UK ministers: denying funding to defence enterprises a security risk
British government ministers Andrew Griffith and James Cartlidge have expressed concerns about the potential impact on Britain's long-term security due to City of London investors who are refraining from supporting the arms industry based on broad ethical concerns. They argue that it is counterproductive for institutions to divest from defence and security companies during a time of war in Europe. The ministers emphasise that peace relies on a robust defence with an industrial base and highlight the parallel universe where the defence sector is being shunned.
They express worry about a misunderstanding within investor preferences and the defence sector, leading to potential capital shortages for defence companies. Despite the defence sector's efforts to incorporate environmental, social, and governance (ESG) considerations, the ministers note that some investors are divesting from defence companies over ESG concerns, which they believe undermines the UK's security and democratic freedoms. This issue was discussed in a recent meeting between ministers and executives from BAE Systems, Babcock, and Qinetiq. The defence industry faces ongoing challenges related to ESG concerns affecting investment and bank support.