Investor 
Op-ed: Investing in defence is legitimate, but it is not impact finance.
Faced with a more unstable geopolitical context, the rise in defence spending in Europe is legitimate, even necessary. But for Laurence Méhaignerie, co-founder and Chair of Citizen Capital, calling it “sustainable” or “impact investing” is a mistake that threatens the credibility of sustainable finance as a whole. Her argument: ESG and impact investing are not a continuum, but two different logics, and defence does not meet the criteria for impact.
This article expands on Laurence Méhaignerie’s analysis, published as an op-ed (in English) on Impact Loop on 16 March 2026.
Why is defence gaining ground in ESG portfolios?
ESG rests on a logic of responsibility: framing how companies behave, whatever their sector. Even controversial activities can be conducted responsibly — and it is this logic that explains the growing place of defence in European ESG portfolios, at a time when security and sovereignty are political priorities once again.
Why is defence not a matter for impact finance?
Impact investing answers a different requirement: financing companies whose business model, by design, generates a positive, measurable and additional impact on society or the environment. Yet armed conflict ranks among the most destructive forces there are — humanly, ecologically and democratically. Destroying hospitals, schools or water infrastructure undoes decades of development in a matter of weeks. That leaves a question with no easy answer: what would positive impact indicators for defence even look like? Lives saved? Measured against which baseline scenario? For Laurence Méhaignerie, this is simply not the terrain of impact finance.
ESG and impact: two different logics
| ESG | Impact investing | |
|---|---|---|
| Logic | Framing behaviour within the existing economy | Financing models that generate positive impact by design |
| Role | Responsibility and compliance | Building new solutions |
| Defence | Compatible, subject to responsible conduct | Not compatible — no measurable, additional positive impact |
| Examples of sectors concerned | All sectors, including controversial ones | Regenerative agriculture, renewable energy, education, health, inclusion |
What role can impact investing play in European sovereignty?
The debate on defence should not obscure the fact that climate, social and democratic challenges have not gone away. For Laurence Méhaignerie, impact finance in fact has a great deal to offer European sovereignty: reducing food dependency through regenerative agriculture, lowering energy costs through renewables, building a resilient digital ecosystem aligned with European values, or preparing the next generation for an economy transformed by AI. These, too, are questions of sovereignty.
Why do words matter so much in sustainable finance?
The point is not to keep defence off investors’ radar, but to call things by their proper names. Savers who choose impact funds are making a deliberate choice, and they deserve transparency about what that choice actually finances. As Laurence Méhaignerie puts it: “when ‘sustainable’ means everything, it no longer means anything.” Her conclusion is blunt: if we want to finance defence, we should create defence funds, and say so clearly.
FAQ — Defence, ESG and impact investing
Why can defence investment not be called impact investing? Because impact investing requires a measurable and additional positive benefit for society or the environment. Armed conflict generates major human, ecological and democratic destruction, which makes it very hard to define a credible positive impact indicator for defence.
What is the difference between ESG and impact investing? ESG frames the responsible conduct of companies within the existing economy, whatever their sector — including controversial sectors such as defence. Impact investing finances business models whose very mission is to generate measurable positive impact, in areas such as climate, biodiversity or social inclusion.
Why is classifying defence as “sustainable” a problem? Because it blurs a distinction that the sustainable finance sector took years to build, weakening a credibility that is already under pressure, and risks diluting the meaning of the word “sustainable” to the point of rendering it useless.
How can impact investing contribute to European sovereignty without going through defence? Through levers such as regenerative agriculture (reducing food dependency), renewable energy (lowering energy costs), a resilient European digital ecosystem, or training in the skills the AI economy requires.
Who is Laurence Méhaignerie? Laurence Méhaignerie is the co-founder and Chair of Citizen Capital, which she created in 2008 — one of the pioneering impact funds in France, with €276 million under management in 2026.
Summary based on Laurence Méhaignerie’s op-ed published (in English) on Impact Loop, 16 March 2026.
