Pictet, the Geneva-based private bank, has launched a bid to make the world a safer place. The financial market plays a crucial role in Pictet’s attempt to isolate the makers of controversial weapons.

More than 80 Swiss and global asset managers have joined Pictet and Swiss Sustainable Finance in their bid to remove the makers of controversial weapons from the world’s stock indexes.

The weapons targeted by the initiative cause indiscriminate or disproportionate harm and their use is banned or restricted under international conventions, Pictet said. They include cluster ammunition, antipersonnel mines, chemical and biological as well as nuclear weapons produced for countries that haven’t signed the treaty on non-proliferation of nuclear weapons.

Index providers such as S&P Global, MSCI or FTSE 100 Russell are among the targets of the campaign of the banks led by Pictet.

Active vs. Passive

Evidently, actively managed funds have always been at liberty to remove weapon makers from their portfolios and Pictet has enforced a strict exclusion policy on makers of controversial weapons since 2011.

But the ever more popular index funds – cheaper as they are for clients – can’t do much but buy all the shares represented in any given benchmark. In the S&P 500 for instance, three widely shunned weapon makers are included – General Dynamics, Lockheed Martin and Northrop Grumman.

If successful, the initiative by the banks and Swiss Sustainable Finance may cause substantial harm to the affected companies.

Big Players Would Profit Too

Since the launch by some 60 Swiss firms, rivals from abroad have joined the bid. They together represent some $3 trillion in assets under management.

The bid may remove a dilemma for asset managers that aim to present their investment strategy as being sustainable. And it would also help big hitters such as Blackrock, which alone has more money under management than the signature firms together.

Launch Imminent

Blackrock CEO Larry Fink repeatedly has tried to take influence on makers of firearms following shooting sprees at schools and other public places in the U.S. As one of the biggest providers of index funds, Blackrock remains one of the major investors in those firms.

Asset managers have until December 21 to join Pictet and Swiss Sustainable Finance. Afterwards, the promoters will officially challenge the index providers to adjust their lists of companies.