‘Defence is Not the Same as Drugs or Pornography’: NATO Pushback Against ‘ESG Debanking’ of Arms Companies

The debanking of defence companies supplying Western militaries is becoming so severe figures including the Secretary General of NATO have been compelled to appeal to the public to say they support banks having investments in weapons companies.

Defence firms should not be placed in the same category as illegal drugs or pornography as risky or immoral investments by banks, the Secretary General of NATO has said, an implicit confirmation that hard-left campaigns to “debank” arms companies is being felt.

Speaking to an audience in Brussels this week, Secretary General Mark Rutte said while ploughing more money into the military now comes with a cost to other areas governments may wish to spend — such as social security — it should be seen as insurance against higher future spending. Billions on arms to deter adversaries from trying their hand means trillions that wouldn’t have to be spent on winning a big future war successfully prevented, he said.

That Ukraine presently spends ten times the proportion of its GDP on defence that most European states do is a “harsh reminder that freedom does not come for free”, Rutte said, but also stating it was up to politicians and the public to ensure defence companies could actually provide what NATO militaries need to provide that deterrence at all, or at least as cost-effectively as possible.

Part of the responsibility lies with governments, Rutte said, saying politicians must “stop creating barriers between each other and between industries, banks and pension funds”, stating these “only increase production costs, stifle innovation and ultimately hamper our security.”
But the more remarkable message was to the public, citizens of NATO states who Rutte said had to now “Tell your banks and pension funds it is simply unacceptable that they refuse to invest in the defence industry. Defence is not in the same category as illicit drugs and pornography.”
Campaign groups have worked tirelessly to deny finance to defence companies for years by piling pressure on banks, and as revealed by debanking campaigner Nigel Farage, in some cases bank employees bring their own political views and prejudices into the workplace when deciding who to deny finance to, as well.

This pressure pushes banks to not provide services to defence companies, with activists frequently citing nuclear weapon systems to equipment provided to particular countries left-wing campaign groups particularly dislike, such as Israel. The campaign to slow or prevent Western arms companies from selling equipment to Israel has recently even broken out of simple letter-writing campaigns to actual acts of sabotage and violence, with factories smashed and people injured.

With the pressure campaign against banks, even reputable newspapers play this game, with London financial newspaper City AM sharing the language of these groups in a report this year, stating that some British banks “have come under scrutiny for being among the top 10 major European investors in arms companies”. The paper cited Martin Rohner, executive director of the Global Alliance for Banking on Values, said: “We call on the financial industry to stop fuelling the production of, and trade in, weapons and arms, and let’s start to all profit from peace, not war.”

So-called Environmental, Social, and Governance (ESG) criteria, which codifies the standards of left-wing campaign groups into rulebooks for businesses has also been cited as a reason behind banks dropping defence, even as NATO and the West faces up to what military planners call a less safe world.

It is evident these anti-defence campaigns are being felt and is being considered as a real threat by defence leaders. As well as NATO boos Rutte’s comments, the British government has also hit similar points this week. The Times of London noted:

Ministers will call on banks and investors to increase support for Britain’s defence sector, amid warnings that corporate virtue signalling is holding back the industry in the face of international threats… it is “time to shift towards a more positive attitude to defence” and move beyond “narrow negative perceptions” of investing in the sector.

It stated the UK government’s business secretary will tell financial executives not to bow to “small but vocal campaign groups” and stated a fifth of smaller defence companies — which are often the most agile and innovative — have found being denied banking because they work in the military industry a “barrier to growth”.

In remarkably clear-sighted comments — for a left-wing British lawmaker — the business secretary reportedly told financial leaders it is hypocritical for them to benefit from operating in an extremely secure country while turning their noses up at the way in which that security is guaranteed and pointed to ESG as being a source of friction.

While these latest comments are perhaps the loudest and most clearly articulated yet on the problem of banks bending the knee to boycott groups, they are not the first. Before the UK general election flipped control of Parliament, the Conservative government also spoke up on activists and ESG undermining defence firms supplying the British military and others.

The comments came as it was revealed that just two British banks had denied or shut down accounts to defence and aerospace companies at least 300 times in just one year. Tobias Ellwood, a former junior defence minister, a defence select committee chair, and Army Reserve lieutenant colonel said of the news: “Let’s not allow well-intentioned ESG standards to jeopardise our defence capabilities in a dangerous world – it’s time to get this sorted”.

Then-treasury Committee chairman Dame Harriett Baldwin rhetorically asked of the figures and the revelation one bank operating in the UK couldn’t answer whether it would open an account for defence contractor BAE systems, one of the UK’s largest companies: “How on earth have we got to the position where a company working to preserve our national security can’t be assured of access to a bank account?”.

Dame Harriett said: “We cannot have organisations in this country systematically debanking legitimate firms or industries because their board turns its nose up at their line of work. If their work is legal then they should be able to access a bank account… Banks’ shareholders demanding environmental, social and governance policies may inadvertently be putting national security at risk. This cannot go on.”

In 2023, then-Defence Minister Grant Shapps outright called ESG policies a threat to the UK defence industry. He said: “This not only threatens an important part of the economy that, through MoD expenditure alone, directly and indirectly supports more than 200,000 jobs, but it fails to recognise that the UK’s defence industry is essential to protecting our way of life.”

Also pointing to the fact that a safe and stable West is the basis upon which financial institutions have the freedom to generate profit for their shareholders, Shapps said: “a strong national defence, including our nuclear deterrent, is a prerequisite for the freedoms we often take for granted. The important values within ESG should not undermine capabilities developed to help us preserve peace and security.”

The state of Western defence firms is evidently a serious preoccupation of NATO leaders, both in the alliance headquarters and in national capitals. The fact nations made the most of the post Cold War ‘Peace Dividend’ to maximise social spending and freeing up capital for the economy is very positive, but had left the West inflexible and unable to react to adversaries quickly, these critics say, noting Russia is massively outproducing NATO in missiles.

In November, NATO’s most senior military officer Admiral Rob Bauer stated businesses need to “be prepared for a wartime scenario”. He said war and preventing war is a “whole-of-society event”, explaining: “while it may be the military that wins battles, it is the economy which wins wars”.