Euronext Redefines ESG to Boost Europe’s Defence and Infrastructure Investment

Euronext has begun a strategic realignment of ESG—historically Environmental, Social, and Governance—by changing its orientation to Energy, Security, and Geostrategy. The new orientation seeks to direct European capital markets toward sectors crucial to the resilience and sovereignty of the continent. The initiative is one of several pursued by regulators of the European Union to reinforce defence capacity, secure energy autonomy, and integrate strategic infrastructure as the geopolitical balance changes.

This rebranding is a big change for the industry in terms of how indices and instruments are constituted and sold throughout the region. As geopolitics become increasingly risky and energy dependencies are reappraised, the European financial market is responding to keep pace with escalating strategic priorities. Euronext's positioning entails the creation of thematic index, efficient access to capital for defence businesses, and harmonisation with new European Securities and Markets Authority (ESMA) regulations.

Euronext introduced three thematic indices under its new ESG strategy. European Energy Security Index targets traditional, nuclear, and renewable energy firms as well as key energy infrastructure. The European Aerospace & Defence Index emphasizes leading defence technology and manufacturing leaders. The European Strategic Autonomy Index targets companies that operate in defence, energy, tech, and infrastructure sectors. These indices act as new investment reference points in partnership with asset managers and financial institutions, directing funds into areas regarded as crucial to the stability and sovereignty of Europe.

Through the development of capital markets, Euronext continues to overhaul the methods of its current flagship indices, like CAC 40 ESG® and MIB ESG®, by mid-2025. The exclusion will only apply to firms involved in internationally prohibited weapons under the new rules, a move aimed at encouraging a bigger, more realistic ESG model. The ESG rating agencies are also being asked to normalize their strategy towards this change because it also falls in line with the EU's changing defence and strategic investment stance.

To speed up capital inflow into the defence industry, Euronext will launch its IPOready Defence program during the third quarter of 2025. This EU-sponsored program will process quicker IPO approvals as well as link defence firms with potential investors. Moreover, bond listings for suitable firms will now be processed in just two days, as opposed to the usual bureaucratic delay. The easier access to markets should induce additional restructuring and activity in expanding by European defense firms.

Industrial groups already have shown interest. Thyssenkrupp, in the meantime spinning off its naval business, is weighing Euronext's program as part of its general strategic consideration. The availability of faster financial mechanisms will most likely induce additional firms in the industry to look to public markets for expansion.

This shift of capital aligns with the EU commitment of up to €800 billion to re-engineer its defence industry. Euronext's initiative positions itself at the epicentre of this revolution, closing private capital to national and regional security over the long term. Investors are already starting to re-deploy attention on defence, energy, and strategic infrastructure, which now represent a new model of sustainable and responsible investing within the European marketplace.

This new ESG model is an unmistakable sign of the capital markets' shift to address the challenges of a multipolar world. Through the integration of geostrategic priorities into financial products, Euronext is taking a leadership role in the continent's readiness and economic sovereignty. The continuous harmonization of regulatory procedures, financial indicators, and market access mechanisms signals a wider re-calibration of the definition of sustainability in the 21st century—a paradigm not exclusively motivated by environmental indicators, but one grounded in comprehensive strategic resilience.

Source/Credits: KnowESG, Published 09 May 2025
Original Report Title: European Capital Markets Pivot: Euronext's ESG Rebrand Targets Defence and Infrastructure
Image Credit: FREEPIK