Investors Flag ESG Dilemma in Europe’s Plan to Fund Defense
- European Investment Bank considering ways to finance defense
- Fund managers see EU bonds as a better route for that purpose
A battle tank at a factory in central France.
Photographer: Olivier Chassignole/AFP/Getty ImagesThis article is for subscribers only.
The possibility that Europe will tap its investment bank to fund defense spending is being met with skepticism from bond investors, who flag risks to the lender’s sustainability credentials and higher borrowing costs.
Given the European Investment Bank’s focus on environmental and social projects, it would likely have to reach other investors outside the ESG industry for any military financing. To analysts and fund managers, the better option is for the European Union to raise the money directly through its joint-borrowing program.