End woke war on defence: Pressure on ESG funds to back the sector
Leading military figures and politicians have issued fresh calls for more City investors to back the defence industry as conflict rages between Israel and Hamas.
Ministers have previously warned that Britain’s long-term security is being put at risk by environmental, social and governance (ESG) investors who shun defence firms.
The case for ESG funds to invest in defence companies gathered steam in the City following Russia’s invasion of Ukraine.
It gained further traction after Hamas attacked Israel, which launched retaliatory airstrikes.
Traditionally, defence firms have been boycotted by ESG investors who have seen them as merchants of destructive weaponry.
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However, this view is increasingly being challenged by those who believe the industry is vital for protecting democracy around the world.
Admiral Lord West, a former First Sea Lord, said: ‘Defence firms are crucially important and work hand in glove with our military so that we can actually fight and win against our enemies.’
‘That seems to me a very worthwhile endeavor and something that should be encouraged rather than penalized in the City.’
City Minister Andrew Griffith said it is ‘misguided’ to exclude defence firms purely on ESG grounds.
He added that the recent conflict between Israel and Palestine as well as the war in Ukraine show that the defence industry is ‘more important than ever’.
ESG investing rules generally ban putting money into companies that produce weapons such as cluster bombs that can cause indiscriminate harm to civilians.
Brad Greve, finance boss at BAE Systems, said: ‘Conflict is still a part of our world and hence the need for a strong defence to protect a free society. Investors should encourage rather than punish the defence industry.’
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