Security is the essential condition without which no important societal issues can be addressed. Investing in security creates great societal impact.
This is a transcript of his presentation:
This week as a plan participant of pension fund ABP I received a letter titled “New Investment Policy For A Changing World”.
I read it with great interest and increasing astonishment. In particular the sentence: “Climate and biodiversity we view as the most important themes with which society and the economy are changing”.
This sentence does not reflect what’s going on in the world today, in my opinion.
Never have there been more conflicts than today. The United Nations has stated that the world has entered a new era of violence. For NATO this means a new era of collective defence.
In the past few months political and military leaders including myself have issued statements on preparing for war.
That’s not bevcause we WANT war. It’s because there’s a real chance that we’ll be involved in one.
NATO is a defence organisation and i twill never attack another country or even threaten one.
But the fact that NATO believes in peace doesn’t mean that our adversaries do.
We merely have to look at Ukraine to see: the unthinkable can happen.
At the military level this has been accepted since 2017/18. At the political level since 2022.
And now society has to accept this. This includes investors.
Politico wrote this week: the peace dividend is dead.
The quicker we realise this, the better. In the EU awareness has come that more investments are needed. A good exapmpe is the new investment plan the European Commission launched this week.
But even though the defence industry is getting out of the doghouse the industry is still not viewed as “sustainable”. Because: weapons are bad, and we don’t like war.
I don’t like war either. Just like a fireman doesn’t like fires and a doctor doesn’t like disease. But war is a fact of life. And if you’re not prepared: a fact of death.
Part of the solution lies with those who determine which activities are deemed sustainable: the taxonomy.
I sincerely hope that these people realise that a triple A status can be gone in one blow if we get involved in a conflict.
ESG goals were never meant to not to defend ourselves. I do not know what is unethical about self defence.
ESG goals were set up for investors to consider the long view. Not for what’s good for shareholders NOW. Solutions that help us ALL-IN the long term. Tot hink anout “us” in a world of “I”.
To invest in determent, to prevent conflict, fits really well in that description. As does self defence.
It would not surprise me if defence will be included in the “S” of ESG.
My concern is: will it go fast enough? Will we be on time?
Speaking of which:
Another part of the solutiuon lies with the defence industry, that shouldn’t pump prices with slower delivery times. They should invest in more production capability. The defence industry, too, is still lacking a long term demand signal.
I think that anyone who reads the paper, does not have to look very far to see the long term demand signal.
As I said before, never have there been so many conflicts as today.
On the other hand I do understand the defence industry. They too have suffered under thirty years of government cut backs.
30 years of wanting a champagne lifestyle on a beer budget. So the government too, needs to change its approach: bigger contracts, for longer terms.
Whereby ammunition and defence equipment is purchased in line with NATO standards, for joint purchase with NATO Members.
This means: taller orders, and more incentive to increase priduction capacity. The government may relax procurement procedures.
At the moment we are in a mutual stronghold of private and public.
Where one waits on the other to make the first move.
Whereby the private side still looks at short term financial interests. And the public side ever more stuck in a bureaucrtic morass.
If we continue as we are doing today, we talk eachother into war.We will not be prepared sufficiently.
For thirty years we’ve lived in a time when everything could be planned and controlled. Focussed on efficiency: just in time, just enough.
That era is over. We need much more decisiveness and much larger stock.
How dark the world may be, there is room for optimism. And for hope. Let’s not fall in the pessimistic trap that we don’t have any influence ourselves.
NATO allies represent 50 percent of military power and 50 percent of economic power in the world. We have it in us to turn the tide. To change our approach.
And even though i twill go slower than as is the case at our autocratic opponents…wit hus, i twill go better eventually. Our systems are smarter, more robust and stronger. For the simple reason that they are based on freedom. On self determination. On conviction, not on force.
That fact makes that we have been able to create peace and wealth for decades.
More is possible than we think.
In Denmark pension funds have already invested 5 billion euro to produce frigates fort he next 25 years. I’m looking forward to hearing about such an initiative in the Netherlands. That’s both a literal and a figure of speech investment in our safety. As far as NATO is concerned, this cannot go quick enough. Time is no longer on our side. But we have it in us to turn the tide.
.