Engagement initiative targets defence-related disclosure transparency

illuminem summarises for you the essential news of the day, reviewed by our editorial team. Read the full piece on Responsible Investor or enjoy below:

🗞️ Driving the news: Global Advisory Alliance is coordinating a collaborative investor engagement on defence sector disclosure, backed by Italian asset manager Etica Sgr, with a first engagement targeted by end-2026
• GAA states the objective is neither to promote nor oppose investment in defence companies, but to identify what information investors need to assess and explain defence exposures consistently with fiduciary duties and client expectations

🔭 The context: European defence investment has moved from the margins of responsible investment debate to its centre since 2022
• GAA's Anna-Stina Wiklund notes that investors previously relied on broad exclusions, with more nuanced discussion emerging since the invasion of Ukraine
• Etica Sgr reported that European ESG funds more than doubled their defence exposure in recent years, against a backdrop of over 50 active conflicts and the widest expansion of armed violence since 1946

🌍 Why it matters for corporate governance and sustainability: Defence companies face heightened scrutiny on conduct, oversight and corruption risk, yet disclosure standards for the sector remain inconsistent, leaving funds unable to explain holdings to clients or regulators in comparable terms
• UK and European policy increasingly frames defence as strategically necessary for economic resilience, which pulls against exclusion-based mandates and makes disclosure quality, rather than binary inclusion, the practical battleground

⏭️ What's next: GAA has been consulting a small group of institutional investors to shape scope and priorities
• A related initiative, GRID, is being developed to provide guidance on responsible investment in defence

💬 One quote: "Previously, many investors relied on broad exclusions. Since 2022, we have seen more nuanced discussions emerging about what responsible defence investment actually means" — Anna-Stina Wiklund, Global Advisory Alliance.

📈 One stat: European ESG funds more than doubled their defence exposure in recent years, per Etica Sgr, with figures current to 2023.

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