Investing in a 'Sustainable' War Economy? Sustainable Investment in the Aerospace and Defence Industry and the Definition of the 'Social' in EU Sustainability Standards (Nordic Journal of European Law)

Summary

• The European Commission presented the Joint White Paper for European Defence-Readiness 2030, targeting the mobilization of over €800 billion in defence spending and capabilities by 2030.p.3
• The ReArm Europe Plan includes Pillar 1, creating the Security Action for Europe (SAFE) instrument to raise up to €150 billion in capital markets for long-term military loans.p.7
• Pillar 2 of the ReArm Europe Plan permits budgetary flexibility for national defence spending via the Stability and Growth Pact's national escape clause, capped at 1.5 % of GDP annually per country for up to four years.p.7
• Between July 2025 and February 2026, a total of 17 Member States activated the national escape clause to increase defence spending.p.7
• The Savings and Investments Union strategy highlights a Draghi report recommendation that an additional €750-800 billion per year will be needed by 2030.p.8

Key insights

1. In June 2025, the European Commission introduced legislative initiatives via the Defence Readiness Omnibus to accelerate defence investments and address security challenges.p.4
2. ReArm Europe Plan's Pillar 3 allows uncommitted European Regional Development Fund money to be redirected toward defence and security-related projects.p.7
3. The European Investment Bank is expanding its lending scope under Pillar 4 to cover defence and security projects to complement public funding.p.8
4. The European Commission issued guidance stating that investments in the defence sector are compatible with the EU sustainable finance framework and SFDR disclosures.p.12
5. The European Commission recognised the defence industry as a vital contributor to the Union's resilience, security, peace, and social sustainability.p.12
6. Financial market participants are advised not to presume defence is a non-contributing sector, but to evaluate social sustainability contributions on a case-by-case basis.p.12
7. Threshold-based exclusions for dual-use technologies in Article 8 funds were relaxed during 2025 to enable investments deemed essential for strategic autonomy.p.14
8. Prohibited weapons under SFDR exclusions include biological weapons, chemical weapons, anti-personnel mines, and cluster munitions.p.15