Allianz Global Investors (AllianzGI) has announced plans to permit defence-related investments in several of its ESG-labelled funds, reflecting a broader shift in European sentiment towards military spending and security.
The asset manager, which oversees numerous Article 8 funds—those designated as promoting environmental, social, and governance (ESG) objectives—is currently updating its fund prospectuses and internal policies to lift previous restrictions on defence holdings. Clients were informed of the changes at the end of March.
“The European view on defence and the need for defence has shifted,” said Matt Christensen, AllianzGI’s global head of sustainable and impact investing, referencing the war in Ukraine and NATO obligations. He added that individual portfolio managers will determine the appropriateness of defence assets based on each fund’s strategy once regulatory updates are finalised.
This policy shift is part of a wider re-evaluation of ESG investing across Europe. Asset managers such as Deutsche Bank’s DWS Group are also reconsidering their exclusions, while Euronext CEO Stéphane Boujnah has called for a broader redefinition of ESG to focus on “energy, security, and geostrategy.”
Germany’s financial regulator BaFin has emphasised the importance of transparency in these transitions. Rupert Schaefer, the watchdog’s chief executive director of strategy, policy and control, recently urged asset managers to ensure clients are clearly informed of any defence-related holdings in ESG portfolios.
Under the updated approach, AllianzGI’s ESG funds may also consider investments linked to nuclear weapons, provided they align with the Non-Proliferation Treaty. Christensen stressed that the changes represent a long-term strategic repositioning rather than a short-term response. “The goal is to cater to clients who want strong ESG risk management but who don’t necessarily want to exclude everything,” he said.
The defence-related activities newly eligible for investment represent approximately 1.7% of the MSCI All Country World Index.
