Business secretary tells banks to ignore activists and back defence firms

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Ministers will urge banks and investors to ignore activists by stepping up support for the UK’s defence sector following pressure over ethical concerns and operational problems.

Business secretary Jonathan Reynolds will call on defence and finance bosses to consider their environmental and social policies, without reducing support for the sector, at a meeting he is hosting with the minister for defence procurement Maria Eagle.

The meeting will look at the challenges that environmental, social and governance (ESG) principles and changing perceptions of defence pose to growth and investment.

Ministers are increasingly concerned that the UK could lag if operations, research and development are not funded after they identified defence as vital to the government’s growth mission.

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Mr Reynolds said: “With our industrial strategy we’re taking the pro-business, pro-growth approach the sector needs to drive investment in every part of the country.

“Our world-leading defence sector is vital to the economy, supporting thousands of high-skilled, high-paid jobs across the UK.”

The meeting comes after a raft of anti-war protests against banks by activist organisations such as Palestine Action.

UK funds cut their investment in defence companies, such as BAE Systems, by 9 per cent since the start of 2022, according to last year’s London Stock Exchange data.

Two separate studies also showed that defence firms found accessing banking services a barrier to growth, and had issues with opening an account or securing investment because of ESG concerns.

“This government is committed to working together with industry to tackle the challenges they face to attracting investment, and that’s why roundtables like these are so important as we work to give investors the confidence they need for years to come,” Mr Reynolds added.

Santander told the Treasury Select Committee earlier this year that it had closed 280 accounts of public administration and defence businesses, and Lloyds Bank closed 20 accounts in the same sector.

Kevin Craven, chief executive of ADS, said: “Our defence sector not only underpins our national security and deterrence capability, but also provides jobs to more than 164,000 people directly throughout the country.

“For our sector to continue to deliver the social value it is renowned for – alongside its role as a key driver of economic growth – government’s engagement with industry is pivotal to strengthen the UK’s position as a place for defence companies to invest and grow, and from which to export.”