Scotiabank’s asset management subsidiary slashed its holdings in Israeli military tech company Elbit Systems last quarter as the bank has been under mounting pressure to divest from the arms supplier.
In a quarterly U.S. Securities and Exchange Commission filing released Tuesday, 1832 Asset Management reported owning about 642,000 shares of Elbit valued at $113 million. That’s down from about 1,130,000 shares valued at $237 million in May.
The fund has significantly reduced its ownership stake in Elbit since the eruption of the Israel-Hamas war. In mid-2023, it was the third-largest shareholder with a 5.04 per cent stake. It’s now the seventh-largest, owning 1.44 per cent, according to Bloomberg.
Scotiabank has maintained that protesters accusing the bank of “funding genocide” did not influence decisions made by its portfolio managers.
But Richard Powers, an associate professor at the Rotman School of Management, said the lender’s move fits into a broader strategy being employed by the world’s largest corporations that aims to consider environmental, social and governance factors along with profits.
“I think it would be a bit naive,” he said, “to indicate that they were making those decisions independently of the protests.”
It’s in the best interest of Scotiabank to “maintain their reputation, and the trust of their investors and the other stakeholders,” Powers added.
The Palestinian death toll is now approaching 40,000 with no prospect of a ceasefire in sight as tensions between Israel and Iran-backed Hezbollah escalate. Hamas-led militants have killed some 1,200 people, mostly civilians, and abducted around 250 in the Oct. 7 attack.
Pressure on Scotiabank has been growing as advocacy groups have called for a boycott. The movement has also garnered great attention from the Canadian arts community. Last year, anti-war activists staged a protest at the 2023 Scotiabank Giller Prize gala with signs that read “Scotiabank funds genocide.”
Forty-three Canadian authors, including Giller Prize winners Sarah Bernstein and Omar El Akkad, said they were withdrawing their works from consideration for the 2024 iteration of the prize.
“Scotiabank’s divestments from Elbit — a stake which had remained untouched for years — only happened as a result of organizing and immense public pressure,” said Jody Chan, a Toronto-based writer and organizer with No Arms In The Arts, a coalition of Canadian artists against “artwashing” by organizations sponsored by Scotiabank, including the Giller Foundation and the Hot Docs Film Festival.
The Scotiabank spokesperson emphasized that holdings in individual securities fluctuate over time as portfolio managers focus on a long-term investment strategy. Elbit is held in “select products” managed by 1832 Asset Management on behalf of its clients, and Scotiabank does not own its shares.
“Scotiabank cannot interfere in the independent investment decisions of its portfolio managers who are fiduciaries that are duty-bound to make decisions in good faith in the best interest of the funds they manage.”
On Wednesday, Elbit reported a jump in profit for the second-quarter of 2024, attributing its success to increased demand from the Israeli Ministry of Defense since the Israel-Hamas war. Over the last two months, Elbit was awarded $530 million to supply ammunition to the Ministry.
Meanwhile, the U.S. has approved $20 billion in arms sales to Israel, including scores of fighter jets and advanced air-to-air missiles, the State Department announced Tuesday.
With files from Richie Assaly and The Associated Press
