Access to Private Funding for the Defence Industry

Explore ASD's insights on private funding challenges in the European defence industry. Learn about strategic measures and recommendations for a level playing field

In response to the European Council's call to enhance access to private funding for the defence industry, ASD outlines key challenges and proposes measures to navigate the evolving landscape of sustainable finance. The European defence industry faces hurdles due to environmental, social, and governance (ESG) considerations, impacting investor interest and share valuations.

Following the Russian invasion of Ukraine, share prices of European defence companies have recovered, yet challenges persist. ESG-focused investors continue to exclude defence activities, hindering industry growth. ASD emphasises the need for strategic initiatives to address this issue and ensure a level playing field.

ASD recommendations

  • ASD recommends the creation of a high-level EU document clarifying sustainable finance regulations' application to defence companies.
  • ASD urges the European Commission to integrate defence industry considerations into sustainability initiatives. Impact assessments for new legislative initiatives should include criteria related to the defence industry's access to finance, reinforcing the Commission's commitment from February 2022.
  • ASD calls for rapid clarification on existing and upcoming sustainable finance legislation. Key points include exempting defence companies from Principal Adverse Impact statements, addressing the EU environmental taxonomy's exclusion of defence activities, and ensuring fairness in SFDR article 8 classification.
  • To counter potential asset manager exclusions, ASD proposes steps to convince the EU and Member States to actively support defence companies. This includes addressing the asset management community directly and encouraging government-controlled asset managers to invest more in the defence sector.
  • ASD highlights the need to align the European Investment Bank's lending policy with the European Council's ambitions.

Access to Private Funding for the Defence Industry

Download ASD's paper on private funding challenges in the European defence industry. Published by ASD in October 2022.