Funding defense contractors should be seen as an ethical investment, says Shapps
Funding defense companies should be considered an ethical investment because military spending “helps prevent war,” the defense minister said.
Defense companies have long been excluded from so-called “environmental, social and governance” (ESG) ratings, limiting their access to investors who want to spend their money sustainably.
In a written ministerial statement on Tuesday, Defense Secretary Grant Shapps said excluding the defense industry from ESG ratings was a “mistake”.
He said: “Defense companies are excluded from access to debt and equity for environmental, social and governance reasons.”
Defense spending helps prevent wars and supports the British way of life
The defense secretary added that this “threatens an important part of the economy” and “fails to recognize that the UK defense industry is essential to protecting our way of life”.
He said: “As set out in the Defense Command Paper Refresh, this Government reiterates that there is no contradiction between the principles within ESG and those of the defense industry.”
“On the contrary, strong national defense, including our nuclear deterrent, is a prerequisite for the freedoms (including social freedoms) we often take for granted and for the aspirations that investors and financial services companies seek to fulfill using ESG considerations. “
Mr Shapps, who took over as defense secretary at the end of August, added: “While investors must always have the freedom to make their own decisions, they should do so based on the facts and those who wish to inform those decisions by providing them. “ ESG ratings should be clearer in their methodology and correct errors more quickly when pointed out.
“Defence spending helps prevent war and supports the way of life for the UK and our NATO allies and partners.”
The statement comes almost three months after ministers met defense contractor bosses to discuss whether calls for more ethical investment are preventing the industry from raising capital.
Defense companies have previously indicated that ESG requirements have reduced investor interest, although BAE Systems CEO Charles Woodburn said earlier this year that this had become less of an issue since Russia’s invasion of Ukraine.
BAE’s share price has risen around 75% since the invasion.
Experts have also pointed out that the ESG view of defense contractors is more nuanced, with few blanket exclusions of defense contractors, but rather specific rules for weapons that indiscriminately harm civilians.
Other analysts suggest that wider problems in the UK stock market are to blame for the woes of UK-based companies, as British investors continue to pour money into European defense companies.
Mr Shapps said the Government would “continue to explore and promote the wider environmental and social benefits of the defense sector”, while he and Finance Minister Andrew Griffith would “work with defense contractors and the financial sector on access to investment and financial services for critical industries.” National security”.
https://www.standard.co.uk/business/business-news/funding-defence-companies-should-count-as-ethical-investment-says-shapps-b1106568.html Funding defense contractors should be seen as an ethical investment, says Shapps
