Towards Sustainability Position on Defence Investments
Towards Sustainability issues position on defence investments
Towards Sustainability’s position on defence investments within labelled portfolios reflects its objectives, key principles and values. It is the result of a stakeholder consultation conducted in April-May 2025, mainly amongst market participants, and a conference on the subject held on 4 June 2025.
In response to a shifting geopolitical landscape and stakeholder consultations, Towards Sustainability reaffirms its prudent approach to defence investments within its labelled portfolios. The position acknowledges the critical link between security and sustainable development, recognizing defence as essential for protecting democratic values and peace.
Towards Sustainability leaves room for investments in defence capabilities that are, or can be framed as, more defensively oriented or essential for national security without directly producing the primary tools of offensive warfare. It maintains that companies significantly involved in the manufacture or sale of weapons in the strict sense, continue to be subject to restrictions from labelled investment products. The restrictions are driven by the high and currently unmitigable ESG risks, transparency limitations, ethical concerns, and investor expectations. This position is anchored in the core principle that “sustainable” finance is intended to foster constructive economic activities that build long-term societal resilience, while carefully managing exposure to activities with inherent destructive potential.
The policy clarifies that:
- The defence sector is not excluded in its entirety. Investments in companies focused on defensive capabilities, non-lethal equipment, essential support services or dual use goods, remain eligible, subject to rigorous ESG due diligence.
- Governments bear the primary responsibility for defence funding. Sustainable investment is not considered an appropriate nor effective instrument to bridge defence funding gaps. Labelled funds, however, can invest in sovereign debt of eligible governments and in dedicated government-led instruments to finance defence.
- Robust, sector-specific ESG due diligence is non-negotiable for any defence-related investment, even those not explicitly excluded, to uphold the "do no harm" principle.
Towards Sustainability aims for a principled yet pragmatic approach, balancing security needs with core sustainability commitments and investor expectations, and remains committed to ongoing dialogue with all stakeholders.