Mandatum has updated its exclusion principles related to the defence industry. With this update, Mandatum now enables broader investment in defence industry companies in some of its products, provided that the investment aligns with the product and its strategy.
The update is driven by changes in the European security landscape, which have prompted investors to reassess their stance on the defence industry. EU defence funding programs and the publicly announced goals of EU member states to increase defence spending have further intensified discussions around investing in the defence sector. This shift has also been reflected in the performance of defence sector equities in early 2025. For Mandatum, updating its guidelines enables investments in companies that are essential to Europe’s overall security.
Previously, Mandatum’s responsible investment policy excluded companies that generated more than half of their revenue from the defence industry. This restriction has now been removed in the updated policy. However, Mandatum continues to exclude companies involved with controversial weapons, such as cluster munitions, or chemical or biological weapons. Mandatum’s definition of controversial weapons is aligned with the EU Sustainable Finance Disclosure Regulation (SFDR).
Mandatum does not either invest in companies whose nuclear weapons-related business is connected to nuclear weapons programs of countries operating outside the Treaty on the Non-Proliferation of Nuclear Weapons (NPT). Investments may be made in companies serving the nuclear weapons programs of countries recognised under the NPT. The rationale behind this guideline is to enable investments in key European defence companies that also manufacture components that can be used in nuclear weapons.
Such investments are assessed on a case-by-case basis using specific criteria. These criteria are designed to ensure that investment decisions are made with as comprehensive an understanding as possible of any potential risks and impacts associated with the company or its products. One of the criteria is that the company’s headquarters must be in a NATO member country. Particular attention is paid to transparency in corporate reporting, compliance with international norms, and anti-corruption and anti-bribery practices.
The update to the responsible investment policy primarily concerns direct equity and fixed income investments, as well as direct private equity investments. In certain products, such as those committed to making sustainable investments, stricter exclusion criteria may still apply.
The change does not apply to indirect alternative credit investments or indirect real estate investments (such as Mandatum’s Private Debt and European Real Estate programs), where investment activities are outsourced to external partners within predefined limits, and Mandatum does not have the ability to assess individual investments of the target fund prior to investment decisions. More information is available on Mandatum’s Responsible Investment Policy.