Unveiling the Trends: A Snapshot of Armament Manufacturing Investments in the Past Year

ESG Risk January 19, 2024 Luis Sanguineti, Ceila Falcón, Mouna Essakouti, Pablo Díaz-Varela

Over the past year, there has been an 11% increase in the count of funds investing in armament manufacturing companies

In 2023, we have continued to witness crises and wars throughout the globe. Given this global context, Clarity AI performed an analysis to better understand potential consequences on the armament industry, and more specifically on investments in armament production. The study focused on quantifying the changes observed between December 2022 and November 2023.

In this research, we looked at data from around 20,000 global equity funds, focusing on those that invest at least 1%¹ of AUM in companies that derive more than 10% of their revenues from armament manufacturing activities,

Results show an increase in the number of funds: the total number of funds investing in armament manufacturing companies has increased by 11% from 5,209 in December 2022 to 5,787 in November 2023.

Chart Note: Data shown for 19,916 global equity funds. AUM exposure to armament production directly sourced from company reports and/or websites. Data as of December 2022 and November 2023. Source: Clarity AI.

In addition, we also conducted a deep dive on funds with AUM allocated in armament manufacturing companies in December 2022 and November 2023 to explore whether the number of AUM exposed per fund had increased. We concluded, as illustrated in the figure below, the number of funds that are investing at least 1% of their AUM in companies that derive more than 10% of their revenues from armament manufacturing activities has also increased.

Chart Note²: Data shown for 4,624 global equity funds that in December 2022 and November 2023 had more than 1% of their AUM allocated in companies which obtained, at least, 10% of their revenue from arms manufacturing activities. Data as of December 2022 and November 2023. Source: Clarity AI

Understanding the investment universe of funds allows investors to allocate capital based on their preferences. It also allows them to engage with companies, using the right metrics and data to influence change. Contact us to learn more about key indicators and metrics to measure company’s involvement in armament production and other controversial activities

¹, ² The increase in funds from December 2022 and November 2023 as well as the average AUM allocation shows the same trend for different thresholds (i.e.AUM allocation greater than 0% and 1% in companies with more than 5% and 10% exposure to armament production).

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