The war in Ukraine and geopolitical uncertainties have resulted in a significant shift in investor attitudes towards defence and armament stocks.
The latest sustainability survey by Hargreaves Lansdown shows that only 27 per cent of investors want to exclude firearms from portfolios — down sharply from a similar survey in 2022. Similarly just 10 per cent of investors said they were “uncomfortable” investing in firms involved with military contracting.
However the survey uncovered marked gender and generational differences. Almost one in two women (48 per cent) still say they do not want to invest in firms involved in firearms, compared to just 19 per cent of men. HL says this is the largest gender gap in its survey on attitudes to investing.
Meanwhile a third of women said they did not want to invest in firms involved in military contracting, compared to only 13 per cent of men.
There are generational divides too, with around a quarter of respondents aged 18-29 reporting discomfort with military contracting, compared with just 11 per cent of those in the 80+ bracket.
Hargreaves Lansdown head of ESG Dominic Rowles says that these changing attitudes are being driven by a more volatile geopolitical background. “The world is an increasingly uncertain place. The war in Ukraine continues, tensions in the Middle East persist, and security concerns are rising across Europe.
“At the same time, US President Donald Trump has suggested that Europe may not be able to rely on American military support if Russian President Vladimir Putin invades the Baltic states, which are NATO members.”
He says this has clearly creating investment opportunities in defence stocks. He points out that European countries have increased their defence spending significantly in recent years. European defence spending reached €380bn in 2025, a rise of over 60 per cent since 2020.
He adds that countries like Estonia and Latvia, which sit on the Russian border, have committed to spending as much as 5 per cent of GDP on defence. Meanwhile in the UK UK, defence spending is set to increase from 2.3 per cent to 2.5 per cent of GDP by 2027, —with an ambition to reach 3.5 per cent by 2035.
Rowles says: “Bigger budgets mean stronger order books, clearer revenue visibility and, in many cases, standout share price performance. Investors who excluded defence have missed significant gains – prompting some to reconsider the sector’s place in a portfolio.”
However he adds that ethical concerns about this sector still persist. “Many investors continue to have deep ethical concerns about the defence industry.
“The weapons it produces are designed for combat and can result in devastating consequences. They have the potential to kill and injure both military personnel and civilians.
These weapons can also cause extensive destruction to infrastructure, crippling essential services and facilities. The impact on local communities can be profound, often resulting in displacement and long-term social and economic disruption.
“Some would also argue regimes that violate human rights and commit alleged war crimes are supported by some defence companies.”
He points out that there have been criticisms of BAE Systems, the UK’s largest defence contractor, with allegations that it has had trading relationships with 13 countries on the UK’s human rights watchlist.
BAE Systems is unable to confirm who it trades with, but says it’s committed to upholding ethical standards.