The Fund has investments in major UK arms companies such as Rolls Royce, Smiths Group, Alvis and BAE Systems which is one of the top ten of world arms companies. In 2002, the Fund revealed it had, at that time, shares in US arms companies Lockheed Martin, Northrop Grumman, United Technologies, and General Electric, respectively the first, third, twelfth and seventeenth largest arms companies in the world. Two other overseas arms companies that the Fund has shares in are Mitsubishi Heavy Industries (Japanese) and Singapore Technologies Engineering, respectively 19th and 53rd largest arms companies in the world according to Defense News. The Fund has the capacity to invest internationally and could therefore be investing in arms companies around the world. Profits from these investments - from arms exports and also more recently as a result of the invasion of Afghanistan and Iraq - form part of the current and future pensions of Fund members.
CAAT believes the primary objective of the public bodies that form the Fund and those working for them is to strive daily to ensure the welfare and well-being of the people within their communities. You pay your Council Tax for the public good not for its use in arms investments. The Fund by investing in arms companies devalues your contributions to the public through Council Tax, devalues the public bodies involved, the efforts of their employees and stains the pension of retired employees.
Greater Manchester Pension Fund should therefore end its arms investments now and in the future.
The Fund states that it "does not interfere in the day to day investment decisions of its investment managers". The Fund, however, does have the ability to invest ethically. Its investment decision-making has been influenced by environmental issues and also by overseas labour standards. During the apartheid regime, the Fund ensured that it made no investments in South Africa.
The Fund's Report and Accounts 2003 gives no details of its approach to or any action related to socially responsible investment (SRI). It refers on a number of occasions to its Statement of Investment Principles, which details its approach to SRI. In a 2001 Friends of the Earth survey of the top 100 UK pension funds, however, the Fund was placed in the poorest category of performance with regard to taking social, ethical and environmental issues into its investments decisions. The Fund had still has the same "poor statement" on SRI despite a revision in 2002. Read the Chair of the Fund's views on ethical investment and Manchester CAAT's response as published in the Manchester Evening News.
The Fund does have guidelines about the purchasing of the US dollar, the Japanese Yen and the Pound Sterling but not on the billions it invests.
Disinvestment from UK arms companies is not a high-risk strategy for Greater Manchester Pension Fund. An investment portfolio that avoided investment in BAE Systems the leading UK arms exporter, for example, would be less than 0.4% short on an FTSE Index weighting. An investment portfolio that excluded all UK arms companies would still be only 1.19% short on the FTSE Index (Figures taken at the end of December 2003).
Job losses are constantly raised when dis-investment from arms companies is promoted. A recent Ministry of Defence/York University report, however, stated that if subsidies to the arms industry were cut by 50 per cent, 49,000 job losses would be offset by 67,000 jobs created in the civil sector.
Adair Turner, Director General of the CBI (1995 -1999) said:
We are not condemned by some economic necessity in a harsh competitive world to sell arms and instruments of torture to dictatorial regimes, or to stay silent about human rights violations, and our attainable rate of employment will not be reduced if we cease doing so."
"The ultimate case for ethical conduct is that it is right to act morally, but the good news is that the cost of ethical conduct in the affairs of developed countries is massively less than often supposed.
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If you want to consider the issues further, have a look at CAAT's Clean Investment Campaign.