Michel Riemersma & Barbara Kuepper

Textron stops producing cluster munitions. The US company announced in August 2016 that it will “discontinue production of its sensor-fuzed weapon product”.[1] What Textron calls a ‘sensor-fuzed weapon’, falls within the definition of ‘cluster munitions and explosive submunitions’ as declared by the international Convention on Cluster Munitions.[2]

Textron’s decision follows the US government’s blocking of a transfer of cluster bombs to Saudi Arabia in May 2016.[3] The decision of the US government follows revelations by Human Rights Watch and Amnesty International about Saudi Arabia’s use of Textron’s cluster munitions in the conflict in Yemen. [4]

In addition to the difficult political situation for Textron, the multi-industry corporation faced pressure from the financial sector. An increasing number of investors installed responsible investment policies excluding cluster munitions producers from their investment universe. The Cluster Munition Coalition and its Stop Explosive Investments campaign has played an influential role in raising awareness on cluster munitions amongst investors.[5]

Three questions still linger after Textron’s announcement. First, does Textron still have a stockpile of cluster munitions? If so, will the US government decide to destroy the stockpile or will Textron be allowed to sell and export its stockpiled products? As the US is not a state party to the Convention on Cluster Munitions, it is not legally obliged to destroy the stockpile.[6]

Second, what will this mean for investments in Textron? Textron’s cluster munitions activities made it a well-known name on investor’s exclusion list.[7] Discontinuing this controversial activity might increase the number of investors interested in Textron shares. In addition, so-called ‘cluster munitions free indices’ covering North America will no longer have to exclude Textron. However, as Textron is also involved in nuclear weapons production[8] and controversial arms trade to countries like Afghanistan, Iraq, India and Pakistan[9], it is likely that responsible investors will maintain Textron on their exclusion list.

Third, Textron announcement was strongly influenced by the refusal of the US government to let it export its cluster munitions, as the company argues: “sensor-fuzed  weapon  sales  have  relied  on  foreign  military  and  direct commercial  international  customers  for  which  both executive branch and congressional approval is required. The current political environment has made it difficult to obtain these approvals”.[10] As the cancellation of the cluster munitions production line is not based on the fundamental beliefs of Textron, what will happen if the political situation changes? To monitor the situation, Textron will have to remain on cluster munitions watch lists for years to come.

For more information or research opportunities on this topic, please contact: Michel Riemersma (m.riemersma@profundo.nl) or Barbara Kuepper (b.kuepper@profundo.nl)

[1]         Textron (2016, August), Form 8-K: August 30, 2016, p. 2.

[2]         Boer, R. et al (2016), Worldwide Investment in Cluster Munitions: A Shared Responsibility, Utrecht, the Netherlands: PAX, p. 36.

[3]         Hudson, J. (2016, August 31), “Last remaining U.S. maker of cluster bombs stops production”, Foreign Policy, online: http://foreignpolicy.com/2016/08/31/last-remaining-u-s-maker-of-cluster-bombs-stops-production/, viewed in September 2016.

[4]         Gibbons-Neff, T. (2016, September 30), “Why the last U.S. company making cluster bombs won’t produce them anymore”, Washington Post; PAX (2016, September 1), Textron ends production of cluster munitions.

[5]         Boer, R. et al (2016), Worldwide Investment in Cluster Munitions: A Shared Responsibility, Utrecht, the Netherlands: PAX.

[6]         Convention on Cluster Munitions (2016, September 26), “Convention status by region”, online: http://www.clusterconvention.org/the-convention/convention-status/, viewed in October 2016.

[7]         For a list of exclusion lists, see: PAX (2016, June), "List of Lists", Financial Institutions banning investments in cluster munitions.

[8]         PAX (2015), “Don’t Bank on the Bomb: Textron”, online: http://www.dontbankonthebomb.com/textron/, viewed in October 2016.

[9]         Herder, A. et al., (2015, June 18), Case Study Controversial Arms Trade: A Case Study for the Fair Insurance Guide, p. 34, Profundo, Amsterdam, the Netherlands.

[10]       Textron (2016, August), Form 8-K: August 30, 2016, p. 2.