Rearm Europe, Rearm Finance
What role for responsible investment in the financing of European defense?
POSITION PAPER

The international context has been marked, since 2022, and even more clearly since the beginning of 2025, by a resurgence of geopolitical tensions, resulting in a marked increase in military spending. In response, the European Commission has launched the "ReArm Europe Plan/Readiness 2030" initiative, aiming to strengthen the defense capabilities of the European Union by 2030, mobilizing up to 800 billion euros. This momentum is accompanied by an increasingly assertive political discourse — the French Minister of Economy, Éric Lombard, stated on March 20, 2025, that financing the defense industry is compatible with ESG1 policies — as well as an evolution in social expectations, which push financial actors to clarify their positioning.
This strategic shift reshuffles the deck for responsible investors. It raises a dual question: on one hand, their positioning in relation to the defense sector, in a context where the imperatives of sovereignty, security, and stability become central; on the other hand, their ability to continue, or even amplify, their financing of an inclusive environmental transition, as Europe’s budgetary and industrial priorities are set to evolve. For an entity engaged in sustainable development issues, it is difficult to ignore the systemic effects of such a shift. The arms industry, in particular, raises profound ethical and strategic dilemmas. Each investor today provides their own response to this challenge.
This strategic shift compels responsible investors to reconsider their position regarding the defense sector while evaluating their ability to maintain and strengthen the financing of an inclusive environmental transition.
At Mirova, we have never excluded the defense industry a priori. We apply a policy of demanding minimum standards, which effectively leads to a lack of exposure of our portfolios to large companies in the sector. However, in light of the evolving context, we believe it is necessary to reassess our position — and our responsibility — as a responsible investor. Because if Europe must invest more in its defense, its actors will likely need to rely more heavily than before on external financing. At the same time, we must ensure that the effort for sovereignty does not come at the expense of ecological transition and social cohesion, but rather that it can, as much as possible, reinforce these goals.
We do not claim to have reached a definitive position today. This paper aims to transparently and sincerely outline the hypotheses of a problem that does not have an obvious solution. For us, it is about exploring the conditions under which sustainable finance actors can contribute to the European sovereignty effort while staying true to their primary mission: to help achieve sustainable development goals through investment, research, and engagement.
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1Environmental, social, governance
Source: Defense and ESG: This "serious misunderstanding" that Eric Lombard wants to address, Les Echos, March 2025.
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