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Ukraine highlights ethical value of the defence industry, says Serco

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NLAW Ukraine - Vadim Ghirda/ AP
NLAW Ukraine - Vadim Ghirda/ AP

The invasion of Ukraine should remind investors of the ethical value of the defence industry, according to Serco chief executive Rupert Soames.

Serco has defence contracts with the UK, US and Australia. In recent years it has come under pressure to avoid bidding for work managing nuclear weaponry and other defence resources from funds concerned about the ESG (ethical, social and governance) impact of their money.

Mr Soames, a grandson of Winston Churchill, has become an outspoken critic of the trend.

This weekend he said it was anti-democratic to oppose defence contracts with democratic countries and that there is a risk that ESG funds undermine Western armed forces.

Mr Soames said: “I don’t think that type of investing has had an impact on the UK defence yet, but there’s a threat it will.”

“If you see what is happening to Ukraine, it’s easy to see that military defences are a social good and have an inherent social value.”

Serco’s chief executive had already raised concerns of the approach of ESG investors at its capital markets day in December.

He compared the opponents of defence and public order contracts to "people who eat sausages, but don’t want to know how they are made", and accused them of going against the will of elected governments.

Mr Soames also called for harsher sanctions on Russia, and not to exaggerate their impact on the West.

He said: “I think we should keep in perspective the impact of foreign sanctions - western governments should call up Facebook, Google and Netflix and tell them to pull down their Russian services.”

In annual results published last week, Serco announced a 21pc jump in profits to £216m off the back of coronavirus contracts, including NHS Test and Trace.

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