A Rotarian has just made me aware that Rotary quietly adopted a policy in June of not investing in weapons companies. This is worth celebrating and encouraging all other organizations to do likewise. Here is the policy, excerpted from a document pasted below:

“The Rotary Foundation . . . will typically avoid investment in . . . companies that derive significant revenue from producing, distributing, or marketing . . . military weapons systems, cluster munitions, anti-personnel mines, and nuclear explosives.”

Now, I’ll admit that declaring what you will “typically” not do is weak compared to declaring what you will never do, but it does create leverage to make sure that in fact the “typical” behavior is at least mostly what is done.

And it is certainly odd that after “military weapons systems” three particular types of military weapons systems are added, but there doesn’t seem to be any obvious way to read that as excluding other types of military weapons systems. They seem to all be covered.

Below is appendix B from the minutes of a Rotary International board meeting in June 2021. I’ve bolded a bit of it:

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APPENDIX B RESPONSIBLE INVESTMENT PRINCIPLES (Decision 158)

The Rotary Foundation acts responsibly and invests responsibly.

The Rotary Foundation recognizes that environmental, social and governance factors are material to the performance of investment portfolios, the objective of generating high long-term returns, and managing investment risk and aligns with its mission to act responsibly and create lasting positive change.

The Rotary Foundation will invest its financial resources and:

• promote alignment with its mission to act responsibly and create lasting positive change.
• incorporate environmental, social and governance factors into the investment analysis and decision-making process.
• consider investments which deliver tangible, measurable positive social and environmental impact in addition to the required financial return.
• be active and engaged owners and incorporate environmental, social and governance factors into the exercise of shareholder rights.

Selection and retention of investments Maximum economic return is the primary criteria for selection and retention of investments, except in cases relating to the disposition of securities in certain circumstances described herein.

At no time will an investment be selected or retained for the purpose of encouraging or expressing approval of specific activities or, alternatively, for the purpose of placing The Rotary Foundation in a position to contest specific activities.

The Rotary Foundation will generally invest in companies demonstrating sound business practices, including a commitment to environmental sustainability, progressive work-place policies, responsible business operations particularly in jurisdictions that may not have a well-developed regulatory framework, ethical and visionary leadership, and strong corporate governance practices.

The Rotary Foundation will avoid investing in companies that have systematically failed to protect the environment, human rights, workers, or prove unwilling to engage in a meaningful process of change and will typically avoid investment in companies with egregious environmental profiles, direct involvement with severe human rights abuses, pervasive or long-standing patterns of discriminatory behavior, a record of not addressing labor issues, and companies that derive significant revenue from producing, distributing, or marketing firearms, tobacco, pornography, or military weapons systems, cluster munitions, anti-personnel mines, and nuclear explosives.

Exercise of shareholder rights

The Rotary Foundation will exercise its right to vote on corporate matters and take such action to prevent or correct societal harm or social injury caused by a company’s actions, products, or policies.

Where a finding has been made that a company’s activities cause societal harm or social injury,

• The Rotary Foundation will vote, or cause its shares to be voted, for a proposition which seeks to eliminate or reduce the societal harm or social injury caused by a company’s activities or develop a risk management regime,
• The Rotary Foundation will vote against a proposition which seeks to prevent such elimination, reduction, where a finding has been made that the activities which are the subject of the proposition cause societal harm or social injury, except in cases in which the proposition seeks to eliminate or reduce social injury by means which are found to be ineffective or unreasonable.

The Rotary Foundation will not vote its shares on any resolution which advances a position on a social or political question unrelated to the conduct of the company’s business or the disposition of its assets.

Divestment (sale) of individual securities held

Where applicable, The Rotary Foundation will sell a security in circumstances where a finding has been made that a company’s activities cause grave societal harm or social injury and:

• it is unlikely that, within a reasonable period of time, the exercise of shareholder rights will succeed in modifying the company’s activities sufficiently to eliminate the societal harm or social injury, or
• it is unlikely that modification of the company’s activities will, within the near future, have a sufficiently unfavorable economic impact on the company to cause The Rotary Foundation to sell the security under maximum economic return criterion, or
• it is likely that, in the normal course of portfolio management, the security in question will be sold before the action initiated by The Rotary Foundation can be completed.

The office of investment will implement these guidelines in a commercially prudent manner based on its reasoned judgment and consideration of the facts and circumstances.

Source: https://worldbeyondwar.org/rotary-divests-from-weapons-companies