UK (Parliament Politics Magazine) – Labour MPs urged banks to revise ESG regulations, arguing that defense investments like missiles and fighter jets should be considered ethical.
As The Telegraph reported, over 100 Labour MPs and peers have urged financial institutions to classify missiles and fighter jets as “ethical” investments.
What did Labour MPs urge banks to do regarding ESG guidelines?
A letter sent on Thursday to Britain’s banking and pension fund leaders, endorsed by 103 Labour backbench MPs and peers, urged them to revoke “anti-defence” ESG guidelines that exclude military-related investments.
The letter stated,
“For the United Kingdom to both support Ukraine in its hour of need and ensure defence of our nation, we must rethink ESG mechanisms that often wrongly exclude all defence investment as ‘unethical.’”
It said, “
There can be no more ethical investment than giving the Ukrainian people every ounce of support that can be mustered by their allies,”
adding,
“The battlefields in which they fight are rapidly evolving, and the technology with it. This means turning on the financial taps to the firms that stand ready to deliver the best of British innovation, capability and skills.”
The letter praised ESG investments for their societal impact, but it insisted that they should also align with the “Ukrainian cause.”
The letter continued,
“We urge financial institutions immediately to sweep away ill-considered anti-defence rules which are acting as a barrier to doing what is right.”
It added,
“There is no silver bullet when it comes to Ukraine, but our allies need to know that we are fully committed to providing the supplies that they so desperately need.”
What did Alex Baker say about outdated ESG rules?
The letter was coordinated by Alex Baker, who became the Labour MP elected in Aldershot during the previous general election. The town, often referred to as the Army’s spiritual home for over 150 years, was also the former base for the Parachute Regiment for more than six decades.
Ms Baker stated,
“Britain’s ability to support Ukraine is being held back by outdated ESG rules that are stopping banks and financial institutions from investing in our defence sector because it is unethical.”
She added,
“The most ethical investment we can make right now is firing up our defence industrial base so that we can support Ukraine, defend our country and create jobs across the UK.”
How did Labour MPs’ letter spark left-wing backlash?
Diane Abbott, the former shadow home secretary under Jeremy Corbyn, has led a left-wing criticism in response to the letter.
Responding to Ms Baker’s comments, Ms Abbott said,
“There is nothing ethical about investing in armaments to be used in genocidal situations like Gaza.”
The MP for Hackney North and Stoke Newington has distanced herself from Labour, previously condemning the party for its “drive to continue the faltering war in Ukraine.”
A fellow left-wing Labour backbencher and ex-shadow cabinet member under Mr Corbyn rejected calls to cut welfare spending to support defence, calling them “absolute rubbish.”
He stated,
“This is the exact opposite of what people need after years of weaker wages and crumbling public services.”
What did Jonathan Reynolds say about ESG standards and the defence industry?
Jonathan Reynolds, the Business Secretary, raised concerns about the influence of ESG standards on the defence industry. He highlighted the potential issues faced by the sector due to these guidelines. He argued that these criteria are often misapplied to the industry and hinder its growth.
Mr Reynolds told Sky News,
“On ESG criteria, I think it’s about misapplication. I think it’s about not understanding the legitimate role, first of all, that defence has to play in our national life economically as well as industrially.”
He added,
“But also alongside that, I would say sometimes it’s not a prohibition on defence. It’s about understanding the risks of that industry, it’s different in terms of the contracts you have, the relationship to geopolitical events.”
What did Rachel Reeves say about reforming ESG standards for defence?
The Chancellor, Rachel Reeves, has committed to speeding up the reforms in the ESG sector, with plans to establish a single set of rules to limit environmental groups from preventing funding for the defence industry.
She said,
“We also need more intelligent investment and, if the opaque ESG ratings are blocking private sector investment, this has to change.”
Ms Reeves added,
“I understand the urgency of tackling this. Which is why I make a promise to Telegraph readers – I will take action on this issue as quickly as possible so that our defence sector gets the private investment it needs to keep our country safe.”
She is facing mounting pressure from a group of almost 40 Labour MPs to reconsider the party’s stance on inheritance tax for family farms.
What did Keir Starmer say about UK’s defence spending amid rising tensions?
The recent denial of US military support and intelligence to Ukraine by newly elected President Donald Trump has triggered a rush among European countries to quickly increase their defence spending.
Keir Starmer revealed that Britain will increase its defence spending to 2.5% of GDP, up from 2.3%. French President Emmanuel Macron has pledged to raise military funding, while Germany’s future Chancellor, Friedrich Merz, aims to relax debt limits to accommodate the rise.