Defence Sector Banking Services: Environmental, Social and Governance Rules

Baroness Neville-Rolfe Excerpts

Monday 26th October 2026 Lords Chamber

[Lord Pitt-Watson (Lab)]

Again, I am in desperate agreement with the noble Lord. The first communication they are going to receive is from their regulator, the Financial Conduct Authority—I have it here—which is going to be clear that there are no sustainability requirements that prevent companies serving defence firms. When they serve defence firms, they should consider the risks associated with them, but they should do that proportionately and consistently across all the companies they are funding. If this FCA action does not work, I am sure I will have another round of Questions in a few months’ time.

[Baroness Neville-Rolfe (Con)]

My Lords, like others, I have been appalled by this long-standing problem with finding bank accounts, especially for the small and innovative defence companies that we really need at the current time. On 8 June, the FCA said:

“Our sustainability rules do not prevent investment in or finance for defence companies”.


I am not sure what today’s welcome announcement changes, because banks continue to have their own ESG-style exclusions—and I know ESG is an area in which the Minister is an expert. So, can he undertake to sort that out as well?

[Lord Pitt-Watson (Lab)]

I think that is also covered in the FCA letter. One can overdo how significant ESG disclosures and regimes have been in preventing investment in defence. At one time, that was an issue, and there has been some concern among supporters of allowing ESG investment, along with some reform. My co-author, Stephen Davis, of Harvard Law School, is among those who has campaigned on this. I note that RUSI agrees that ESG disclosure regimes generally do not prevent investment in defence, and the push now being given by the FCA is the right next step for us to take to ensure that defence companies are treated in exactly the same way as any other companies seeking finance.