The head of Saab, the Swedish defence group, has joined the growing chorus of executives warning that the sweeping trend for ESG investment could lead to the sector being seen as unsustainable and potentially losing out on funding as a result.
Micael Johansson told the Financial Times he was “a bit frustrated” that “when it comes to sustainable finance, we tend to be viewed as something that is not sustainable”. It was important for people to understand “what we do and what we stand for”, he added. “We do provide things that keep societies and people safe.”
Johansson said Saab had discussed the trend with the company’s shareholders and other stakeholders. The point in question, he said, was about “funding” and “how we attract capital to our business”.
Saab is the latest European company to sound the alarm over the issue. Concerns have been focused in particular on draft proposals for the EU’s classification system for a “social taxonomy”. The directive lays down a number of overarching conditions that economic activities must meet to be deemed as contributing positively to society. Draft proposals submitted last year grouped the defence industry as harmful, alongside tobacco.
Alessandro Profumo, chief executive of Italy’s Leonardo and president of ASD, the European trade federation, told lawmakers in Brussels this week that “there is no sustainability without security, and no security without defence capabilities and industry”.
Johansson’s comments on Friday came as Saab lifted its dividend after reporting full-year 2021 results with sales, order bookings and profits all rising. Sales rose 11 per cent year on year to SKr39.15bn ($4.2bn), while order bookings grew 3 per cent to SKr43.57bn ($4.7bn). The company said its earnings before interest, depreciation and tax were SKr4.8bn ($500mn), up from SKr2.8bn the previous year.
The company cautioned that risks from pandemic-induced supply chain shortages still remained but that it had largely mitigated the impact on its business.
Separately, Johansson said the rising tensions in Ukraine had spurred interest from countries looking to improve their defence capabilities. He cited more “off-the-shelf products”, such as sensors for monitoring and ammunition for support weapons and missile systems, as examples of orders that some defence forces wanted to prioritise.
