Companies involved in the defence industry have recently found themselves shunned by many investors who seek to wear the ESG badge, which signifies investments do right by the environment, society and have high governance standards.
Take Serco, the outsourcer that does everything from housing asylum seekers to running large parts of NHS Test and Trace.
The Telegraph reported last November that Serco had dropped out of the bidding for a Government contract managing nuclear weapons, for fear of falling foul of the ESG brigade.
Writing in The Times a month later, boss Rupert Soames said companies like his were finding it “harder, or more costly, to finance themselves in public markets”.
In yesterday’s annual results, he groused that “a company’s social value appears to be in the eye of the individual analyst or institution who beholds it”.
To many of these City money men, things like nuclear weapons are a grubby business that does more harm than good to society.
But as BAE Systems boss Charles Woodburn pointed out this week: “You can’t have a focus on ESG without strong security underpinning that.”
Nothing brings that home more clearly than the missiles raining down on Kyiv.
Defence is like insurance: you hope to never have to use it, but you’ll be glad it’s there if you do. In a perfect world, we wouldn’t need fighter jets and nukes. But as Soames put it this week: “Our job is to navigate with the world as it is, not as we would like it to be.”
Investors spending their days thinking about ESG ratings would do well to reflect on his comment.