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PUBLICATION

How to promote private finance of European defence: Two views






Security & defence / PUBLICATION
Alan Riley , Paul Taylor , Stephen Davis

Date: 11/03/2025

The European Policy Centre is keen to stimulate debate on how to attract private and institutional investment into European defence. We included recommendations on how to tap pension and insurance funds, other private investment funds, commercial banks and savings institutions in our recent Policy Brief “Quick March! Ten steps for a European defence surge”.

In these two papers, eminent academic experts offer contrasting but complementary proposals for making defence more investable for the private financial sector. Both address the problems raised by the interpretation of Environmental, Social and Governance (ESG) criteria which have come to dominate the investment management industry. Investment managers and defence industrialists cite ESG as the biggest single obstacle to private investment in the defence sector.

Alan Riley, a visiting professor at the College of Europe in Natolin, offers a top-down proposal for the European Commission to use its regulatory power to explicitly define defence production for national defence and the defence of allies as compatible with ESG. 

Stephen Davis, senior fellow at the Harvard Law School corporate governance programme, suggests that investors could develop a set of guidelines for defence companies that would give greater comfort over issues of concern such as arms exports, end-user certification, controversial weapons, transparency and corruption. Furthermore, he urges EU governments and institutions to engage public opinion and stakeholders in debate on the essential social benefit of security.

ESG and Defence Finance: Cutting the Gordian Knot

Defence of Europe as a Responsible Investment






Paul Taylor is a Senior Visiting Fellow with the Europe in the World Programme at the EPC. 

The support the European Policy Centre receives for its ongoing operations, or specifically for its publications, does not constitute an endorsement of their contents, which reflect the views of the authors only. Supporters and partners cannot be held responsible for any use that may be made of the information contained therein.




Read the full paper here.
Photo credits:
CANVA

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