The defence industry itself has reportedly been lobbying for some time for the EU to declare investments in arms as sustainable in its social taxonomy, on the basis of their function in security and defence.

Longstanding, strict position

Triodos, as a values-based financial institution, has always held a firm position against weapons. Our mission is To help create a society that promotes people’s quality of life and that has human dignity at its core. Financing the arms industry fundamentally contradicts this mission: the use of weapons, whenever and wherever, fundamentally undermines human physical and psychological integrity and ignites a culture of conflict and violence. Triodos is one of those financial institutions that have always refrained and will continue to refrain from financing weapons through its banking and investment activities, being these controversial weapons or so-called conventional weapons. The area of our activities where this is most relevant is investments in listed equities and bonds: here we completely exclude the aerospace and defence industry from investment, and carefully screen companies in high-risk sectors for direct and indirect involvement. We apply a 0% tolerance threshold for companies involved in the production, distribution or services related to weapons (this includes both weapons and weapons components that are tailor-made and essential for their functioning), and strict criteria for the financing of weapons, that applies to financial institutions and company participations.

Our position goes beyond a mere rejection of weapons. Armed conflicts are the antithesis of what it means to create a prosperous society. Our vision is one for long-term societal progress, which requires to redirect resources away from fomenting a culture of dominance over people and environment, investing in conflict prevention and social dialogue.

Long-term societal progress at risk

Stock prices of arms manufacturers soared following the announcement by several European countries to increase their defence spending1, and several financial institutions have indicated a willingness to reconsider and boost their involvement in the sector2. While the war in Ukraine has brought security to the fore of the debate in Europe, financing arms manufacturing and arms trade means financing warfare, not just today but also in the future. Banks that start to finance production of and trade in weapons today will continue to do so once the Ukrainian conflict is over. This means normalising this type of financing activities and diverting funding (and attention) away not only from conflict prevention, capacity building and reconstruction, but, importantly, also from other real economic activities that can truly contribute societal progress.

It should also be highlighted that financing the arms industry is in fact far from what it means to invest in  security and defence. Trade in weapons structurally lacks transparency, is poorly monitored, and highly sensitive to corruption3. Governments rarely provide comprehensive lists of countries excluded from trade activities, and when they do explicitly ban the sale of weapons to conflict areas, these criteria are frequently undermined by lack of transparency. Even when arms and military equipment are sold and traded for defence and security purposes, it is impossible to establish in advance how, where, and by whom they will be used, as even outdated weapons can find new, 'second hand' markets. Ultimately, banks and financial institutions that channel money towards weapons producers have no or limited formal control over who weapons are sold to. And indeed, this is hardly a concern for financial institutions that engage in this business, as long as returns are attractive (which has very much been the case in the past ten years4.

Added to misplaced faith in how trade in weapons might contribute to collective security in various parts of the world, and not to mention the physical, material and also psychological toll that armed conflicts impose on people (and on nature5), are the broader effects of trade in weapons. An interesting study6  from the Transnational Institute (TNI), for example, has documented how the arms industry, through arms deployment in conflict areas, not only contributes to forced displacement, but also benefits from it through increasing border militarisation that is aimed at migration containment. The study focuses on EU and UK exports of weapons, but findings can easily be extended to other exporting countries.

Weapons production is never sustainable

Today, the production, sale, and use of arms are intrinsically unsustainable. The arms race combined with (exponential) technologies7 puts society in a position in which armed conflicts cannot be won without a massive death toll.

While Triodos starts from a position of rejection of weapons rooted in our values, we believe that also by just looking at the facts there is no room for arms and related products to be considered sustainable under the upcoming EU social taxonomy.

The declared intention of the EU taxonomy is to establish a common language and clear definitions of what is ‘sustainable’, creating “a common classification system for sustainable economic activities”8 While weapons and military equipment can be deemed important by national governments for security purposes, this is not enough to label arms production and trade as sustainable, for all the reasons mentioned above.

Our appeal           

The war in Ukraine has re-opened a page in European and global history that many of us thought was closed. Images of death and destruction feel now closer than many in Europe have perceived in their lifetime. For a tragic trick of the mind, we can sense the pain that radiates from the devastation in Mariupol and Bucha with an intensity that does not allow us to look away, and yet we know that similar acts of violence and profound disdain for human life are a daily reality in other parts of the world as well. This war must stop. But perhaps even more importantly, war must stop.

Triodos has a strong, deeply rooted fiduciary duty towards its clients, broader community, and society at large, to channel funding towards activities that have positive social and environmental outcomes. Warfare is not part of such activities and should never be considered sustainable.


6 The study is available in English, French, German and Spanish
7 Exponential technologies are technologies that allow change at an accelerated speed