Beyond Defence: The Stewardship Implications of AI, Dual-Use Technologies and Geopolitics for Asia-Pacific Investors

Asia-Pacific Investor Briefing - Executive Summary

Asia-Pacific investors are confronting defence-related exposures in a regional context shaped by long-standing security tensions, rising defence spending and rapid technological change. The discussion showed that the region is not simply following the European or North American debate. Instead, investors are increasingly asking how responsible investment frameworks can be applied across portfolios where semiconductors, cloud services, robotics, gaming, artificial intelligence and other commercial technologies may also serve military purposes.

A defining theme was the growing mismatch between traditional investment tools and the realities of modern defence exposure. Revenue-based classifications and conventional ESG datasets can struggle to capture the role of dual-use technologies, while data on conflict-affected and high-risk areas (CAHRA), product end-use and customer relationships remains incomplete. For large diversified portfolios, the practical challenge is therefore one of prioritisation: identifying the indicators that warrant deeper due diligence, engagement or escalation.

The panel also emphasised that stewardship has a particularly important role where regulation and disclosure lag technological development. Investors can use engagement not only to seek improvements in governance and transparency, but also as an information-gathering tool asking questions that external data providers cannot answer about human rights due diligence, end-use controls, AI governance and meaningful human oversight.Across the session, the emerging APAC approach could be characterised as increasingly contextual: retaining clear red lines around controversial weapons, while building more granular analysis of defence and dual-use exposure through governance, human rights, resilience, transparency and active stewardship.

Part I – A Distinct Asia-Pacific Context

The global reassessment of defence investment since 2022 is also visible in Asia-Pacific, but the drivers are different. European discussions have been heavily shaped by Russia’s invasion of Ukraine, while North American investors have often focused on financial materiality and the growth of defence-related technologies. In Asia-Pacific, the conversation sits against long-standing regional tensions, changing security relationships and a technology ecosystem that is deeply embedded in global portfolios.

“The technology driving that spending is very much present in the APAC portfolios so chips, cloud, robotics, AI platforms, etc.”— Yumi Fujita, Robeco

‍The panel noted that rising defence spending may also be changing the economics of defence businesses in parts of the region, including Japan and South Korea. At the same time, the investment implications extend well beyond traditional defence primes. Commercial companies are entering partnerships, joint ventures and acquisitions that can create new defence exposure without fitting conventional sector classifications.For investors in Australia and New Zealand, the debate also has a strong beneficiary and communications dimension. Public concern about armed conflict and human rights is increasing scrutiny of how funds describe exclusions, exposure and portfolio holdings. This makes precision in policy language particularly important.

‍“The exposure needs to be really clearly stated... what do you mean by exposure? Do you mean the production of weapons, the development, the assembly... what do you do about the dual-use tech?”— Estelle Parker, Responsible Investment Association Australasia

‍This creates a dual responsibility: investors need sufficiently nuanced analysis internally, while ensuring that external claims about exclusions or responsible investment remain consistent with investment strategy, legal documentation and actual holdings.

Part II – Dual-Use Technology and the Limits of Traditional Data

One of the strongest messages from the webinar was that traditional product and revenue-based screening is becoming less effective as defence exposure moves into technology layers that serve both civilian and military applications.“The dual-use landscape had become really too nuanced... for a blunt instrument, like exclusion policy.”
— Yumi Fujita, RobecoA semiconductor, cloud platform, AI model, drone, gaming technology or industrial product may have multiple end uses. The same product can appear commercially ordinary at the revenue-line level while being embedded in military systems or conflict-related applications. This means that traditional classifications may provide continuity, but cannot be the sole basis for evaluating risk.

‍“The revenue line... is helpful for continuity... but it cannot be the only thing that we analyse a company, or the whole situation.” — Christine Chow, global investment leader and former Managing Director at UBS Asset
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ManagementThe practical difficulty becomes even more acute when investors seek to assess exposure to conflict - affected and high-risk areas. Panelists described a decline in the availability of some CAHRA-related datasets and highlighted the challenge of translating broad legal and responsible investment frameworks into company-level signals across large portfolios.

“What are those indicators? Which company is doing what, exactly, becomes that trigger forescalation or concern that we then want to take additional steps on?” — Jillian Reid, Mercer

Rather than expecting one definitive list of “responsible” or “irresponsible” defence companies, the discussion pointed toward triangulation. Investors may need to combine ESG data, governance indicators, regulatory filings, contract disclosures, UN databases, specialised research, investigative reporting and direct engagement.

Several practical information needs emerged:
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• clearer identification of conflict-affected and high-risk area exposure;
• company-level indicators that can trigger deeper investigation;
• better understanding of customer and end-use controls;
• greater transparency around sovereign customers, exports and supply chains;
• more granular analysis of partnerships, acquisitions and dual-use applications;
• data that can support prioritisation across public equities, fixed income, sovereign debt and private markets.

The dialogue between investors and data providers was therefore presented as part of the solution. Rather than asking providers for a single verified list, investors can define which indicators are most useful for identifying red flags and determining whether

Part III – Stewardship, Human Rights and AI Governance

The APAC discussion placed particular emphasis on stewardship as both a risk-management tool and a source of investment information. Where data is incomplete, direct dialogue with companies can help investors understand whether appropriate governance exists around product use, government customers, AI systems and downstream human rights risks.

‍“Part of what we are doing is really asking questions that data providers cannot answer.” — Yumi Fujita, Robeco

‍Examples discussed during the session illustrated that stewardship on dual-use technology is not new. Engagement with Asian technology and industrial companies has previously led to strengthened compliance functions, third-party human rights assessments and improved disclosure. What is changing is the scale and speed at which civilian technologies are becoming relevant to defence applications. This becomes especially important for autonomous and AI-enabled systems. The panel stressed that “human in the loop” cannot be treated as a simple checkbox at the moment of deployment. Investors may need to understand how accountability, training data, decision thresholds and human oversight are embedded throughout the design and development process.

‍“We expect companies developing AI-enabled systems to have a documented policy on human control and accountability requirements at every stage of the product lifecycle.” — Yumi Fujita, Robeco

‍Christine Chow similarly highlighted the importance of investor judgement when companies enter new defence partnerships or acquisitions. These transition points can create a particularly useful moment for stewardship, because investors can ask why the partnership is being pursued, how it may change the company’s business model, what governance applies and how much control the company retains over the intended use of its technology.

‍“That is where the investor stewardship power can be amplified if we have a strong framework that underpins it.” — Christine Chow

‍The discussion also reinforced the continued relevance of the UN Guiding Principles on Business and Human Rights, international humanitarian law, the RIAA Investor Toolkit on Human Rights and Armed Conflict, and the forthcoming Guidance on Responsible Investment in Defence (GRID). These frameworks do not remove the need for investor judgement, but they can provide a structured basis for assessing severity, company involvement, governance, exports, end-use, transparency and accountability.

Concluding Reflections

The Asia-Pacific webinar suggested that responsible investment in defence is increasingly becoming a question of how investors govern complexity. The region combines rising defence expenditure, significant technology exposure, diverse security relationships and strong stakeholder expectations—while the information available to investors remains uneven.

Several observations emerged consistently throughout the session:
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• Dual-use exposure is becoming a mainstream portfolio issue. Defence-related risk increasingly sits within technology, industrial and consumer-facing companies as well as traditional defence contractors.
• Revenue screens remain useful, but insufficient. Investors need to understand context, intended use, partnerships, customer relationships and governance rather than relying on a single percentage threshold. CAHRA and company-level data remain a major implementation gap. The practical need is for indicators that help investors prioritise where deeper due diligence is required.
• Engagement is an information-gathering mechanism as well as a stewardship tool. Company responses - and the absence of adequate responses - can themselves be material inputs into investment decision-making.
• Human rights and AI governance require lifecycle thinking. End-use due diligence, meaningful human control and accountability need to be considered from design through deployment.
• Collective capacity-building matters. Dialogue among investors, data providers, companies and standard-setters can accelerate practical solutions where no single dataset or framework is sufficient.

Ultimately, the session did not point toward one universal APAC position on defence investment. Instead, it showed an investor community moving toward more granular, evidence-based and stewardship-led approaches. In a region where the boundaries between commercial technology and national security are becoming increasingly difficult to draw, robust governance, human rights due diligence, transparent communication and informed investor judgement will be central to responsible investment practice.

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