JP Morgan Asset Management (JPMAM) lifted defense-related investment exclusions across dozens of its United Kingdom and European funds, according to notices issued to shareholders. The changes allow those funds to invest in a wider range of defense and aerospace companies and apply to 95 Luxembourg-based funds, 29 Ireland-based funds, and five environmental, social, and corporate (ESG) funds in the United Kingdom. The notices cite “evolving client expectations relating to defence preparedness” and the changing regulatory environment as reasons for the updates.

The changes include updates to how the funds apply restrictions to weapons-related revenue and nuclear weapons-related issuers. The set of affected funds includes JPMAM’s two largest exchange-traded funds in the region — the U.S. Research Enhanced Index Equity Active fund and a global equivalent — reported as $13 billion and $10 billion in size, respectively. The Luxembourg and Irish funds are described as Article 8 funds, defined by the EU Sustainable Finance Disclosure Regulation (SFDR) as "products that promote, among other characteristics, environmental or social characteristics, or a combination of those characteristics."

JPMAM’s move aligns it with other global asset managers that have revised ESG fund mandates to allow broader exposure to defense-related companies. Firms including Franklin Templeton, Columbia Threadneedle, DWS, and Allianz Global Investors have made similar changes as NATO member countries committed to increasing defense spending to 5% of GDP.

As defense spending increases across Europe, asset managers are revisiting how defense companies fit within ESG-labeled products, particularly those classified under Article 8 rather than stricter Article 9 standards.

European ESG funds have typically excluded weapons manufacturers, often grouping them with tobacco or fossil fuel companies. That approach began to change after Russia’s invasion of Ukraine, as European defense and aerospace stocks rose sharply and ESG funds expanded the number of defense companies eligible for investment and increased sector exposure.

Regulatory clarification at the European Union level reinforced that shift. In late December 2025, the European Commission confirmed that nuclear weapons are not classified as prohibited weapons under EU sustainable finance rules and that mandatory ESG exclusions apply only to specific weapons banned under international law. As a result, ESG funds are not automatically barred from holding companies involved in recognized nuclear deterrence programs, leaving inclusion decisions to fund managers.

In October 2025, JP Morgan also announced plans to invest $1.5 trillion over 10 years in U.S. industries described as critical to national economic security and resiliency.

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