Dutch pension funds PME, PMT and ABP are unwilling to heed a call from the Netherlands’ defence minister Kajsa Ollongren to increase their investments in weapons.

“We have seen that we simply need the weapons industry for our security [after the Russian invasion of Ukraine]. Rigorously excluding firms will lead to us not being able to defend ourselves,” Ollongren told financial daily Het Financieele Dagblad last month.

According to a spokesperson for technology industry scheme PME, the minister’s call made “little sense”. He said: “Pension funds do not place orders, it’s governments that do that,” noting that the Netherlands has not met the guideline to spend at least 2% of GDP on defence since 2010.

“A strong defence sector starts with long-term investments. Defence firms will only invest in new production lines when they’re sure of sufficiently large order placements for certain material over a prolonged period of time,” the spokesperson added.

A spokesperson for PMT, the metals industry fund that includes companies that produce weapons or are supplier to the defence industry, said “some caution with investors and other financiers is understandable”, as some defence companies are involved in the production of controversial weapons.

Civil service scheme ABP has no plans to increase its defence investments, though it noted army personnel, which it counts among its members, should be “sufficiently equipped”.

Pension funds have significantly reduced their investments in weapons in recent years, mostly for ESG reasons. This does not sit well with the Netherlands’ defence ministry nor NATO.

A spokesperson for the ministry calls for a “reorientation” on the question whether investing in defence companies is warranted. The ministry is expecting an increase in orders.

“To meet changes in demand, the defence industry will need to retain access to financing,” it said in answer to emailed questions.

Dutch investments in weapons down by two thirds

Total Dutch investment in the defence industry has come down by two thirds since 2016, according to data from the Dutch central bank DNB.

While defence investments totalled €4.7bn by the end of 2016, they had come down to €1.5bn by the end of last year. Pension funds and investments funds account for 90% of invested assets.

Rob Bauer, president of NATO’s military committee, recently branded the idea to exclude weapons companies “an odd investment advice”, appearing on a Dutch TV show.

“It’s a little strange to see the capability to defend yourself as something non-ethical. I would like to see a change in these guidelines so that [our pension funds] can invest in the [European] defence industry again,” he said.

Nuclear weapons

Recent weapons divestments have mostly followed directly from the 2017 UN Treaty on the Prohibition of Nuclear Weapons. This treaty excludes all firms that can be linked to the production or use of nuclear weapons.

PME excludes firms like Boeing on the basis of this treaty, “because this firm is involved in the maintenance of US nuclear weapons,” according to a spokesperson.

ABP excludes firms such as Airbus, Thales, Leonard, Honeywell, Boeing and Lockheed Martin on the basis of their involvement with nuclear weapons.

PME does, however, see a more positive attitude towards investing in defence among its members. “Before the war in Ukraine, almost three quarters of them were against investing in weapons. Since March we’ve seen an increase in support at two recent meetings with our members,” a spokesperson said.

PME’s weapons investments amounted to some €113m at the end of September.

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