Institutional investor network Shareholders for Change (SfC) has written to the president of the European Commission to complain about the ejection of one of its members during a conference on financing the defence sector.
Held in late November, the Commission hosted the EU Defence Industrial Investment Forum with the main aim of addressing “the challenges of securing investments for the defence sector, paying particular attention to alignment with the European Union’s sustainable investment framework”.
Tommy Piemonte, head of sustainable investment research at Bank für Kirche und Caritas, attended the event as an online delegate in addition to other representatives of SfC members. In a complaint to the Commission, the SfC said Piemonte was kicked out of the meeting after pressing for his questions to be asked, and that after he was readmitted he was told he had been “momentarily removed” as he had been “disrupting the meeting”.
SfC is a values-driven collaborative engagement group that was formed in 2017 by a group of smaller European institutional investors. It now has 18 members, with collective assets under management as of last year standing around €35bn.
In SfC’s complaint to the Commission, the president of the network said: “It is particularly serious that the organisers unilaterally ejected a participant from a public meeting because, in their eyes, he asked critical questions.”
SfC called on Commission president Ursula von der Leyen to “take all the political actions to avoid similar violations of democratic rights by EU structures,” the SfC said in its letter.
‘Hypocritical’
Russia’s invasion of Ukraine has led to calls from political leaders for more private sector investment in security and defence in Europe, including arguments that arms makers should be considered sustainable investments.
Parts of the investment industry, including some European pension funds, have eased restrictions on investing in defence in response to Russia’s aggression and the changing political and public stance on defence.
According to Piemonte, his initial questions addressed defence industry claims for weapons to be declared sustainable, also following up on audience comments about exclusion rules needing to be relaxed.
The first question he posed, in written form, involved arguing that “the arms industry’s demand to declare weapons as sustainable is […] completely unfounded on the basis of the SDGs”, followed by asking “Why do you think it is so important for the arms industry to be labelled as sustainable?”.
Before being kicked out, he also wrote in the Q&A chat that arms were of course needed for national defence and security but that “taking the Ukraine war as an opportunity for the defence industry to attempt to remove ‘ESG hurdles’ is nothing short of hypocritical”.
The Commission declined to comment on the conference incident.
Commission conference report
IPE understands that other pension investment attendees had the impression the event involved a lot of criticism of the financial sector not investing enough in the defence industry, but without including a solid discussion about what type of financing is needed and what the thresholds are preventing investment.
According to a Commission note about the Forum, the event “addressed the question of the contribution of the defence sector to sustainability goals, emphasised the importance of overcoming widespread exclusion policies in the financial sector and identifying innovative solutions to stimulate private sector engagement, hinting at a series of follow-up actions aimed at sustaining the created momentum”.
“The EU Defence Industrial Investment Forum underscored the vital role of investors in supporting the defence industry including innovation and paved the way for further discussion. By bringing together the financial sector and industry stakeholders, the initiative reaffirms the EU’s commitment to enhancing security, technological sovereignty, and sustainability across member states.”
During a hearing with members of the European Parliament (MEPs) early last month, now-confirmed EU commissioner for financial services Maria Luís Albuquerque was tight-lipped when asked by an MEP if she would act to make it easier for the European Investment Bank to invest in the arms sector.
In response, she expressed her support for Ukraine in its war with Russia, but added: “On what you mentioned about ESG being a constraint for defence financing, to be honest, at this stage, I’m not fully convinced that that is the issue.”
She said she wanted to “talk to relevant stakeholders” about the challenge faced by defence companies, to see if it was linked to ESG screens.
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