapons or weapon components and services to the defence industry. These companies specifically cater to the defence industry, providing a wide range of weaponry and equipment used for military and combat purposes. This category does not include companies engaged in non-weapons-related military support activities.

Our materiality definition includes a >10% revenue threshold for military contracting weapons and weapons-related products and/or services.

Company profile: China North Industries Corporation (NORINCO), a major defence conglomerate, has come under scrutiny due to its involvement in the production of military weapons and technologies. The company’s defence products include tanks, armoured vehicles, artillery weapons, guided weapons, ammunition, air-launched weapons, naval weapons, infantry weapons and military defence projects. The corporation's activities have sparked ethical and moral debates, as they contribute to the perpetuation of armed conflicts and pose risks to global peace and security.