Insurance and Pension Denmark (I&P Denmark) has given its backing to pension funds wanting to invest in European defence, following a report published by the European Commission on its plan for more investment in the sector.

Private investment, including the pension industry, is an important part of the solution. I&P Denmark believes that Danish pension companies are ready, but more political action is essential to make it more legitimate to invest in the area.

I&P Denmark deputy director, Tom Vile Jensen, said: “The EU Commission stresses that a strong defence industry is essential to secure against the threats that countries are experiencing right now. The Danish Zilmer report showed the same bleak picture back in 2022, and it requires significant investments to build both the Danish Armed Forces and a defence and security industry that can match the new threat picture in a credible way.”

Several Danish pension companies have already entered the field in relation to, among other things, the operation and expansion of the Danish Armed Forces' buildings and the upgrading of the Danish Navy. Several Danish companies have also invested in defence and security companies.

However, according to the EU Commission, large parts of the Danish and European defence industry need a major boost in the coming year. Therefore, the EU Commission also proposes that the European Investment Bank (EIB) be given the opportunity to invest in defence and security.

“It is obvious to look at how we can best solve the tasks together across all the competencies, resources, and capital we have as a society. At I&P Denmark, we have made it clear that pension companies are welcome to collaborate with both the Danish Armed Forces and invest in the defence industry, but that it is entirely up to each individual company to decide,” Vile Jensen stated.

However, the European Commission highlighted that investors may be unnecessarily reluctant to invest in the defence sector due to European sustainability regulation and reputational concerns.

“There is some caution when it comes to investments in defence and security. Now, the European Commission is making it clear that sustainability regulation does not stand in the way of investing in the defence industry. If politicians want to succeed in raising much more capital from private investors, further targeted initiatives in the EU and Denmark may be needed to create greater acceptance and understanding of the investments,” Vile Jensen concluded.

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