MN State Board of Investment: Stop Funding War & Apartheid!

Good afternoon members of the State board of investments 

• Auditor Blaha 
• Secretary Simon 
• Attorney general Ellison 
• Governor walz

My name is Brandon Schorsch, my pronouns are he/him, I’m a Jewish Minnesotan. In my day job I work for a small Jewish non-profit, however today I’m strictly here in a deeply personal capacity as a member of the Anti-War Committee asking this body to divest from corporations profiting off of war, and particularly those profiting from the state of Israel’s internationally illegal settlements & well-document apartheid practices.

Being anti-war involves realizing that in the last several centuries, and especially in the last several decades, war has become a very profitable business. As Senator Elizabeth Warren commented last week, today we have a handful of major defense contractors while just 30 years ago we had well over 50. Notably, the state of Minnesota is heavily invested in all of these.

Investing in these corporations is nothing like buying the war bonds of yesteryear. Stock investments rely on some level of speculation, a bet that war, or the increasing chance of it, will result in increased stock value. The SBI currently manages investments in General Dynamics [$53m], Northrop [$54m] Lockheed [$73m], Raytheon, [$97.6m] Elbit [$1.6m] Rheinmetall [$6.4m], Thales [$10m], BAE [$27m], Hanwha [$0.5m], Serco [$1.2] and others. 

Moody’s ESG blog noted last May that there are 83 publicly-traded corporations manufacturing a range of prohibited weapons- 33 are US-based and most of these are on your ledgers. Dozens of banks, including Deutsche and HSBC, as well as numerous national & state pension funds have divested from many, if not all, of these corporations in the last few years. The SBI has committed to other ESG initiatives related to issues like climate, however it takes no public stances on even the most controversial of weapons- like white phosphorus, fully-autonomous weapons, cluster munitions, or even nuclear weapons. We ask you to follow the lead of numerous fellow UN PRI ESG members in adopting real standards on military hardware, and begin to divest ASAP. Most of these companies in the SBI portfolio are at record stock prices- there isn’t a better time to start divesting.

Working towards divesting from over $500 million of combined value in dozens of controversial arms manufacturers will be a lengthy process, so with my remaining time I’d like to draw your attention to one example of divestment you could make today at a much smaller ‘hit’ to the SBI portfolio. 

It has been well-proven by various NGOs and the UN itself that the nation-state of Israel has been violating agreed-upon international law for many years, creating illegal settlements beyond boundaries that were agreed to and instituting what is now globally-regarded as an apartheid regime. This assertion becomes less controversial by the day. In 2021, Amnesty International released a 280 page report to this effect. Last April, the UN Human Rights Council and the UN General Assembly recognized that Israel has enacted elements of apartheid policy. Last summer, Human Rights Watch agreed in a 270 page report. In the last few months Israel’s actions have pushed many historically-cautious organizations and publications in Israel and across the Jewish diaspora to agree with these assessments.

So today, building on our testimony from last August, we bring a list of well over a dozen companies that the SBI is currently investing in that are knowingly violating international law by doing business in or aiding in the development of illegal settlements. Most notable on our list today is Elbit systems, in which the state is moderately invested. Elbit systems is known for manufacturing drones, cluster munitions, and various different surveillance technologies used not only in implementing apartheid policy, but also on the United States-Mexico border, used for the very border wall to which many of the members of this body have publicly stated their opposition.

In 2020 this body made a commitment to Environmental Social and Governance standards, and has since become a member of several different ESG organizations including the United Nations Principles for Responsible Investment. One thing that we have found utterly lacking in the SBI’s current ESG commitments is any set of standards regarding what is and is not appropriate for ‘defense’ contractors, or standards for proven violations of international law. We encourage this body to follow the actions of HSBC, Deutsche Bank and numerous European & state pension funds that have chosen to divest not only from places that are knowingly violating international law, but also from numerous arms manufacturers.

We ask you today to consider divesting the rather modest sum currently invested in illegal Israeli settlement practices in Palestine, and to further consider adopting stronger standards regarding financial investment in war manufacturers moving forward.