THE Pensions Board has strengthened restrictions on investment in companies with revenues from defence. To be eligible for investment, such revenues must now make up no more than five per cent of a company’s total revenues, down from the previous figure of ten per cent.
The policy differs from that now operated by the Church Commissioners, who last year announced a change allowing them to invest in UK-based companies that make the majority of their revenue from selling military weapons systems, or small arms and ammunition for military and law enforcement (News, 5 December 2025).
Both policy changes follow the publication of updated advice from the Ethical Investment Advisory Group (EIAG), which sought to “take account of the complexities of the defence industry and military contracting”.
Technological advances meant that “companies not traditionally considered part of the defence sector or as military contractors are involved in conflict around the world,” said the EIAG advice. “This makes the boundary between what is or isn’t a defence investment more permeable and decisions about what may be or may not be appropriate for investment become more difficult.”
The EIAG advised, nevertheless, that “extreme caution should be applied when considering whether or not to invest in companies that derive a material proportion of their revenue from defence”.
The Church Commissioners have stressed that “the bar to investing in defence businesses will remain high” and that the new policy represented “a sharpening of the criteria” for investment, making it “harder to invest in companies linked to oppressive regimes, while enabling responsible investment in NATO and UK defence related business”.
The 2025 stewardship report produced by the Pensions Board, published last week, draws attention to the EIAG’s call for “extreme caution”. It refers to “opaque and porous defence export regimes” and the risk of “weapons appearing in ongoing conflicts and alleged genocides”.
It also reports on the launch of the Global Centre for Peacebuilding and Business in South Africa, which has as its co-chair the Pensions Board’s Chief Responsible Investment Officer, Adam Matthews (News, 13 February). A number of pilot schemes connecting local Anglican leaders with key financial and corporate actors linked to conflicts have since taken place in areas including the Democratic Republic of the Congo (DRC).
The EIAG guidance explores Just War theory, and its relationship with investment advice. In his encyclical published this month, the Pope warned of “a troubling revival of war as an instrument of international politics, while the very ethical principles that had previously limited its use are being eroded”.
Just War theory was “outdated”, he suggested. “Humanity possesses far more effective and capable tools for promoting human life and resolving conflicts, such as dialogue, diplomacy and forgiveness. The use of force, violence and weapons reflects a relational poverty that always has disastrous consequences for civilian populations.”
He warned: “The armaments industry, and countries that supply weapons, profit from a market that thrives precisely on conflicts.”