Defence and responsibility: from dilemma to practice

As geopolitical tensions rise, responsible investors are asking tough questions: Is there a case for responsible investment in defence? In this episode, Nathan Fabian , Chief Sustainable Systems Officer at PRI, is joined by Mark Wade (Allianz Global Investors), Estelle Parker (Responsible Investment Association Australasia), and Torben Möger Pedersen (Danish Foreign Policy Society; former CEO, PensionDanmark) to explore whether defence can be considered part of responsible investment, and if so, under what conditions. Overview The discussion examines the complexities of defence in the environmental, social and governance context. With NATO members increasing their budgetary commitments and European states boosting spending, defence is becoming a more prevalent part of the investment landscape. Yet reputational, human rights, and environmental risks remain at the forefront of investor concerns. The panel unpacks exclusion versus inclusion approaches, the rise of dual-use technologies, transparency challenges, and the role of stewardship in shaping defence practices. Detailed Coverage The case for defence investment: Torben argues that democracy and national security are foundational, making military capacity essential to safeguarding rights and advancing long-term societal goals. Human rights and environmental risks : Estelle highlights investor obligations for heightened due diligence, noting reputational, environmental, corruption, and legal risks tied to weapons. Evolving client expectations : Mark outlines shifting European regulation and investor sentiment, with non-labelled funds more open to limited defence exposure under strict conditions. Dual-use technologies : The blurred line between civilian and military innovation (cyber, AI, drones, green energy) challenges investors to navigate benefits and risks. Transparency and disclosure : All panelists agree that investors need clearer reporting from defence companies — not on classified technology, but on customers, contracts, and safeguards. Stewardship opportunity : Rather than blanket exclusion, investors could push for higher standards by engaging directly with defence companies and shaping industry norms. Chapters 00:44 – Why defence is back on the agenda 02:09 – Democracy, defence, adding the “D” into ESG? 05:26 – Human rights, reputational, and environmental risks 08:53 – Ukraine, NATO, and the defence boom 11:47 – Client expectations and regulatory shifts 16:08 – Responsible investing frameworks: defence as social necessity? 18:24 – Due diligence, customers, and sanctions 23:31 – Stewardship, standards, and defence bonds 28:33 – Dual-use technologies and transparency 37:36 – Human rights due diligence in practice 40:04 – Policy, regulation, and long-term certainty 45:00 – Final reflections on the future of defenCe investing 47:16 – The responsibility of investors in today’s world Keywords responsible investment, defence sector ESG, PRI podcast, democracy and defence, sustainable investing, fiduciary duty, NATO defence spending, human rights due diligence, reputational risk, dual-use technologies, defense bonds, military ESG risks, transparency in defence, systemic stewardship, long-term investment strategies, ethical investing, exclusion vs inclusion, autonomous weapons, investor stewardship, sustainable finance regulation Risk Disclaimer Your capital is at risk. The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is not an indicator of future results. Disclaimer This podcast is provided for educational and informational purposes only. It is not investment advice, financial planning guidance, or a recommendation to buy, sell, or hold securities. All discussions are for educational purposes only.

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Defence and responsibility: from dilemma to practice is an episode from PRI Podcasts by The PRI.

This episode is 52:50 long.

This episode was published on Sep 9, 2025.

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