Green War: How the arms industry sells itself as sustainable

Hans Christoph Atzpodien knows his business. The managing director of the Federal Association of the German Security and Defense Industries has been promoting the arms industry for years with the slogan “Security is the mother of all sustainability”. The take: If Germany and Europe did not invest heavily in security, sustainability in its various forms could not exist. According to the argument, what is supposed to create security - specifically the weapons industry - would have to be classified as sustainable. And this also applies to investments in the private financial market.

What constitutes a sustainable investment is regulated by environmental, social and corporate governance requirements (English: Environment, Social, Governance, which leads to the abbreviation ESG). They oblige banks, funds and insurers to disclose how they take risks from these three areas into account and also to demonstrate their sustainability promises. In this way, investors should be able to understand whether a product is really sustainable or just sounds like it.

Recently, global interest in sustainable investments has decreased somewhat. Nevertheless, there are around three trillion euros in circulation in the European market for sustainable investments. When it comes to investing, it is still important to many people that they do not invest in products that cause harm.

So-called green funds therefore exclude certain product groups from investments, such as gambling, the tobacco industry, and for a long time companies that do a large part of their business with fossil fuels such as coal or oil, or armaments: the basic rule for investments that are considered sustainable within the EU was “do no harm”. So they should clearly not harm any of the sustainability goals. Companies that make more than ten percent of their sales from defense equipment were therefore usually excluded.

After the start of the Russian war of aggression on Ukraine, defense companies made enormous efforts to ensure that they were no longer excluded from sustainable investments. Research, including by taz and LobbyControl, showed that there were dozens of meetings with lobbyists from the defense industry. At the end of 2024, the EU changed its guidelines for sustainable investments. Since then, including the defense industry in green funds has become much easier. There are currently efforts at EU level to even put armaments and defense on the list as a positive criterion for sustainability.

“The defense industry is increasingly marketing itself as a peace-building industry,” says Frederike Potts from the NGO Facing Finance. Public perception has also changed. After being perceived as a “dirty child” for a long time, armaments are now the “favorite of major investors”.

If you just look at the numbers, this isn't surprising - you can currently make good returns on defense. Before the Russian war of aggression, Rheinmetall shares were available for less than 100 euros. In the meantime, they fetched ten times as much, and are currently being traded for around eight times as much.

The German asset management associations have now also adapted the “ESG target market concept” so that defense stocks can be included in sustainable funds in Germany. “Anyone who buys sustainable funds today must first assume that armaments are included,” says Antje Schneeweiß from the working group of church investors.

There is much to suggest that she is right: According to the “Capital for common good” report, the giant German asset manager Allianz Global announced around 2025 that its sustainable funds would be able to invest not only in defense but also in nuclear weapons in the future. Overall, around two thirds of all funds classified as sustainable now also invest in the weapons industry. Only controversial weapons that violate international law are excluded - these include mines, cluster munitions, chemical and biological weapons, but not tanks, rockets, ammunition or even nuclear weapons. In this context, GLS Bank speaks of a “breaking point in the concept of sustainability in the financial sector”.

The fact that armaments are no longer just tolerated in investments, but are increasingly perceived as sustainable, is “extremely bitter” from the perspective of financial expert Schneeweiß. Armament potentially destroys lives and results in less money being available for truly sustainable activities. “Armament is currently necessary, but not sustainable,” she says.

Since the rule changes, it has become much more difficult for consumers who want to invest sustainably to ensure that their money does not end up in defense companies. Only a few banks with a strong focus on sustainability continue to rule out investments in weapons.

In addition, the money for European defense companies is not automatically only used for the defense of Europe. Research and database evaluations repeatedly show that weapons from European manufacturers also end up in wars that violate international law. The Ukrainian secret service, for example, repeatedly lists components from Western companies on a website that were found in Russian military equipment or weapons.

Transparency note: The research was funded and supported by Network Research and the non-profit environmental support organization Olin gGmbH.