Rishi Sunak has urged investors to back defence companies amid concerns that they are being spurned by environmental, social and governance (ESG) funds. In a statement accompanying a rise in military and industrial spending, the Prime Minister stressed that supporting western arms companies was compatible with so-called ethical investing practices. He said: “There is nothing more ethical than defending our way of life from those who threaten it.” At the same time, a joint statement was released by the Treasury and Investment Association on Tuesday which added that the defence industry “contributes to our national security, defends the civil liberties we all enjoy, while delivering long-term returns for pensions funds and retail investors”. It added: “Investing in good, high-quality, well-run defence companies is compatible with ESG considerations as long-term sustainable investment is about helping all sectors and all companies in the economy succeed.” It comes after ESG funds showed reluctance to invest in arms companies or nuclear energy producers. These funds, which have grown in popularity in recent years, are meant to give investors peace of mind by ensuring their money does not help businesses that could be considered “unethical”. However, the ESG trend has faced a backlash more recently...