Context: financial sector, nuclear weapons, international treaties

Nuclear weapons remain a significant threat to global security, with their relevance increasing in recent months. The primary international framework is the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), adopted in 1968. While the NPT aims to prevent the spread of nuclear arms, the Treaty on the Prohibition of Nuclear Weapons (TPNW), which entered into force in 2021, goes further by explicitly prohibiting development, testing, and financing. Despite a majority of states signing the TPNW, most large financial institutions continue to ignore it, preferring to refer to the NPT to justify their investment positions. This study analyses whether financial institutions actually adhere to their voluntary commitments regarding these treaties.

A new nuclear arms spiral?

Nine states currently possess nuclear weapons. Modernisation efforts are widespread, with nuclear-armed states spending more than $100 billion in 2024 alone. The New START treaty between Russia and the USA expired in February 2026, removing binding limits on their arsenals. Additionally, France announced plans to grow its nuclear arsenal for the first time since 1992. While the explosive power of tactical weapons has increased to twenty times the yield of the bomb used on Hiroshima, over half of the world’s states have signed the TPNW to seek a total ban.

The structure of the global nuclear weapons industry

The industry is dominated by state buyers, but relies heavily on private, publicly listed corporations. These entities generate billions in annual revenue from the production and maintenance of warheads and delivery systems. Key players include Lockheed Martin, BAE Systems, Boeing, and General Dynamics. Many companies are also active in civilian markets, making their nuclear-related activities less transparent to average investors.

The potential influence of the financial sector

Financial institutions are vital to the industry as providers of bank loans and underwriters of shares and bonds. Divestment campaigns by civil society have previously pressured banks to introduce exclusion policies. Exclusions can raise a company’s cost of capital, potentially prompting changes in business practices. Alternatively, institutions may use shareholder engagement to influence company behaviour, though compliance with existing exclusion criteria is essential for maintaining credibility.

Controversial weapons as “sustainable investments”?

A redefinition of the term “controversial weapons” is occurring within the financial sector. Some systems previously classified as controversial are being rehabilitated. EU regulations and guidelines, such as the EU Defence Industrial Strategy 2024, have begun to describe the defence sector as “sustainable”. Consequently, sustainability-labelled funds (ESG funds) are increasingly permitted to invest in weapons producers, provided they do not produce specifically outlawed items like anti-personnel mines or cluster munitions. Nuclear weapons are often omitted from these modern exclusion lists, despite their indiscriminate nature.

Methodology and analysis of the policies of the 15 asset managers

The study examined the policies of 15 major asset managers: five global leaders (BlackRock, Vanguard, Fidelity Investments, State Street, and JPMorgan), five European leaders (Allianz, UBS, Amundi, BNP Paribas, and Legal & General), and five German leaders (DWS, Union Investment, LBBW, MEAG, and Deka). It evaluated whether they exclude nuclear weapons across all funds, apply revenue thresholds, or differentiate between jurisdictions. Most US managers have virtually no exclusions, whereas European managers often apply more restrictive criteria, particularly in ESG-labelled portfolios.

Analysis of actual investments in nuclear weapons companies

Financial relationships were found between the 15 managers and companies supporting nuclear programmes in India, Israel, France, the UK, and the USA. No relationships were found with programmes in Iran, Pakistan, Russia, China, or North Korea. State Street and BlackRock were identified as the most frequent investors in nuclear weapons companies. Conversely, LBBW and MEAG had the lowest frequency of investment. Notably, all European managers responded to requests for clarification, while all five US-based managers ignored enquiries.

Investigation of possible breaches of nuclear weapons policies

The investigation found several instances where investments appeared to conflict with stated policies. For example, Deka’s Art. 8 funds were invested in Hewlett Packard Enterprise (HPE), despite policies excluding nuclear weapons producers; these shares were eventually sold in early 2026. Union Investment held shares in Larsen & Toubro (L&T), which is involved in India’s nuclear submarine programme, and Honeywell, which has nuclear-related revenue exceeding the manager’s 5% threshold. Similarly, BlackRock’s EMEA Baseline Screens exclude nuclear weapons, yet several of its Europe-domiciled ESG ETFs held shares in companies like Thyssenkrupp and Elbit Systems, which support nuclear programmes in non-NPT states.

How can asset managers break their own nuclear weapons rules?

Asset managers often break their rules by adopting narrow definitions of what constitutes a “nuclear weapons producer”. Many exclude only the production of warheads while permitting investment in delivery systems like missiles, submarines, or aircraft. Others rely on government classifications of goods as “conventional” to justify investing in companies that provide nuclear-capable platforms to non-NPT states like Israel and India. This “strategic ambiguity” allows managers to claim treaty compliance while continuing to finance the industry.

Conclusion

The report concludes that many asset managers are loosening their nuclear weapons exclusions to capture high profits from the defence sector. While they may claim adherence to the NPT, they typically focus only on non-proliferation and ignore disarmament obligations. To ensure credible policy implementation, the report suggests that managers require both a clear exclusion of companies supporting non-NPT programmes and active engagement regarding the disarmament obligations of NPT-recognised states.