SfC engagement will now escalate to AGM
«We strictly adhere to the principles, guidelines and policies of the German government for any kind of production or export [of weapons].». This was the answer of the German corporation ThyssenKrupp to the questions of a number of investors, led by SfC – Shareholders for Change, asking about the company’s weapons export to countries ruled by autocrats and where human rights are allegedly violated, such as Egypt and Turkey.
The steel giant ThyssenKrupp generates ca. 5% of its total revenue (or €1.75bn) with weapons, through its business unit ThyssenKrupp Marine Systems. Among others, Marine Systems develops and manufactures submarines, frigates, corvettes and mine warfare vessels. Some of them are allegedly sold to countries like Egypt and Turkey, allegedly involved in human rights abuses and armed conflicts contrary to international law.
«We have had a long and constructive dialogue with ThyssenKrupp’s investor relations office and ultimately turned to the executive board», explains Tommy Piemonte, Head of Sustainable Investment Research at Bank für Kirche und Caritas. «The company replied to most of our questions but in our opinion, is downplaying our human rights concerns regarding its armaments export practices. We think that the adherence to the German government’s principles and policies for the export of military equipment is not enough to avoid human rights violations. The group needs to carry out an enhanced human rights due diligence in accordance with the UN Guiding Principles on Business and Human Rights before exporting arms in the future».
The risks of not performing an independent human rights due diligence, explain the group of investors led by Shareholders for Change, under the lead of its founding members Bank für Kirche und Caritas and Fondazione Finanza Etica, are not only ethical but also reputational and financial: there could be lawsuits, penalties and the revoking of weapons export licences in case the UN Guiding Principles become binding.
Shareholders for Change, together with German sustainable investors Pax-Bank, Steyler Ethik Bank and Verka, have sent more than 20 questions to ThyssenKrupp between October 2020 and February 2021. «We consider this first part of our dialogue with the company as completed», adds Tommy Piemonte. «Since ThyssenKrupp has not committed to stopping its weapons export to crisis and war zones and carrying out an enhanced human rights due diligence to its arms exports, we will escalate our engagement to the company’s AGM next year, illustrating our concerns to the company’s board and shareholders».