defence stocks and defence vc are really outside of ESG. There...

defence stocks and defence vc are really outside of ESG. There are lots of things happening in defence but quite a bit skirts around the ESG conundrum with "dual use" technology or capability. So Drones can be designed and built as civilian delivery type of things but with the capability to be easily retro fitted for weapon carrying which would allow an ESG compliant fund to invest. Lots of "critical infrastructure" investments are manufacturing sites that can assist in "sovereign capacity" etc Australian Missile Corporation does a bit with universities on developing hypersonic rocket tech to allow the launch of low orbit weather satellites etc but should the need arise.. they can be retro fitted to carry a warhead... dual use that allows sovereign capability.

There are also military VC funds like Beaten Zone Ventures which is pretty much just Steve Baxter's formalising of his input into the ADF. BZV aims quite clearly for lethality rather than dual use as it's a family office backed investment vehicle and doesn't need to satisfy any ESG requirements. Transition Level and TEN13 (his other investment companies) can't or won't go into lethal military grade hardware so he has BZV. There are more and more family office backed VC funds moving into lethal technology and hardware.

Personally I think we (Australia) need more sovereign capability to defend and re-arm ourselves at a national level but lots of the defence side of things is also stacked with lots of lobby groups that also would be happy to have more firearms broadly available to Australian citizens and that's where the waters muddy a fair bit even if you are investing family office money without an actual ESG mandate, just because you want Australia to be better defended doesn't mean you want us to go down the American path of guns everywhere...

It's a difficult space to invest but there are ways around it all but lots of funds simply will not ever touch anything military based... hope that helps as an answer