Your 401(k) likely includes military weapons holdings
investmentnews.comMost retirement plans have investments that fund weapons of war, including exposure to the makers of controversial munitions like cluster bombs, according to a report Tuesday from As You Sow.
The revelation comes amid an outcry over the federal government’s decision to provide cluster bombs to Ukraine to aid in its defense against Russia. Such weapons are widely condemned by nongovernmental organizations because portions can remain undetonated for years, posing a danger to others — especially children — long after conflicts have ended.
The 25 biggest U.S. asset managers all have exposure in their mutual funds to controversial weapons and nuclear weapons, with holdings ranging from 2.5% to about 5.3%, according to As You Sow. The five companies with exposure of more than 4% are John Hancock, American Funds, Columbia Threadneedle, Franklin Templeton and MFS, the report found.
“Many investors, given a choice, would not want to profit from companies that manufacture weapons of mass destruction,” As You Sow CEO Andrew Behar said in an announcement of the findings. “Yet nearly every retirement plan has nuclear and other controversial weapons embedded in their plan.”
However, the Employee Retirement Income Security Act has long-standing principles of prudence and loyalty that require fiduciaries to not sacrifice returns or assume risk for social choices, said Bonnie Treichel, chief solutions officer at Endeavor Retirement.
“I respectfully think that Behar is missing the point in an Erisa-covered plan,” Treichel said in an email, pointing to the Department of Labor’s new rule governing ESG factors in retirement plans. “Under the final regulation, if there is a tiebreaker, Erisa does not preclude consideration of nonfinancial
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