The boss of Britain’s biggest asset manager yesterday insisted that putting money into defence firms can be ‘responsible’ amid a growing backlash against ‘woke’ investing.
Legal and General chief executive Antonio Simoes made the remarks as City firms are being urged to back the sector amid threats to UK and European security intensifying.
‘We have investments in most global stocks including those of defence companies,’ Simoes said as L&G published its annual results for 2024.
‘There is no reason in principle why investing in defence companies cannot be in line with responsible investing.
‘Countries may need to defend themselves… UK defence companies can be invested in.’
His comments came after banks and fund managers have been urged to scrap the restrictions that exclude defence investments as ‘unethical’, due to concerns that ‘woke investing’ is holding back Britain’s military spending and national security.
On target: Defence shares including London-listed giants BAE Systems and Rolls-Royce have soared in recent weeks
Defence shares including London-listed giants BAE Systems and Rolls-Royce have soared in recent weeks.
Stocks were boosted after UK and European leaders committed to spending more on defence after US President Donald Trump’s intervention in Russia’s war on Ukraine. But there are concerns that environmental, social and governance (ESG) rules have squeezed funding to arms firms.
Many pension firms limit or block investment in defence companies due to ESG rules, which also exclude controversial sectors such as oil and gas, and tobacco.
Supporters of the industry have argued that investment in arms firms is ethical and essential to support Ukraine and defend freedom in Europe.
‘Responsible’: Legal and General chief exec Antonio Simoes (pictured) said UK defence companies can be invested in
A group of 100 MPs and peers last week called on fund managers to include arms’ company stocks in ESG funds.
L&G, which provides life assurance and retirement savings, does not invest in businesses that produce ‘controversial weapons’, such as landmines, cluster bombs and chemical weapons.
And it will not fund conventional defence companies that provide arms to ‘high-risk countries’. The company refused to provide details on which nations were deemed to be high-risk.
Around £4.6billion of L&G’s assets under management are in funds where clients have specifically asked for all defence stocks to be excluded.
The company has around £1.1trillion of assets under management in total. It does not have a blanket ESG policy that excludes arms stocks.
The group yesterday unveiled a £500million share buyback as part of its plans to hand more than £5billion back to investors within three years after reporting higher earnings for 2024.
Pre-tax profits more than doubled from £195million in 2023 to £542millon.
Simoes, who took over as chief executive at the start of last year, has slimmed down the business by selling its housebuilding division Cala for £1.35billion and its US protection arm for £1.8billion.
It is now focused on three core units: institutional retirement, asset management, and UK retail pensions and protection.
The group has also created a corporate investments division which houses parts of the business earmarked for offloading.
‘We now have a plan in place for the disposal of each of the remaining assets in our corporate investments portfolio as we continue to simplify our business and unlock value to redeploy into our strategic businesses,’ the group said.
Analysts at RBC Capital Markets said that the profits were lower than expected. L&G shares slipped 2.3 per cent, or 5.6p, to 239.3p.
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