Stockholm (NordSIP) – The current geopolitical situation has led to a re-evaluation of the defence sector by the sustainable investment industry. While controversial weapons have long been excluded from most European institutional portfolios, the potential threat from Russia has led some to believe that investing in the defence industry and its related infrastructure can be deemed responsible and a way to boost national resilience.
It remains that institutional investors with exposure to the defence sector feel compelled to keep a close eye on the companies they hold to ensure that their products are not being used to breach international law. Norway’s KLP, the country’s largest occupational pension scheme announced on 30 June 2025 that it will be excluding two companies based on their involvement with the Israeli army’s operations in Gaza.
Insufficient human rights due diligence
According to Head of Responsible Investments Kiran Aziz, KLP became aware of companies flagged by the United Nations (UN) as being directly involved in the Israel Defence Force’s (IDF) Gaza operations. As the IDF is accused by the UN of violations of human rights and humanitarian law, KLP carried out a review of these companies that included a direct dialogue to evaluate their due diligence efforts to ensure that they are not contributing to human rights violations.
US vehicle manufacturer Oshkosh Corporation and German engineering firm Thyssenkrupp were found to be unable to provide sufficient documentary evidence of their efforts to avoid being implicated in operations that violate international laws and norms. According to Aziz both companies are longstanding suppliers to the IDF and did not cease or reduce deliveries in reaction to the ongoing operations in Gaza. This is why KLP decided to exclude both stocks from the investment universe, which is last resort implemented once company engagement has failed to achieve satisfactory results.
Image courtesy of Military_Material from Pixabay
Stockholm (NordSIP) – The current geopolitical situation has led to a re-evaluation of the defence sector by the sustainable investment industry. While controversial weapons have long been excluded from most European institutional portfolios, the potential threat from Russia has led some to believe that investing in the defence industry and its related infrastructure can be deemed responsible and a way to boost national resilience.
It remains that institutional investors with exposure to the defence sector feel compelled to keep a close eye on the companies they hold to ensure that their products are not being used to breach international law. Norway’s KLP, the country’s largest occupational pension scheme announced on 30 June 2025 that it will be excluding two companies based on their involvement with the Israeli army’s operations in Gaza.
Insufficient human rights due diligence
According to Head of Responsible Investments Kiran Aziz, KLP became aware of companies flagged by the United Nations (UN) as being directly involved in the Israel Defence Force’s (IDF) Gaza operations. As the IDF is accused by the UN of violations of human rights and humanitarian law, KLP carried out a review of these companies that included a direct dialogue to evaluate their due diligence efforts to ensure that they are not contributing to human rights violations.
US vehicle manufacturer Oshkosh Corporation and German engineering firm Thyssenkrupp were found to be unable to provide sufficient documentary evidence of their efforts to avoid being implicated in operations that violate international laws and norms. According to Aziz both companies are longstanding suppliers to the IDF and did not cease or reduce deliveries in reaction to the ongoing operations in Gaza. This is why KLP decided to exclude both stocks from the investment universe, which is last resort implemented once company engagement has failed to achieve satisfactory results.
Image courtesy of Military_Material from Pixabay
