Examples include aerospace company Electro Optic Systems, whose technology includes space communications, sensors to detect, track and classify objects in space, and remote-controlled weapons systems. Its shares have soared 48% over the past month.
Another example is DroneShield, which makes counter-drone technology and has seen its stock price gain 11% during this time. It has contracts with the military, law enforcement, homeland security, airports and critical infrastructure customers around the world and most of its recent contracts have been with the United States, Australia and Europe.
Oleg Vornik, CEO of DroneShield, says the company doesn’t have to brush off investor concerns about the company’s ethics. Indeed, “DroneShield technology safely detects and disables drones, rather than destroying them, without harming humans,” he explains.
Griffiths explains that another reason professional investors are wary of defensive stocks is that executing corporate strategy is rarely a “linear process.” Markets take years to penetrate and exploit, he says.
Defense actions also carry the usual risks associated with tech companies, Griffiths says. They often need ongoing fundraising to finance the high development costs of their technologies, he says.
And most Australian companies in the sector are yet to make a profit.
About half of the respondents surveyed in early 2020 by the Association for Responsible Investment Australasia said it was important to exclude weapons and firearms from ethical and responsible investment portfolios and other investments.
Victoria Maclean, associate fund manager of the Pengana WHEB Sustainable Impact Fund, says the view that weapons can contribute to positive impacts – like fighting off an abuser – that outweigh the harm is a “difficult conclusion” to draw from. to reach.
She says larger defense budgets could boost the growth prospects of defense companies and, for some investors, will make the sector a more attractive place to put their money.
Yet, although the war in Ukraine shocked the world, it does not justify the conclusion that defense contributes more to social good today than it did before the war, she says.
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