Newsweek quotes ASD on finance barriers undermining Europe’s defence
In a Newsweek article this week, ASD Secretary General Jan Pie is quoted on the challenges posed to Europe’s defence industry by environmental, social, and governance (ESG) criteria, warning that these restrictions are playing into Russia’s hands.
Jan Pie explained that ESG regulations are “absolutely” impacting Europe’s defence industry, particularly at a time when increased investment is critical. He said: “It’s a self-inflicted problem in Europe, you don’t see that in any other region of the world ... I would subscribe 100 percent to the idea that ESG is benefiting Russia, with restrictions binding European defence industry at ‘the worst possible’ time.”
The Newsweek article highlights how institutional investors, bound by ESG rules, avoid defence companies, categorising them as socially unacceptable investments. In his interview for Newsweek, Jan Pie cited a banker who described being under scrutiny from NGOs, which could "declare war against the bank" for including defence stocks.
Before May 2024, European businesses proposing projects in the defence and security sphere were only eligible for European Investment Bank investment if more than half of their predicted revenues came from civilian use. While this is no longer the case, an EIB spokesperson clarified that weapons and ammunition remain excluded from financing, along with explosives and equipment or infrastructure dedicated to military or police use.
Jan Pie noted that this restrictive stance contributes to broader hesitation in the financial sector: “If the EU’s investment bank isn’t willing to wholeheartedly back defence, why should large banks?”
The broader implications of this financing shortfall are stark. As Europe seeks to bolster its defence capabilities in response to growing threats from Russia, China, and other geopolitical actors, ESG-driven exclusions undermine the sector’s ability to innovate and meet urgent demand.
Jan Pie’s remarks resonate with other industry voices. A BAE Systems spokesperson commented that constraints on defence investments hinder the sector’s ability to develop essential skills and technologies. Similarly, Swedish defence firm Saab described ESG exclusion as “detrimental to progress” and a barrier to achieving stronger national defence capabilities.
The Newsweek article underscores the unique challenges faced by European defence firms compared to their counterparts in regions like the United States. Jan Pie’s remarks represent the call by the defence industry for ensuring that ESG frameworks do not stand in the way of European investment in safeguarding its security.
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