Question to the Ministry of Defence:

To ask His Majesty's Government what assessment they have made of the impact of the new environmental, social and governance rules on (1) defence companies' costs and ability to access financial services, and (2) Ministry of Defence procurement costs.

Trade associations and individual companies have raised the issue of ESG in discussions with Ministers and officials from across government.

While we have so far seen no evidence that ESG criteria are leading to increased procurement costs, we are aware of instances where companies, particularly SMEs, have found obstacles to accessing financial services.

Officials across Government are working closely with trade associations and the financial sector to understand the nature and extent of the issue, and agree mitigating actions where appropriate. The Government is unequivocal that there is nothing unethical about investing in and providing financial services to the UK defence sector and the financial services sector should not be disadvantaging companies based on their association with defence. On the contrary, a strong national defence is a pre-requisite for the freedoms and rule of law that we often take for granted.

Industry and Government are also showing leadership on all aspects of the ESG agenda as illustrated by the recent launch of the Defence Aviation Net Zero Strategy. We will continue this work with our industrial partners to explore and champion the wider environmental and social benefit of the defence sector.