Danish pension funds have been re-evaluating their investment strategies, leading to a dramatic increase in their holdings in the defence sector. Over a single year, from April 2023 to April 2024, investments in defence companies nearly doubled, soaring from 9 billion to almost 19 billion kroner. This significant shift is documented by the industry group Forsikring og Pension and signals a fundamental change in the perception of defence-related investments among Danish savers and financial institutions.
This surge isn’t just from existing investors increasing their stakes; new companies are also entering the defence market. As Forsikring og Pension’s CEO, Kent Damsgaard, points out, the industry has been quick to adapt to the changing geopolitical landscape. This sentiment echoes a broader trend across Europe, where the invasion of Ukraine and other global tensions have prompted a renewed focus on national security and defence.
Many pension funds, which previously had ethical policies that excluded defence companies, are now adjusting their criteria. This change is driven by the desire to capture the high returns seen in the sector, as well as a growing societal understanding that a strong defence is a necessity for security and stability.
The trend of increased defence investment is continuing and gaining momentum. In early 2025, several Danish financial organizations, including Forsikring og Pension and Finance Denmark, launched a joint “Financial Defence and Emergency Partnership” to coordinate the financial sector’s role in strengthening Denmark’s national security. The initiative aims to mobilize private capital, including pension funds, to finance defence projects and align with the government’s defence industrial strategy.
Individual pension providers are also taking action. For instance, PFA, Denmark’s largest pension fund, has adjusted its policy to allow investments in certain defence companies it had previously blacklisted, citing the need to safeguard national security. This change will allow them to invest in a wider range of defence stocks, including major European and American firms. PFA and others are also offering their members the choice to opt out of defence investments or invest more specifically in the sector through new, dedicated funds.
This move toward defence investments is happening alongside Denmark’s commitment to significantly increase its defence spending to meet NATO targets. With a ten-year defence agreement in place, allocating billions of kroner to military modernization, the demand for both public and private funding is at an all-time high. This political and economic environment is creating new opportunities for pension funds to contribute to national security while aiming for solid returns for their members.