PFA Pension, the largest pension fund in Denmark, will reverse a rule that prohibited investments in a select number of defense stocks. The 828-billion-Danish-kroner ($125 billion) pension fund will no longer blacklist companies involved in the production of nuclear weapons, the fund announced Monday. The change comes as many European countries are preparing to increase defense spending over the next decade.
“The world has changed significantly since Russia’s invasion of Ukraine, and there is both here at home and broadly in Europe, a growing understanding that we need to invest more in defense to safeguard our own security,” said Rasmus Bessing, the PFA’s director of responsible investing, in a statement.
The policy reversal will allow the pension fund to invest in approximately 10 new companies that had been blacklisted due to generating revenue from the production of components for nuclear weapons. Companies now eligible for investment by PFA include Airbus S.E., the Boeing Co., Dassault Aviation and Thales S.A.
The company will still blacklist defense companies engaged in the manufacturing of controversial weapons. Companies in this category, which includes cluster munitions, biological weapons and chemical weapons, are commonly blacklisted by institutional investors.
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In a statement, PFA also announced it would continue to blacklist companies it deems to violate global norms or to violate the pension fund’s guidelines for responsible investments.
European defense stocks have been strong performers this year, with Thales returning 103% year-to-date and Rheinmetall returning 222%. The STOXX Europe Total Market Aerospace and Defense Index has returned 40.76% so far this year. ISS STOXX is the parent company of STOXX and CIO.
As a part of the Readiness 2030 initiative, the European Commission is expecting to boost the continent’s defense spending by 800 billion euros ($900 billion) over the next four years.
Bessing said the pension fund will give members the option to opt out of defense investments, as well as the option to invest more specifically in defense through two new funds available to PFA members.
“Russia’s invasion of Ukraine has created a growing need to invest in the defense industry for the benefit of our collective security,” the PFA stated in the announcement. “Therefore, PFA is now expanding its investment universe for defense stocks.”
PFA has more than 1.3 million members across 6,500 companies and organizations.
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Tags: Denmark, Pensions, PFA, Rasmus Bessing
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