UK Defence Startups Are Being Denied Banking Services Under ESG Rules
UK-based defense startups are struggling to secure banking services due to strict ESG (Environmental, Social, and Governance) compliance policies. Banks are increasingly categorizing defense-related businesses as high-risk, leading to the 'debanking' of legitimate firms.
Why it matters
This highlights a growing conflict between corporate ESG mandates and national security interests, potentially stifling innovation in the defense sector.
– – Share Successive UK governments have made the case for more and better defence spending, encouraging British start-ups to invest in this fast-growing and rapidly changing sector.
Against this background, founders would be forgiven for expecting a permissive regulatory environment, but regulation lags politics, and many companies have run into compliance issues dating back to when defence spending was naïvely thought to be immoral.
Will Morris is the co-founder of Eyebrook Technologies, a British start-up focused on surveillance and counter-drone systems. Having already secured financing of £700,000 and the support of the government, the former British Army officer was confident of being able to open a bank account for his fledgling business.
“I did a load of research on bank accounts and there are certain banks who won’t touch defence companies for various reasons,” Morris said. “All the research I did said ‘go to Barclays’, so I applied.”
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