Swedish bank SEB has revised its arms and defence policy to permit business with nuclear weapons companies as long as they are “headquartered” in a Nato country.
Announced this week, the updated policy means Sweden’s largest lender will allow business relationships with Nato-headquartered companies involved in the “development, testing, production, manufacturing, acquisition, possession or stockpiling of nuclear weapons”. Restrictions still apply to doing business with such companies outside the military alliance.
The deteriorating security situation in Europe, the need for European countries to “defend themselves” and build a “credible deterrent”, and Sweden and Finland recently joining Nato, were cited as reasons by SEB for the substantial shift in policy.
“As a responsible corporate citizen, SEB strives to play an active role in contributing to strengthening Europe’s defence, security and resilience through providing financial services and investments,” SEB’s chief sustainability officer Hans Beyer said in a statement published on the bank’s website. “This is of key importance to uphold and defend European democracy and freedom.”
Despite the changes, SEB said it will avoid business relationships with companies that produce “controversial weapons”, such as anti-personnel mines, biological and chemical weapons, and cluster munitions.
SEB is the latest European bank to review its arms and defence policy in response to pressure from governments as Europe looks to scale up defence spending and re-arm after decades of under-investment in the sector.
In April, Danske Bank expanded the investment universe for its asset management and pension fund businesses, removing 30 or more defence companies from its exclusion list to now make them “investable”. It attributed the changes to calls by the Danish government and the European Commission for larger levels of investment in defence, as well as a “noticeable change” among investors towards defence shares.
As part of its review, Danske Bank made the distinction for the first time between “involvement” in nuclear weapons included within the Nuclear Non-Proliferation Treaty and those outside the treaty. This means that companies that provide certain “subcomponents” or that are involved in the maintenance of such weapons, could now be deemed “investable”.
In March this year, Belgian media reported that state-owned bank Belfius had loosened restrictions on investing in companies that derive more than 10 per cent of their turnover from controversial weapons. The restrictions were only relaxed for companies from Nato member countries in light of “changed geopolitical circumstances”.
A number of other European banks are also believed to be conducting reviews of their defence lending and investment policies. In the US earlier this month, responding to government concerns about “fair access” to banking services, Citigroup announced it would scrap its firearms policy, which had been in place since 2018 to promote responsible sales practices.
Announcing its updated policy this week, SEB said it recognises that the arms and defence sector is “complex”, with a number of embedded issues, but that its sector policy includes several restrictions that seek to mitigate such risks.
The bank said it will not support transactions involving the sales of arms and defence-related equipment that lack an export licence from the EU, the European economic area, the UK or Switzerland, or are destined for countries subject to EU embargoes or sanctions.
SEB also added a restriction to avoid financing companies that produce “semi-automatic” weapons for non-military and law enforcement purposes.