In a recent episode of "Sustainability Wired", Lorenzo Saa, Chief Sustainability Officer, Clarity AI, talked to Dan Neale, Social Lead for the Responsible Investment team at the Church Commissioners for England
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- Regulators in the EU and UK have clarified that defence is not inherently incompatible with sustainable investment, prompting asset managers to revisit exclusions.
- The Church Commissioners have adopted a geography-based screening framework, allowing full exposure to UK defence firms while barring companies linked to oppressive regimes.
- ESG data gaps in Conflict-Affected and High-Risk areas are making it harder for investors to meet their responsibilities under international standards.
- A new initiative, the Principles for Responsible Defence Investment, is being developed to provide practical guidance for integrating ESG and human rights standards in defence-related investments.
Can defence ever qualify as a responsible—or even sustainable—investment?
For decades, many sustainable funds excluded defence outright. But recent geopolitical tensions, particularly the war in Ukraine, have forced a reassessment. Defence budgets among EU member states have surged by over 30% since 2021, and regulators are signalling a shift.1 The European Commission now recognizes defence as a potential contributor to social sustainability,2 and SFDR classifications have evolved to allow for greater exposure, even in Article 8 and 9 funds.
In this episode of Sustainability Wired, Lorenzo Saa sits down with Dan Neale, Social Lead for the Responsible Investment team at the Church Commissioners for England. Dan brings a unique perspective: a former Royal Navy officer turned sustainability expert with deep experience in human rights and ESG integration.
Together, they unpack the complexities of investing in the defence sector through a responsible lens. From updated exclusion thresholds and country-specific screening to the challenge of end-use transparency and dual-use technologies, the conversation explores how institutional investors are navigating this once-taboo sector.
Neale also introduces the Principles for Responsible Defence Investment (PRDI), a new initiative that aims to fill the current governance gap by providing practical, rights-based guidance for evaluating defence-related companies.3
Whether you’re a skeptic or a pragmatist, this episode offers a clear-eyed look at how sustainable finance is responding to a more volatile world.
Refer to the full report on Clarity AI.
Also explore other articles connected to defence and responsible defence.
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