UK Pension Funds Face Scrutiny Over Restrictions on Defence Investments

Government and MPs push for regulatory changes to align ESG standards with national security and defence industry growth.

Major UK pension funds, including Aviva and Nest, restrict investments in defence companies based on ethical ESG criteria, prompting criticism from ministers and MPs.
The government plans to increase transparency in ESG ratings and bring them under Financial Conduct Authority regulation to encourage defence sector investments.
More than 100 MPs and Lords have called for a reassessment of ESG standards, arguing that defence spending is ethical and vital for national security and economic growth.
Labour Chancellor Rachel Reeves has pledged to fast-track reforms to ESG guidelines, ensuring the defence industry receives necessary private sector funding.
The defence sector is highlighted as a driver of innovation, high-skilled jobs, and economic growth, with calls for the UK to follow France's model of prioritizing defence production and exports.