Since March 2022, the number of ESG funds investing in defense companies has grown by 25% and reached 1.2 thousand at the end of the third quarter of 2023. In total, approximately 5 trillion dollars.
Bloomberg journalists received information from representatives of the analytical company Morningstar Inc. that funds intended to invest in companies that adhere to ESG (environmental, social and governance) principles are investing funds in defense companies.
European Commission Commissioner for Financial Markets Mairead McGuinness believes that ESG funds are not doing anything unacceptable and that defense is one of the important areas of the economy. James Alexander, chief executive of the British Sustainable Finance and Investment Association (UKSIF), also says there are no legal barriers for ESG funds to invest in the defense sector.
Representatives of the British Legal & General Investment Management have a similar opinion: “There is no reason why investment in certain defense companies cannot be compatible with responsible investment, as long as these companies do not produce weapons prohibited by treaties. or do not supply conventional weapons to high-risk countries.
The benefits of this type of investment for investors are evident: with the example of Goldman Sachs, Bloomberg shows how profitable it is to expand its presence in the defense sector, thanks to the influx of new funds in shares of companies in the aerospace segment and defense. The fund has grown almost 90% since the end of February 2022 and 13% since the beginning of October 2023.
But in addition to the legal ones, there are also ethical norms, which is why many experts condemn investments in this area by ESG funds, because they consider it an ideological contradiction.
Opponents of such investments include representatives of the European Investment Bank (EIB), SDG Impact Japan’s director of investment strategy, Saja Beslik, Simmons & Simmons’ ESG director, Sonali Siriwardene, and other opinion leaders of the market.
Author:
Ekaterina Alipova
Source: RB
I am a professional journalist and content creator with extensive experience writing for news websites. I currently work as an author at Gadget Onus, where I specialize in covering hot news topics. My written pieces have been published on some of the biggest media outlets around the world, including The Guardian and BBC News.
