The European Commission is considering revising the EU's "sustainability" rules to help defence companies secure private funding and attract money from investors, Euractiv reports, writes UNN.
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This could stimulate arms manufacturers and other defence contractors, who accuse environmental, social and governance (ESG) investment criteria of missing out on large private investments amid broader EU efforts to ramp up arms production across Europe.
The European Commission is assessing "adjustments to the sustainability funding framework" as part of its efforts to stimulate funding for the sector, European Commission spokesman Thomas Reiner told Euractiv on Monday.
Reiner said the EU executive is laying the groundwork for its defence facilitation package - known as the Omnibus - to create "conditions for a rapid industrial build-up across Europe".
EU's €800 billion defense plan hit with tepid response - Euractiv06.05.25, 11:49 • [views_11774]
European Commission President Ursula von der Leyen planned to raise the issue of access to finance on Monday during an event with European defence firms to mark the start of the EU Strategic Dialogue with Industry, according to an event document seen by Euractiv.
Easing ESG restrictions could free up private investment in industries such as ammunition manufacturing, and both defence ministers and the defence industry have repeatedly called on the EU to improve access to credit from banks and financial institutions.
In particular, they criticised the current taxonomy of "sustainability" investment in the bloc, which does not include arms manufacturers and does not encourage banks to lend to them. They called for defence companies to be reclassified as "do no harm" in accordance with the terms.
The European Commission, as indicated, has pledged to remove "obstacles related to access to finance, including ESG investments" for defence companies in a recent defence policy document, but provided few details.
EU leaders to back EIB funding for defense projects - Reuters12.03.24, 14:16 • [views_101382]
The European Investment Bank (EIB) has previously changed its investment practices to channel more funds into the arms industry. The EIB's criteria for dual-use products for civilian and military use, such as cybersecurity systems and drones, have been increasingly relaxed over the past year.
In March, the EIB called for simplification to ease private lending conditions for Europe's defence industry.
Following the EIB's lead, Europe's largest stock exchange, Euronext, has also announced that it will revise its mandate to provide defence companies with the best access to private investment opportunities.
Among ESG-focused investors, there is debate about whether defence companies can truly be considered within the realm of "sustainability" given concerns that they may contribute to deadly conflicts and serve undemocratic regimes, the publication writes.