Values-based investors are asking tough questions about what their money is funding. Many are looking to reduce exposure to global conflict – and to the corporations, institutions and governments connected to it.
This movement has been building for years. But when we first explored the idea of screening global conflict out of investment portfolios, the focus was largely on corporate exposure: companies tied to weapons manufacturing, conflict zones or the financial systems that enable them. For many values-based investors, that was the most visible and actionable place to start.
But the conversation has evolved since then.
“There’s been a notable rise in investor education,” says Genus Portfolio Manager Darryl Brown. “Clients are asking tough questions. They’re curious, thoughtful and increasingly, there is much more agency and intention around where their financial capital goes – and where they don’t want it to go.”
That growing awareness is starting to surface a more complex question: should conflict-related divestment expand beyond companies to include governments themselves?
That shift is changing not only what investors are concerned about, but where they’re looking inside their portfolios.
How global conflict is changing investing priorities
A lot has changed geopolitically since we last explored this topic. But many of the underlying concerns have only intensified as global conflicts continue to shape political and economic realities around the world – and closer to home.
The last several years saw student-led protests¹ and calls for divestment that helped push institutional investment practices into the mainstream conversation. And public scrutiny of institutional investing has remained high.
“People are saying, ‘I want to understand what I actually own. Some would love to invest more in Canada. Others want to reduce exposure to U.S. companies.” – Darryl Brown, Portfolio Manager, Genus
While large-scale institutional change tends to move slowly², those conversations have not disappeared even though widespread protests have largely taken a pause. “The conversations are still happening,” Brown says. “But it takes time to work with investment committees, which include people with varying views. But we are seeing more integration of considerations beyond just financial returns.”
At the same time, individual investors are becoming more engaged with the details of their own portfolios. Brown says many clients are no longer satisfied with broad assurances around responsible investing. “People are saying, ‘I want to understand what I actually own,’” he says. “Some would love to invest more in Canada. Others want to reduce exposure to U.S. companies.”
And increasingly, investors are also examining the actions of governments themselves – and whether sovereign debt exposure aligns with their values. “For Canadians who are kind and pragmatic, that feeling of being attacked by our closest neighbour has been such a betrayal,” Brown adds. “Many are saying ‘no, I don’t want to travel to the U.S.’ Some are trying not to buy anything from the U.S. Others would love to invest more in Canada and some don’t want to invest in the U.S. at all.”
Those concerns are also prompting investors to look more closely at the different ways conflict exposure can appear within a portfolio – including areas many people rarely think about.
Where conflict exposure shows up in investment portfolios
Conflict exposure can show up in portfolios in several different ways. The most obvious is through equities – companies directly involved in weapons manufacturing, military contracting, surveillance technology or supply chains connected to conflict zones. This is also where most responsible and impact investing frameworks have traditionally focused their screening efforts.
The second layer – financial intermediaries – is often less visible to investors. Banks, asset managers and other institutions may finance, lend to or invest in companies connected to controversial activities, even if those companies are not directly held within a portfolio itself.
But increasingly, a third category is entering the conversation: sovereign exposure.
“U.S. treasuries are widely used across many diversified portfolios. But what happens when it’s a government that isn’t aligned with your values?” – Darryl Brown, Portfolio Manager, Genus
In simple terms, sovereign debt means lending money directly to governments through the purchase of government bonds – fixed income products that provide stability and liquidity to any portfolio. These investments are a foundational part of the global financial system and are commonly held within diversified portfolios. “U.S. treasuries are widely used across many diversified portfolios,” Brown says. “But what happens when it’s a government that isn’t aligned with your values? Or a government that is accused of violating international humanitarian law, environmental protection treaties or human rights conventions?”
Investors who once focused primarily on corporate behaviour are now examining whether they are comfortable lending to governments whose actions they may fundamentally disagree with.
Rethinking exposure to U.S. treasuries
Brown recently wrote about one client, Alissa Hamilton, who requested to divest from sovereign debt.
“This feels like I’m investing in war… and massacre.” – Alissa Hamilton, Genus client
Hamilton had been closely following political developments in the U.S. and questioned whether holding U.S. treasuries aligned with her values. “This feels like I’m investing in war… and massacre,’” Hamilton said to Brown.
Until this point, U.S. treasuries had been the best place for her to park undeployed assets. “It’s always been the most well regarded, liquid and secure investment class out there,” Brown says. “And the default placeholder in the investment world.”
But the conversation led to replacing Hamilton’s U.S. treasury exposure with the Canadian equivalent – Canadian government bonds. “We said ‘If that’s what you want, we can do that,’” Brown says. “That’s now an option for impact investors. We can invest in a way that excludes direct exposure to U.S. treasuries.”
Reducing exposure is not always simple. Sovereign screening is still one of the least defined areas in responsible investing. Unlike corporate ESG frameworks, there is no widely agreed standard for how to evaluate governments through an investment lens. That leaves questions that don’t have simple answers: which international laws or conventions should be used as reference points, when is a violation considered sufficiently established to act on, and how should investors respond while events are still unfolding?
At Genus, these questions are currently handled on a case-by-case basis, as well as through our broader controversy screening framework.
A framework for making values-based investing decisions
Individual investors can also look more closely at the alignment between their portfolios and their values by leveraging a consistent way of working through the questions that come up.
Here’s a simple framework that can help ground those decisions:
1. Identify exposure
Start with what you actually own – including areas that are often overlooked, such as fixed income and government bonds.
2. Understand the real-world connection
Look at how each holding links back to real-world activity. That might include corporate operations, financial systems or sovereign borrowing.
3. Evaluate alignment
Consider whether that connection is consistent with your values and what matters to you as an investor.
4. Explore alternatives and trade-offs
If something doesn’t align, what are the realistic options – and what changes in returns, liquidity or structure might come with them?
This kind of framework doesn’t produce a single right answer. But it does create a structured way to think through increasingly complex questions as portfolios evolve.
It also helps to look beyond headlines. Market activity and media narratives don’t always move in step, and decisions driven purely by short-term events can miss the broader structure of a portfolio.
Finally, this is not something investors need to navigate alone. Working with an advisor can help translate values into practical portfolio adjustments, including options that balance alignment with liquidity, risk and return considerations.
“It’s okay to go digging and ask these questions,” Brown says. “It can be intimidating to know what you’re looking at, but it’s a fair question to ask. And if where you’re at doesn’t align, there are alternatives out there.”
Interested in exploring how to build an investing strategy that aligns with your values? Speak with a Genus advisor today.
References:
Burga, S., & Popli, N. (2026, January 19). Protesters Are Calling on Universities to Divest from Israel. Here’s What That Means. TIME. https://time.com/6974063/divestment-explained-campus-protest-israel/
Hyslop, K. (2025, April 18). Did Divestment Protests Succeed at UBC? The Tyee. Retrieved May 14, 2026, from https://thetyee.ca/News/2025/04/18/Did-Divestment-Protests-Succeed-UBC/
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