Insight Exchange: Pensions for Purpose

Published: September 15, 2025

Interviewee:

Pensions for Purpose

LAPF Investments speaks with Pensions for Purpose to discuss some of the issues shaping the sector

Pensions for Purpose is a UK platform that connects pension funds, asset managers, and stakeholders in sustainable investing. The organisation provides research, training, and events focused on integrating ESG and impact considerations into investment strategies. Based on findings from a recent event hosted by the organisation, it reflects on the current attitudes to defence investing.

 

What is your current policy for investing in defence?
Policies vary among funds, but the discussions reflected a common tendency to exclude companies involved in weapons of mass destruction such as chemical or biological arms. Conventional defence investments are generally considered on a case-by-case basis, assessing risk, return, sustainability, and alignment with responsible investment principles. Many funds incorporate nuanced boundaries, for example, one policy now allows investment in companies involved in controversial weapons if headquartered in NATO countries. Blanket exclusions are generally avoided where possible, with implementation delegated to asset managers but guided by clear criteria for acceptable sectors such as cyber or infrastructure and prohibited ones.

How can committees navigate conflicting pressures and challenges versus expectations to support national defence?
The findings from the Pensions for Purpose event stressed the importance of balanced, transparent decision-making, avoiding knee-jerk divestment and instead assessing each case within the wider geopolitical and fiduciary context. Clear communication with stakeholders is key, explaining how investment choices support security while respecting ethical concerns. Trustees should listen actively to members’ views but recognise their responsibility to make informed decisions based on fuller information. Where feasible, engagement should be prioritised over divestment in order to influence company behaviour. Committees must also accept that trade-offs are unavoidable, but trust and accountability can be strengthened by setting well-defined policies and explaining them openly.

“Total defence” includes protection of the whole of society against catastrophes such as war, natural disasters, and other strategic crises. When thinking about this wider definition, what policies or investment approaches do you have in place? Is this likely to change?
From the “total defence” perspective shared at the event, defence is not only about weapons, it spans cybersecurity, critical infrastructure, economic resilience, and disaster preparedness. Investment approaches increasingly recognise this broader scope, with some funds updating RI principles to permit certain controversial defence investments if they support national or allied security objectives. In practice, this means supporting companies contributing to societal stability and economic security, while still screening for reputational, environmental, and social risks. This broader framing is likely to lead to evolving policies, especially in response to heightened geopolitical risks and NATO/EU security priorities.

What challenges might LGPS funds encounter when seeking to implement their defence-related policies through their pool?
Challenges raised include policy alignment, as individual funds may have different boundaries on acceptable defence investments, making it difficult for a pool to act consistently. Screening for controversial weapons or companies linked to conflict zones can also be complex, especially when definitions differ. Pools face the challenge of managing reputational risk when navigating politically sensitive investments on behalf of multiple stakeholders with diverse views. Engagement and monitoring require significant resources to ensure pooled investments meet each fund’s expectations for stewardship and transparency. Finally, there is a risk of unintended consequences, such as investments indirectly supporting regimes or actors contrary to members’ values, which can be difficult to foresee or fully control.

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