The Defence Secretary Grant Shapps has hit back at the defunding of the defence industry in the name of Environmental, Social and Governance (ESG) considerations, saying it threatens peace and security.
In a joint statement with the Treasury in answer to a Parliamentary Question today, Shapps said: “Defence companies are being excluded from access to debt and equity capital,” a policy which “fails to recognise that the U.K.’s defence industry is essential to protecting our way of life”.
Here’s how it begins.
I wish to make a joint statement with HM Treasury, on behalf of His Majesty’s Government.
The Government is clear the U.K.’s defence sector has an integral role in supporting the first duty of Government: to promote and protect the United Kingdom’s core national interests: the sovereignty, security and prosperity of the British people. That includes supporting allies and partners and contributing to broader international security.
Nowhere is this clearer than in Ukraine – where we continue to have a leading role in providing our Ukrainian friends with our support and with vital military aid to resist President Putin’s illegal and brutal war.
Our defence industrial base underpins our Armed Forces, maintains our continuous-at-sea nuclear deterrent and safeguards our critical infrastructure. The private sector is essential to our national security whether in peacetime or times of emergency. The ongoing maintenance of critical industrial facilities, skills and intellectual property onshore, and the approach we take to sustain these, gives us confidence that we can continue to operate independently, in defence of the country’s interests, without external political influence and protecting the sensitive technologies that underpin our military capability.
Despite this, defence companies are being excluded from access to debt and equity capital, citing Environmental, Social and Governance (ESG) grounds. This not only threatens an important part of the economy that, through MOD expenditure alone, directly and indirectly supports over 200,000 jobs, but it fails to recognise that the UK’s defence industry is essential to protecting our way of life. Such divestment also threatens to increase the cost of procurement, diverting taxpayers’ money away from other defence spending and from public services. The industry’s value to us as a key strategic asset is only increasing at a time of global uncertainty. …
Whilst investors must always be free to make their own choices, they should do so on the basis of the facts, and those seeking to inform those choices through providing ESG ratings should be clearer on their methodology and more prompt to correct errors when these are pointed out. Defence spending helps prevent war and helps support the British way of life, and those of our NATO allies and partners. …
This Government believes that the important values within ESG should not undermine capabilities developed to help us preserve peace and security, without which sustaining those values would not be possible.
While Shapps repudiates this element of ESG, he is at pains to stress that the defence industry is otherwise fully compliant with ESG values, so the statement is hardly a fulsome rejection of ESG. But I suppose the move would fail completely if it wasn’t diplomatic.
Will the Leftist ideologues behind the ESG movement listen to anything a Tory Defence Secretary says? We can but hope.
Read the full statement here.