ExitArms identifies companies around the world that make part of their profits by selling weapons to war zones. Some drastic examples of this practice and relevant developments around ESG and defense companies, are summarized in case studies.
Facing Finance has investigated thirteen sustainability ratings. It has analyzed whether ESG scores show a difference between companies that export arms to war zones and companies that do not, and whether the ESG scores of companies that export more weapons to more war zones differ from companies with fewer exports to fewer war zones. It is found that ESG ratings measuring financial sustainability risks relative to peer industries tend to be positively correlated with arms exports to war zones, while ratings that are absolute and measure sustainability controversies are negatively correlated with weapon exports to war zones.
The Russian war of aggression against Ukraine has influenced the discussion about the defence industry and arms exports to conflict zones. In this context, some banks might weaken their guidelines on arms manufacturers. Therefore, we have analyzed how banks active in Germany changed their policies and the respective criteria guiding their financing of the armaments sector following the war in Ukraine. Thereby, we discuss how weak guidelines potentially could increase the risk of contributing to human rights violations and war crimes.
In addition to the war zones, the actual arms deliveries and the companies responsible for them, the Exit Arms database also records the use of weapons systems in a few selected examples. In this context, only the use of weapons is verified if the delivery of this weapon is already recorded in the database. In this article, examples from the war zones in Yemen, Syria and Nagorno-Karabakh are presented.
Since a military coalition led by Saudi Arabia entered Yemen in 2015, the country has been ravaged by continuous air strikes, arbitrary artillery attacks and numerous violations of fundamental human rights. The anti-Houthi coalition consists of Saudi Arabia, the United Arab Emirates (UAE), Sudan, Qatar, Egypt, Jordan, Bahrain, and Kuwait. Most airstrikes are launched by Saudi Arabia – often hitting civilian targets. These attacks constitute violations of customary international humanitarian law and may amount to war crimes, as they violate the principles of distinction, proportionality and precaution.
The war in Ukraine skyrocket the stock of Germany's largest arms manufacturer, Rheinmetall, to record levels. On the eve of the Russian attack, it stood at around 95 euros, two month later in April 2022 at 214.8 euros. An increase of 150 percent. Rheinmetall can look back not only on an economically successful fiscal year 2021, but also on a rosy future. The company consists of two divisions, Automotive and Defence. The Defence sector now dominates with a 63 percent share of sales and is expected to rise to around 70 percent in 20251. In 2021, arms sales of around 67 percent of total sales went to countries in the European Union, 42 percent to non-EU countries, in particular Australia and parts of the MENA region (Middle East and North Africa2.