Writing in the Mail on Sunday, city minister Andrew Griffith and defence minister James Cartlidge said it is “perverse” that as war rages in Europe, “there is a parallel universe where the defence sector is being shunned”.
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They said the “troubling misunderstanding” within investor preferences over ESG criteria risks “starving” the industry of capital at competitive valuations.
They explained the British defence sector has already embraced ESG considerations but companies within the space have been “swept up in ESG investment groupthink, with profound consequences for us all”.
The two minsters added: “The biggest [consequence] is that divesting from defence companies undermines Britain’s long-term security and democratic freedoms – not least the freedom to support environmental and social causes in the first place.
“A failure to invest in defence and security firms also damages the economy. Defence is a huge nationwide creator of employment, with 141,000 direct jobs and many more indirectly across the supply chain.”
They also argued the systems and technologies that have been first developed in the defence sector have had much wider applications – noting the internet, satellite navigation and jet engines as examples.
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As a result, they argued failure to invest in defence companies and bolster technological innovation, “robs investors and society alike”.
Griffiths and Cartlidge concluded: “Investing in defence companies is a good thing – for our values, for investors and for society. If Russian tanks roll further into Europe, the freedom we all take for granted would go out the window.
“The quicker investors realise this and come on board the better.”
