By Naomi Rovnick, Iain Withers and Simon Jessop
London (Reuters) – European asset managers reconsider their policies in defense, under pressure from customers and some politicians to release limitations and to finance the race of the continent to arm again.
According to the rules of the European Union, a number of funds that are as a sustainable need to ensure that their investments ‘do not cause any significant damage’. Many have completely avoided the sector, with even motor maker Rolls Royce and Airbus, who has a large commercial aviation division, limits.
But because the EU is now looking for around 800 billion euros ($ 870 billion) investment to strengthen the defense after US President Donald Trump said that Europe should take more responsibility for its own safety, the sector is too important to ignore.
The largest investor Legal & General of Groot -Britain is one of those who are planning to increase exposure to the defense, and says that the profession of the sector has risen “dramatically” in the midst of deeper geopolitical tensions, Reuters reported Thursday.
Some of the largest fund groups in Europe have started revising their policy at management level separately, people who are familiar with the companies told Reuters, although the complexity and controversial nature of rewriting sustainability policy to take up armsmakers, make the process difficult, the people said.
The UBS activity management of Swittersland told Reuters that the exclusions of the defense sector about funds evaluated, while Mercer, a leading consultant for pension funds, said that investors asked asset managers to include defense in portfolios, including those with sustainability goals.
The EU spending boost has sent European space and defense shares, including the German Rheinmetall and the Italian Leonardo to register highlights together with the sector index – and has left investors behind without exposure missed opportunities.
“Some (customers of asset managers) say, we actually think it is important that … Europe can defend itself. And so we want you to invest in this sector,” said Rich Nuzum, global main investment strategist at Mercer, who advises investors who manage $ 17.5 trillion to Activa.
Exclusions about investing in controversial weapons – such as cluster munition and biological weapons – are held on a large scale and informed by international treaties. EU and UK rules do not prohibit investments in most other defense companies, but an investor focus on environmental, social and administration (ESG) helped large asset managers to do this, such as tobacco.
“We come to a point where the atmosphere is that if you exclude the defense, you do not have the one who has to explain,” said Carl Haglund, CEO of Finnish pension and insurance group Veritas and former defense Minister Van Finland.