A Change of Heart

    War in our immediate vicinity has, just like death, an instant and striking effect on us all. We get disoriented, scared, even panicky. At the very least war has the power to change our perspective on the world. Faced with its brutal reality, things that felt extremely important to us just yesterday are all of a sudden barely relevant. Eventually, the shifting priorities might force us to re-examine the very fundamentals of our value system, only to find them somewhat shaky, and in dire need of repair.

    Companies are, of course, hardly immune to the same derivative effect of war that we experience as individuals. Take for instance the recent soul searching conducted by SEB Investment Management. Just a year after deciding to stop making defence investments across all of their funds in February 2021, the Swedish bank announced earlier this week that they have had a change of heart. The sustainability policy has been duly updated to reflect that a number of SEB’s equities and corporate bonds funds will be able to invest in companies that generate more than 5% of their revenue from the defence sector, starting 1 April, 2022 (it is not a joke, though, I assure you).

    “When the facts change, I change my mind – what do you do, sir?” said famous British macroeconomist John Maynard Keynes, allegedly[1]. In this particular case, the facts might not have changed much, but the zeitgeist certainly has. Never mind that defence executives have been nagging for years that their sector is part of sustainability and must be recognised as such. Most self-respecting ESG experts used to quickly dismiss such claims as greenwashing attempts by the powerful arms industry lobby.

    Russia’s invasion of Ukraine seems, however, to have reminded investors of the ethical value of the defence. SEB’s policy review and subsequent decision, for instance, were triggered by “the serious security situation and growing geopolitical tensions in recent months,” according to their spokesman.

    Or could it be that they paid attention to the words of Artis Pabriks, the outspoken defence minister of neighbouring Latvia? In a recent article in Financial Times, he verbally attacked Swedish banks and institutional investors for refusing to give a loan to a Latvian defence company as it would violate their ESG standards. “I got so angry,” says Pabriks to the FT. “How can we develop our country? Is national defence not ethical? How is the Swedish defence industry financed — by Martians?”

    Whatever managed to sway the collective mind of SEB’s executives, their decision marks an important shift. Let us see if other investors will follow suit.

    War is certainly a gamechanger.


    [1] Trying to verify the quote, in the spirit of quality journalism, led me to quite a few sites contesting the fact that Keynes ever uttered the famous words. Hence, I feel a disclaimer is in order.

    Image courtesy of Gerd Altmann on Pixabay
    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.

    Latest Posts

    Partner content


    NordSIP Insights Handbook

    What else is new?