Defence Industry: Environmental, Social and Governance Requirements

Adam Dance Excerpts

Wednesday 28th January 2026 Westminster Hall

[Jack Rankin (Windsor) (Con)]

I beg to move,

That this House has considered the impact of environmental, social and governance requirements on the defence industry.

It is a pleasure to serve under your chairmanship, Ms McVey. I thank the Minister and hon. Members for making time to attend what I hope will be a consequential debate.

Last week, we all heard the Canadian Prime Minister speaking at Davos. He is not quite my flavour of politics, but he spoke a truth: we live in a much more dangerous world and we cannot rely on the international rules-based order to protect us. We are quickly learning an ancient truth that hard power is the most material reality. If we continue to play by imaginary rules while our enemies, and sometimes even our allies, are playing a different game altogether, we are destined to lose, with disastrous consequences for our country and for our children.

Sadly, many of those old assumptions are embedded and entrenched in our financial services industry, universities and politics. In turn, that is having a deeply damaging effect on British defence companies and ultimately on our ability to defend ourselves.

[Adam Dance (Yeovil) (LD)]

Defence firms such as Leonardo in Yeovil are happy to invest in environmental and social products. Leonardo has invested heavily in Yeovil college and entertainment venues and is building its own solar farm—but does the hon. Member agree that, if defence firms are to meet those obligations, the Government need to award contracts such as the new medium-lift helicopter, and that, if not, we will lose the benefits for our community forever?

[Jack Rankin]

The hon. Gentleman makes a powerful point about Leonard, which builds helicopters in his constituency, and I am sure the Minister has heard his pointed remarks.

Parties of both colours have pledged to increase defence spending. This Labour Government have committed to an uplift of 3% in the next Parliament, but when will we see it? What proportion of it will simply make up historical military pensions? How much is actually going to cutting-edge research and development? Currently, only 4% of defence spending goes to small and medium-sized enterprises, which often lead the way on innovation.

What if I told the Minister that there is billions of pounds in funding waiting to be unlocked that would cost the taxpayer nothing, be a huge boost to the economy and improve our national security? It is sitting in the private sector. The importance of private investment was recognised in the strategic defence review, but we are not properly utilising it. Right now, British defence companies are deprived of much of that potential investment because funds of various descriptions prioritise sustainable investment or environmental social governance —ESG—regardless of return. Sometimes those funds actively rule out defence, explicitly or implicitly, in the rules they set.