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Banks, investors, and pension funds are being urged to reconsider their stance on investing in weapons manufacturers, with over 100 Labour MPs and peers advocating for these companies to be deemed “ethical” investments. This move aims to channel more funding toward the defense industry, particularly in support of Ukraine and the UK.
The open letter, signed by 96 MPs and six peers, calls for financial institutions to eliminate restrictive anti-defense regulations that they argue hinder essential support for military preparedness. This stance reflects a growing backlash against environmental, social, and governance (ESG) policies that some perceive as obstructive to defense funding.
Recent developments, including Donald Trump’s discussions regarding U.S. military aid to Ukraine, have accelerated defense spending initiatives across Europe. UK Labour leader Keir Starmer announced plans to raise defense spending to 2.5% of GDP from the current 2.3%. In France, President Emmanuel Macron has made similar promises, while Germany’s incoming Chancellor Friedrich Merz has expressed intentions to revise strict fiscal policies to facilitate increased military expenditure.
In line with these efforts, the Italian aerospace and defense company Leonardo has entered a partnership with Turkish drone manufacturer Baykar, aimed at rapidly scaling the production of unmanned systems for Ukraine within Europe.
Leonardo’s CEO, Roberto Cingolani, noted in an interview that Trump’s critical remarks about Europe have galvanized a sense of urgency among European nations regarding their defense budgets.
The Labour MPs who endorsed the letter contend that the ESG criteria adopted by certain investment entities have imposed constraints on defense financial support, a sentiment echoed by leaders in the arms industry. However, it’s important to note that there’s a lack of clarity on whether ESG measures have genuinely stifled investments in defense firms. The defense sector’s market valuations have surged, with BAE Systems witnessing its stock value nearly tripling since the onset of the war in Ukraine.
Additionally, Rolls-Royce, a significant player in manufacturing fighter jet engines and submarine reactors, has also enjoyed a significant uptick in stock performance due to rising defense expenditures. The stock values of other companies like Melrose and Babcock International have more than doubled since Russia’s invasion of Ukraine.
Among the signatories of the letter is George Robertson, a former NATO Secretary-General who is currently involved in formulating a strategic defense review for the Labour party.
The letter underscores the argument that there is no more ethical investment than providing comprehensive support to the Ukrainian populace in their time of need.
Leading the initiative is Alex Baker, the MP for Aldershot, a city closely associated with British military presence due to its significance as a garrison location. His election victory in Aldershot last year marked a significant shift, as Labour secured the seat for the first time since its establishment in 1918, highlighting not only the party’s resurgence but also its strengthened ties to military advocacy.
Starmer has consistently shown support for the UK defense sector, contrasting sharply with the more critical perspective held by his predecessor, Jeremy Corbyn, who had long campaigned against arms trades with nations implicated in human rights violations.
Baker emphasized the readiness of local businesses in Aldershot and Farnborough to enhance the UK’s defense capabilities but criticized poorly designed ESG rules for hindering necessary innovation within the defense industry.
In response, Emily Apple of the UK-based Campaign Against the Arms Trade condemned the notion of relaxing ESG criteria, arguing that the companies likely to benefit are those profiting from conflict and destruction globally.
Source
www.theguardian.com