Defence Industry: Environmental, Social and Governance Requirements

Jim Shannon Excerpts

Wednesday 28th January 2026 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

As always, it is a pleasure to serve under your chairship, Ms McVey. I congratulate the hon. Member for Windsor (Jack Rankin) on setting the scene and the hon. Member for York Outer (Mr Charters) on his excellent contribution; both had plenty of knowledge and information. It is always nice to see the Minister in her place, and I wish her well in her role. I remind her gently of the invitation to come to Beyond the Battlefield in Portavogie in my constituency; maybe she will be able to confirm that shortly—it is nothing to do with this debate, but I wanted to take that opportunity to remind her.

Our armed forces protect our freedoms and deter aggression in a world that has become increasingly volatile. The defence sector employs tens of thousands of people across the United Kingdom of Great Britain and Northern Ireland, while sustaining thousands more in supply chains, and underpins our sovereign capability. In today’s climate, where threats have become much more serious and less predictable than at any time since the end of the cold war, the 2025 strategic defence review highlights the importance of private investment, stating that the sector must make a

“concerted effort to unlock private capital and expertise”,

and outlines the environmental, social and governance role in this sector. I am reminded that the pastor of my church, the Baptist church in Newtownards, said last year that there are 67 wars in the world. It is a world at war, in the truest sense.

From June 2028, ESG ratings providers will be regulated by the Financial Conduct Authority, with new rules on transparency, governance, conflicts of interest and stakeholder engagement. There has been a significant shift towards identifying those factors since Russia’s invasion of Ukraine, which is always in our minds; the pictures and stories from Kyiv in the paper today remind us of the pressure the Ukrainians are under. Morningstar data shows that exposure to aerospace and defence has increased across European funds, including those with ESG labels. That reflects a growing recognition that a strong defence industrial base is essential for security. This Government’s defence industrial strategy sector plan must emphasise the importance of making the defence sector more attractive to private investment, as the Government continue to support and increase it, which I congratulate them and the Minister on. The money they have allocated for Northern Ireland is very welcome, and I appreciate it.

I want to highlight two important examples in Northern Ireland that demonstrate both the challenges and the opportunities. Thales UK, located in east Belfast, is a key player in defence innovation. I have visited Thales on several occasions with my right hon. Friend the Member for Belfast East (Gavin Robinson). I remind the House of the £1.6 billion deal announced in March 2024 for 5,000 lightweight air defence missiles, which are one of the reasons why Ukraine has been so successful in holding her own. Production of those missiles is currently supporting approximately 700 jobs at Thales, while also supporting Ukraine’s defence efforts in the current conflict.

The work done at Thales highlights Northern Ireland’s key position in, and contribution to, the UK defence industry. As I said to one of the Minister’s colleagues in the Chamber, I am very keen to ensure that Northern Ireland’s defence sector can see more of the contracts and opportunities. I know the Government want to do that—I am not saying they are not doing it—but I emphasise that again.

Thales has been proactive in engaging with ESG principles by contributing to the drafting of the UK defence ESG charter in 2024 through ADS Group, integrating ESG criteria into supplier selection and supporting the UK’s low-carbon transition through energy-efficient technologies and cyber-resilience. Far from being restricted by ESG, Thales continues to demonstrate that responsible, ethical practices do strengthen capacity to compete, while attracting local talent and building investor confidence in a sector that is vital to our national security. I am very encouraged by Thales’s introduction of apprenticeships this year, which it is committed to. Thales pays some of the apprentices’ fees, and they get a good wage. That is really constructive and positive, and it comes through the business that the Government here do with Thales and what Thales does as a company.

I am proud to raise another example of Northern Ireland’s contribution to our defence industry: the historic Harland & Wolff shipyard in Belfast, which is one of only three naval shipyards in the UK equipped to carry out major Ministry of Defence work. We are very pleased that it is central to Government policy once again. In 2023, Harland & Wolff became part of the Team Resolute consortium with Navantia UK and BMT, after having been awarded a £1.6 billion contract by the MOD to build three fleet support ships for the Royal Fleet Auxiliary Service.

The impact on the shipyard will be significant. It will include upgrades such as new automated panel lines and advanced robotics, and the technology will move forward to meet the ESG criteria. Harland & Wolff is committed to long-term, ethical production and sustainability while providing jobs in Northern Ireland, and it is really proactive in meeting those criteria. If we want to move forward with a policy, we have to bring companies with us, and that is clearly happening in Northern Ireland. To be fair, I think it is happening across the whole of the United Kingdom. I urge the Minister to commit to issuing joint guidance with the Treasury and the FCA to financial institutions to clarify that responsible investment in UK defence companies, which is vital for national security and jobs in places such as Belfast, can be fully compatible with ESG principles.

I will conclude with this comment. I very much welcome the fact that the Government are prioritising private investment in defence, but we must build on that by providing clearer policy guidance. It is in the national interest of the United Kingdom of Great Britain and Northern Ireland to ensure that our defence industry continues to be supported by Belfast-based firms such as Thales and Harland & Wolff. I ask the Minister to identify and support measures that unlock investment, increase contractual opportunities for businesses in Northern Ireland, in particular, and maintain our defence sovereignty.