The European Union published guidance on December 30 that reclassified nuclear weapons as acceptable investments under its sustainable finance framework, completing a policy change approved in November that narrowed the definition of banned armaments from "controversial" to "prohibited."
The shift addresses earlier vagueness that the Commission said hindered efforts to raise $932 billion in defense investments over four years. Under the revised rules, only four weapon categories remain expressly outlawed by a majority of EU states: personnel mines, cluster munitions, and biological and chemical weapons. Nuclear weapons manufacturers avoided exclusion because only Austria, Ireland and Malta signed the Treaty on the Prohibition of Nuclear Weapons, though all EU members support non-proliferation under the Non-Proliferation Treaty.
The updated guidance also permits ESG labeling for companies handling depleted uranium for anti-tank ammunition and white phosphorus, which is toxic but not classified as a chemical weapon. European ESG funds currently hold minimal defense stocks, according to Jefferies data. The Commission's notice now makes these investments eligible for funds operating under Article 8 and Article 9 sustainable investment mandates.
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