Defence secretary Grant Shapps: ESG considerations risk undermining UK defence industry

investmentweek.co.uk:

Grant Shapps was appointed as defence secretary on 31 August. Image: Lauren Hurley / DESNZ

In a written ministerial statement on Tuesday (12 September), the secretary said defence companies are being excluded from access to debt and equity capital, citing ESG grounds. 

«This not only threatens an important part of the economy that, through Ministry of Defence 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,» he said. 

Shapps said there was «nothing contradictory between the principles within ESG and the defence industry», noting that the UK defence sector has reflected ESG considerations «in a range of ways».

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«Industry is driving innovation in new technologies to improve sustainability and companies are embedding ESG metrics into their remuneration structures,» he said.

«Additionally, defence companies are exploring how to raise standards across the board, improve access to information and communicate the positive vision of what they are achieving on these subjects.»

Earlier this year, the Treasury published a consultation on a potential regulatory framework for ESG ratings providers, with the aim of improving transparency and promoting good conduct in the ESG ratings business.

In his statement, Shapps urged ESG ratings providers to be clearer on their methodology and more «prompt to correct errors when these are pointed out». 

The defence secretary also said that, alongside the Treasury minister Andrew Griffith, he will continue to engage with defence companies and the financial sector on access to investment and