Jefferies Says Investors Boost ‘Nuclear Exposure’: ESG Investing

by Tim Quinson of Bloomberg News, 5/27/26

Almost two-thirds of fund managers permit some level of “nuclear exposure,” with 34% allowing investments in nuclear weaponry, according to Jefferies Financial Group Inc.’s fourth-annual ESG and defense survey.

The report finds that many money managers have loosened policies in recent years to become more receptive to defense investments. Still, 38% prohibit holding stakes in companies involved in manufacturing nuclear weapons.

“Nuclear is increasingly investable, but it remains the most contentious boundary,” Jefferies analysts wrote in a report published Friday. Where investors permit exposure, they often rely on rule-based constraints tied to alliances or treaties rather than fully endorsing the sector, the analysts said.

Most respondents also expect investors to boost allocations to aerospace and defense companies. Jefferies cited clearer policy signals, rising defense spending and the growing importance of dual-use technologies as factors lowering barriers to investment.

Defense stocks have rallied since Russia’s invasion of Ukraine in February 2022, and the number of environmental, social and governace equity funds with exposure to the nuclear-arms industry has steadily risen. The S&P Global 1200 Aerospace & Defense Index has soared 128%, including reinvested dividends, since Russia’s attack, outperforming the 85% advance of the S&P 500 Index.

Jefferies surveyed about 60 financial-market specialists, mainly money managers and analysts.