Asset Managers Quietly Add ‘ESG’ to Portfolios of Defense Stocks
Defense holdings rise in an ESG fund class worth $5 trillion, and NATO's boss says there’s nothing unethical about such investments
A M109 155mm self-propelled howitzer at a position in the Donetsk region.
Photographer: Anatoli Stepanov/AFP/Getty Images
In the world’s biggest ESG fund class, portfolio managers are getting more comfortable with holding military assets against a backdrop of mounting political pressure and industry profits.
At the end of the third quarter, 1,238 funds claiming to “promote” environmental, social and good governance goals held stocks in the industry classification code Aerospace & Defense, according to Morningstar Inc. data. That’s roughly 25% more than in March last year, right after Russia invaded Ukraine. A large portion of those funds converted to “ESG” during the period, Morningstar said.