Investing in a ‘Sustainable’ War Economy? Sustainable Investment in the Aerospace and Defence Industry and the Definition of the ‘Social’ in EU Sustainability Standards

This article examines the role of private defence investment as part of the efforts to define the scope and meaning of EU social sustainability, at a time of increased EU investment interest in the aerospace and defence industry (A&D). One of the central questions posed by private investors, civil society and international legal scholars alike is, in fact, whether investment in the production and selling of arms and other security and defence-related products can be considered to be socially sustainable and if so, under what circumstances. In the absence of an agreed upon definition of EU social sustainability, this debate is crucial in terms of shaping the scope and content of the so-called hidden ‘S’ in Economic, Social and Governance (ESG) standards adopted at EU level, and thus in understanding and redefining EU social objectives. Against the backdrop of the evolving geopolitical context, the article examines EU legislative initiatives introduced by the European Commission in June 2025 to boost private finance for rearmament and resilience initiatives. It does so by considering the sustainability risk disclosure requirements envisaged in Articles 6, 8 and 9 of the Sustainable Finance Disclosure Regulation (SFDR). It argues that these private investment decisions are central to a definition of EU ‘social’ sustainability standards which justify, as ultimately ‘sustainable’, investments linked to armed conflicts regardless of the well-documented breaches of international law that they entail.