A Rather Delicious Paradox: Social Responsibility and the Manufacture of Armaments

Purpose – To argue for the use of corporate social irresponsibility (CSI) proves far more useful in assessing arms makers’ limits of responsibility in a different way altogether. By focusing on the negative ‘externalities’ – that is impact on society – we are able to examine the practice in the context of constitutive and regulatory norms (i.e. the accepted rules), as opposed to norms that are merely evaluative (i.e. moral) or practical (i.e. what's possible).

Methodology/approach – This chapter examines the investment policies, practices and procedures of a handful of Australian pension and sovereign wealth funds in relation to investment in the development and production of cluster munitions – a class of weapon banned under international law since August 2010.

Findings – The chapter finds that the negative externalities inherent in armaments manufacturing demand that institutional investors view such firms through a ‘CSI lens’, especially when tasked with identifying and developing strategies to account for emerging social norms such as the prohibition of cluster munitions.

Practical implications – The investor is advantaged by having at its disposal a roadmap for managing – though not necessarily predicting – emerging social norms. This is so for ethical, responsible and mainstream investment approaches, although is most readily compatible with investors who have pre-established exclusionary policies as well as effective implementation procedures.

Social implications – A CSI approach to investment in cluster munitions as outlined in this chapter benefits society by inducing economic actors, such as pension and sovereign wealth funds, to direct their capital in such a way as to minimize humanitarian and environmental harm.

Originality/value of chapter – Proponents of the social responsibility of business and investment have seldom assessed the makers of conventional armaments such as machine guns, attack helicopters and battle tanks. Fewer still have attempted to devise and implement such programs within firms. Simply put, the prevailing argument is that arms makers and their financers are not capable of being socially responsible.