Nordic pension funds are now interested in the arms industry

CopenhagenUntil now, the Norwegian government's global pension fund, which is financed by revenue from oil and gas production, had excluded some of the largest weapons manufacturers from its investments. Following the fund's ethical criteria, set by the Nordic country's Parliament, companies such as Airbus and Boeing, as well as BAE Systems (the world's second-largest military contractor), were not part of its investment portfolio due to their contribution to the manufacture of nuclear weapons components.

But in a context marked by for the call from European countries to increase investment in defense and strengthen the European military industryThe ethical barriers facing the Norwegian pension fund could soon change. In a recent speech, Ida Wolden Bache, the governor of Norway's central bank, spoke of the turmoil the world has experienced in recent years, which, however, has not affected the enormous growth of the pension fund, which has doubled in value to €1.74 trillion. Bache encouraged Norwegian politicians to "be open to the possibility that what is considered ethically acceptable could change, at a time when the world is once again marked by military rearmament and rising tensions between countries."

The bank leader made the speech at a time when the debate to reconsider the pension fund's ethical criteria regarding the arms industry has also reached the country's Parliament: "It makes no sense that, on the one hand, Norway buys F-35 fighter jets from Lockheed Martin and, on the other, the fund," noted Conservative MP Ine Eriksen Søreide. This issue could soon fall on the desk of the newly appointed Finance Minister Jens Stoltenberg, who until October was NATO Secretary General, from where he had continually called on the Alliance countries to increase defense spending. At the annual meeting of the Norwegian employers' association, Stoltenberg defended the need to provide more money to arms companies."What's more ethical than investing in something that can protect our own country and protect Ukraine?" he asked the audience.

The oil fund isn't the only fund considering reconsidering its stance on the arms industry. A trend among Scandinavian pension funds, which until now had considered acquiring shares in arms companies unthinkable, is starting to change their language and refer to the "defense sector" when referring to companies that produce weapons. This change in tone is also perceived by finance expert Aksel Mjøs at the Norwegian School of Economics (NHH), who asserts that "with a real war going on like the one we're currently experiencing, a common perception has emerged both in the media and among politicians and investors that it's necessary to invest in this industry." Other experts also predict that if the Norwegian state pension fund changes its ethical rules for investing in arms companies, other pension funds will surely follow suit, since, as Espen Henriksen, a professor at the Norwegian Business School, explains, "the oil fund's exclusion list of companies is the standard."

Sweden and Denmark

In neighboring Sweden, no pension funds currently invest in the top 12 European defense companies, including the Swedish company Saab, despite the fact that its profits have grown significantly since the start of the war in Ukraine. However, the investment funds' stance could soon change, as Katarina Romberg, head of asset management at AMF (one of the country's largest pension funds, which manages €77 billion), hinted when she told the media: Dagens Industri that companies like Saab are no longer "on the fund's exclusion list." An editorial in the same newspaper considered that "pension funds should have shares in the important defense sector, since there are moral and business reasons: savers contribute to rearmament and at the same time receive a good return." While the majority do not invest in companies like the Israeli Elbit Systems or the German arms manufacturer Rheinmetall, some funds are open to the arms sector. This is the case of Pensiones Danmark (which manages 46 billion euros). According to its director of sustainability, Jan K?, they categorically rule out companies that manufacture controversial weapons, such as anti-personnel mines and cluster bombs. Intelligence in Copenhagen and the new ships that the Army's Arctic Patrol will receive.