KEY TAKEAWAYS:

• Amid plummeting commercial aerospace sales and rising global defence spending, military sales within the aerospace industry are accounting for a greater proportion of overall revenue compared to pre-pandemic times.
• With the commercial aerospace industry set for a long recovery, this trend is likely to continue in the near term.
• Investors concerned about corporate involvement in military equipment and services are thus expected to face exposure to higher military sales from traditionally commercially-focused aerospace companies.
• According to an analysis of ISS ESG data, ‘Information Technology’ (IT) is now the GICS sector with the second highest involvement in military equipment and services, after the established ‘Industrials’ sector which includes the Aerospace & Defence industry.
• With technological shifts in military requirements, investors are being challenged to broaden their view of companies involved in military-related activities outside of traditional industries.