Lhe geopolitical context reminds us every day: Europe and France must prepare for the risk of a hostile act or the need to provide arms to a friendly country.
This preparation involves in particular a rearmament effort by the member countries of the European Union, which have truly become aware of the need for this effort on the occasion of Russia’s invasion of Ukraine, after decades of under -investment in the military field, particularly in France.
The French defense industry is well placed to contribute to this rearmament and to the strengthening of European sovereignty in this area.
However, several factors weaken European companies in the defense sector seeking financing to develop the best technological solutions or increase their production capacities.
We will only retain here the most paradoxical of these factors, namely the tacit or sometimes explicit exclusion of these companies from the scope of so-called “sustainable” finance, in application of environmental, social and governance (ESG) criteria, at the same time. such as tobacco, alcohol or gambling. Thus, European financial organizations are sometimes reluctant to support companies in the defense sector due, in particular, to the contradictory signals sent by certain European authorities when developing ESG standards.
An unfavorable competitive position
However, as stated on December 14, 2021 Florence Parlythen Minister of the Armed Forces, before the National Defense Committee of the National Assembly: “If we start thinking that defending our citizens is not a sustainable activity, then we won’t last very long. »
Since then, despite the war in Ukraine, things have not fundamentally changed and reluctance remains, even if it is expressed less openly.
The European Association of Aerospace and Defense Industries (ASD) noted in a note dated October 11, 2022 the financing difficulties encountered by companies in the sector, which affect their valuation and their ability to attract and retain talent, particularly in SMEs, thus placing the European defense industry in an unfavorable competitive position compared to non-European industry.
Despite the evolution, since last year, of European bodies in terms of ESG standards, it nevertheless remains, as the Minister of the Armed Forces noted in his response from September 27, 2023 in the Senate [à une question de Catherine Dumas (Les Républicains)]that : “Financial players, keen to meet the demands of their clients and influenced by these various first draft reports, have already developed their own ESG criteria excluding certain activities relating to the production or trade of arms. »
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