For much of the last decade, defence was the investment nobody really talked about.
ESG frameworks treated it with suspicion. Institutional investors applied blanket exclusions. Fund managers kept their distance. And directors on fund boards rarely saw it on an agenda.
That has changed. Profoundly, and the numbers tell the story.
In 2025, for the first time in recorded NATO history, all 32 member states exceeded the alliance's 2% GDP defence spending target, a benchmark that only four countries met as recently as 2017. At the 2025 NATO Summit in The Hague, member states went further, committing to invest 5% of GDP annually on core defence requirements and defence-related spending by 2035. In 2026, NATO's combined allied defence spending exceeded $1.5 trillion for the first time ever. European allies and Canada increased their defence spending by 20% in 2025 alone.
This is not a temporary response to a temporary crisis. It is a structural, decade-long commitment by the world's most powerful military alliance to rebuild, rearm and reinvest.
The investment community has taken notice.
The ESG recalibration has been swift. In June 2025, the European Commission published its Defence Readiness Omnibus package, explicitly confirming that the EU's Sustainable Finance Disclosure Regulation is sector-neutral, defence is not inherently incompatible with sustainable investment frameworks. The European Investment Bank removed key internal restrictions on defence investment. The value of defence-related assets in European sustainable-branded funds nearly doubled between 2022 and 2024, from $3 billion to just under $7 billion. The barrier that kept institutional capital out of defence for a decade is eroding.
And the institutional architecture to support it is being built.
In one of the most significant developments in defence finance in a generation, Canada, under Prime Minister Mark Carney, has been selected to headquarter the new Defence, Security and Resilience Bank. The DSRB, a new multilateral financial institution backed by eight founding member nations including Belgium, Greece, Latvia, Luxembourg, Romania, Turkey and Ukraine, which aims to raise up to $185 billion in low-cost financing for defence, security and resilience projects across NATO member states and allied nations. Its founding Articles of Agreement were concluded in Montreal in April 2026. At the 2026 NATO Summit in Ankara, Prime Minister Carney formally welcomed the first wave of member commitments. The DSRB is the most significant new multilateral financial institution created specifically to mobilise private capital for defence since the end of the Cold War. Its implications for fund structures, investment vehicles and the directors who govern them are only beginning to be understood.
For fund directors, this creates an entirely new set of governance considerations, which most are navigating it for the first time.
The first question is one of familiarity: Defence as a sector carries its own regulatory architecture. Export controls. Security classifications. Dual-use technology restrictions. Enhanced AML and sanctions requirements. Government contract governance. National security oversight regimes.
A director who has governed consumer funds, real estate vehicles or private equity structures will find the compliance landscape of a defence-related fund quite different, different in ways that demand preparation.
The second question is one of data: Defence-related fund structures carry enhanced data security obligations that go beyond standard financial services requirements. The sensitivity of the underlying investments, in some cases touching classified technology, government contracts or critical infrastructure, means that the information a director holds, reviews and discusses is itself subject to a higher standard of care.
Where board papers are stored matters. How they are accessed matters. Who can see them matters. The era of storing board packs and minutes in shared drives is not compatible with the governance standards that defence-adjacent investment structures will increasingly require.
The third question is one of judgement: Directors sitting on defence fund boards will face questions that sit at the intersection of financial governance, ethical consideration and geopolitical context.
Which technologies qualify as defensive versus offensive? How does the fund's mandate sit within the LP's own ESG commitments? What enhanced due diligence is required on underlying investments? How does the board evidence that its oversight meets the heightened standards that regulators and investors will apply?
These are not questions with simple answers. They are questions that require preparation, independent research and the kind of informed, curious governance that directors have always brought to complex mandates.
Defence investment is not a passing trend. It is a structural shift in how capital is deployed globally. Underwritten by sovereign commitments. Backed by multilateral institutions. Supported by a regulatory framework that has removed the ESG barriers that once kept institutional capital at bay.
And as the number of defence-related fund structures grows, accelerated by the DSRB and the wave of capital it is designed to mobilise, the demand for directors who can govern them effectively will grow with it.
MyDirector-OS was built for exactly this kind of environment.
A private, encrypted workspace where board papers, meeting records, compliance obligations and appointment details are held securely, accessible only to you. No shared drives. No unsecured portals. Every document stored in an encrypted vault, visible to nobody but the director it belongs to.
BoardLens, our AI board pack review tool, was designed with the same standard of security in mind. Documents are extracted within your own browser before any review begins. They are transmitted over encrypted channels. The AI model that reviews them is stateless, meaning it does not retain, store, learn from or share the content of any document it processes. No trace. No training data. No residual exposure.
For directors governing defence-adjacent fund structures, where the sensitivity of the underlying information may extend well beyond standard financial services, this matters. Not as a feature. As a requirement.
BoardLens surfaces risks, flags governance gaps and identifies the decisions that require your attention, all before you walk into the room. Jurisdiction-aware, so the regulatory framework it applies reflects the specific structure you are governing.
The analysis is yours. The judgement is yours. The data never leaves your control.
The opportunity in defence investment is real. The governance obligations that come with it are equally real.
The directors who are ready for both will be the ones who invested in their preparation before the mandate arrived.