Where good data is an investor’s best defense

The data on European sustainable funds’ exposure to defence stocks (“European ESG Investment Funds Double Exposure to Defence”, Report, 3 September) is a striking example of the complexities involved in defining environmental, social and governance investments. The risks in this type of sector are high and can become very complicated very quickly.

In recent years, even the ESG fund BlackRock mentioned in the article has faced criticism for its involvement in the activities of major entities involved in the production of military equipment and weapons.

Sustainable bonds can deliver on their promise and justify their category while investing in sectors that some may consider unsuitable or characteristically “green.”

Similarly, a social bond is unlikely to place the same emphasis on environmental goals that are otherwise well-implemented and currently taken for granted.

In these cases, the importance of supporting investment decisions with data becomes non-negotiable. Reliable, high-quality data is key to accurately understanding the composition of portfolios, especially when navigating complex sectors such as defense.

Investors run the risk of misjudging the true impact and sustainability of their investments.

With regulatory requirements becoming more stringent and the geopolitical landscape becoming more complex, now is the time to act.

Volker Lainer
Vice President (Product Management), GoldenSource, London EC2, UK