(1)

As indicated in the Joint White Paper European Defence – Readiness 2030 (2), boosting public investment in defence is indispensable, but it would not be sufficient. Undertakings established in the Union, including small and medium enterprises and mid-caps should have better access to capital, including guarantee instruments for de-risking investments, to bring their solutions to industrial scale and to drive the industrial ramp-up that the Union needs. Although the financial sector shows a growing interest in defence, it, the defence sector remains an under-served market due to limitations in investment policies of public and private financial institutions. The Joint White Paper sets out a defence package providing financial levers to Member States to drive an investment surge in defence capabilities. Making business easier and deepening the Single Market are among the package’s key goals. On 6 March 2025, the European Council called upon the Commission to swiftly take work forward on simplifying the legal and administrative framework, for public procurement, industry cooperation, permitting and reporting requirements, to address all obstacles and bottlenecks hindering a rapid ramping up of the defence industry, including for SMEs and mid-caps.

(2)

Commission Delegated Regulation (EU) 2020/1818 (3) establishes climate-related labels for benchmarks which require that all companies involved in any activities related to controversial weapons are excluded from EU Paris-aligned and Climate Transition Benchmarks. However, the definition of controversial weapons in that Delegated Regulation leaves too much uncertainty and confusion for administrators referred to in Regulation (EU) 2016/1011, leading to confusion and should be clarified and simplified, notably because the relevant international treaties and conventions to which Member States are parties do not reference controversial weapons but rather prohibited weapons.

(3)

It is therefore necessary to amend the definition of controversial weapons in Delegated Regulation (EU) 2020/1818 and replace it by a definition of ‘prohibited weapons’ to ensure legal certainty and consistency across the sustainable finance rulebook and harmonised practices by benchmark administrators. This can be done while keeping a safe level of exclusions in line with the objective of Regulation (EU) 2016/1011.

(4)

Delegated Regulation (EU) 2020/1818 should therefore be amended accordingly.

(5)

The implementation of this Regulation might lead to warranted effects on transactions by funds relying on those indices based on EU Paris-aligned and Climate Transition Benchmarks. To avoid market disturbances, it is appropriate to give existing benchmarks sufficient time to adapt to those changes,

(1)

Article 12(1) is amended as follows:

(2)

an Annex is added in accordance with the text set out in the Annex to this Regulation.