80 years ago, on 6 and 9 August 1945, the US dropped two nuclear bombs on Japan, killing more than 200,000 people by the end of 1945. It is estimated that of those killed, more than 38,000 were children. Many more were maimed and died in the following years of leukemia, cancer and other injuries and side effects from the radiation. Those who survived, continued to need treatment for radiation-induced illnesses for most of their lives.
In this year’s commemorations of those tragic events, many made strong and direct references to current geopolitical developments. Experts agree that the nuclear threat is now at its highest levels since the Cold War. Recent years have seen an increase ingovernment expenditure in nuclear weapons, which reached a record USD 100.2 billion in 2024 alone. At the beginning of 2025, almost 40 years after the end of the Cold War, there are still over 12,000 nuclear warheads in the world owned by nine countries, although about 90% are held by the US and Russia alone. France and the UK are the only two European nuclear powers, although the Netherlands, Belgium, Germany, Italy and Turkey have all long hosted a number of US-controlled nuclear warheads, while more recently Belarus announced that it is hosting Russian warheads. The other five nuclear powers are China, India, Israel, North Korea and Pakistan.
Possession of nuclear weapons is still widely presented as essential for peace and stability through nuclear deterrence. In the current geopolitical landscape, this old narrative has been warmly embraced by the European Commission, which recently excluded nuclear weapons from its definition of controversial weapons.
A shifting landscape: controversial weapons in Europe
Defence spending is now high on the agenda of most EU countries and the UK. This shift is not limited to conventional weapons, controversial weapons are also part of the conversation. In an unprecedented move, several EU countries are exiting or planning to exit key conventions that had established consensus against controversial weapons designed to inflict severe, indiscriminate and long-lasting harm to civilians.
Nuclear weapons have always represented a special case among controversial weapons. They are perhaps the most inhumane and destructive of all weapons, creating immense human and environmental harm not just when used in conflict, but also in their testing phase and long after their use.
Yet, despite the existence of a binding UN Non-Proliferation Treaty (NPT) and of the more recent UN Treaty on the Prohibition of Nuclear Weapons (TPNW), their status as controversial weapons is still conveniently debated in Europe.
In practice, however, financing nuclear weapons production and trade has been widely considered controversial and treated as a reputational risk for financial institutions. Until now.
A troubling nudge to nuclear weapons investments
In June this year, as part of the European Union’s recent Omnibus package – designed in part to bolster Europe’s defense capabilities – the European Commission published a Notice clarifying that the definition of controversial weapons listed in the SFDR does not cover nuclear weapons.
This has very concrete repercussions for sustainable finance. While nuclear weapons were never explicitly included in the list of controversial weapons according to SFDR, a certain ambiguity remained, and data providers would commonly include information about nuclear weapons involvement among SFDR-related data. With the recent clarification by the Commission, this is changing.
What this means for institutional investors and their clients
The signal from the Commission has been swiftly picked up by financial data providers, that now no longer label nuclear weapons as “controversial” in their ESG data products. This move effectively normalises nuclear weapons financing, while itbecomes more cumbersome (and therefore more costly) for responsible investors to identify and avoid exposure to companies involved in nuclear weapons production and their financiers. More importantly, companies involved in the production of nuclear weapons may now more easily find their way into the portfolios of sustainable investment funds.
This is a further erosion of ESG standards, which is especially concerning for clients who expect their money to be managed in line with values of peace and human dignity.
Triodos’ position: no complacency – nuclear weapons are controversial weapons
Our position is clear and unwavering: nuclear weapons are controversial weapons. We believe the toll (and the cost) of testing nuclear weapons and the risk of them being used again is unacceptably high, and that the only responsible course is to halt their production, dismantle existing arsenals, and prevent the flow of capital that sustains the nuclear weapons industry. As such, we are amongst those financial institutions that firmly support the call for a ban on nuclear weapons.
Weaponry is for governments to buy. Not sustainable investors.
While our policies exclude all direct investments in companies involved in weapons production, in the case of controversial weapons we go a step further, excluding also financial institutions that provide funding for controversial (including nuclear) weapons development and manufacturing.
As regulatory frameworks and data availability change, we believe this only makes our vigilance more important. We see it as our fiduciary duty not only to adhere to regulation, but also to ensure that our clients’ investments align with our shared values of peace and human dignity.
As responsible investors, but also as individual citizens, we should not be complacent but take a firm stance against nuclear weapons and ensure that at least our private money is not used to finance their development and production. We call on other responsible investors and asset managers to (continue to) do the same.
As we mark the 80th anniversary of Hiroshima and Nagasaki, let us recommit to a world where such tragedies are never repeated - and where our investments reflect the values we hold most dear.