Share in Defence

Posted: 28th November 2021

Something curious happened this time last year when Serco lost its deal to run the Atomic Weapons Establishment, which manages Britain’s nuclear warheads. The outsourcer’s shares crashed. But after the news, its rating on several ESG indices — which measure compliance with environmental, social and governance metrics — shot up. The message was clear. While financial investors were worried about the loss of some £17 million a year in underlying trading profits, ESG analysts were delighted that Serco would no longer have anything to do with making the missiles carried on the Royal Navy’s four Vanguard-class submarines. ESG investors have shaken up the oil, gas and tobacco industries, and now they’re coming for defence. Concerns that weapons manufacturing could become unpalatable for a broadswathe of shareholders are weighing on share prices. In April, analysts at BNP Paribas pointed out that defence valuations had fallen in line with those for tobacco companies since 2018 — even though, unlike with cigarettes, victims of war are unlikely to sue for damages, and sales of planes and tanks aren’t going to end. Times 28th Nov 2021  https://www.thetimes.co.uk/article/nuclear-weapons-are-the-next-battleground-for-esg-warriors-5dlphlgsc