Pressure from ethical investors has reportedly forced outsourcer Serco to drop out of the race to manage Britain’s nuclear weapons arsenal.
Best known for its involvement with NHS test and trace during the coronavirus pandemic Serco is believed to have had plans to compete for contracts with the Atomic Weapons Establishment, which makes and maintains warheads.
Serco abandoned its bid after investors warned that if the FTSE250 company began working on nuclear weapons they may have to dump shares to meet Environmental, Social and Governance (ESG) standards, the Telegraph first reported. A spokesperson for Serco declined to comment on the news.
The outsourcer is the latest company being forced to take a cautious approach to Government work as a result of investor ESG commitments.
The creation of the International Sustainability Standards Board (ISSB) at the COP26 climate summit could strengthen the role of ESG further by providing a global framework for ethical business behaviour.
Serco which saw revenues of £2.1bn in the first six months of 2021 operates across five main sectors – defence, justice and immigration, transport, health and citizen services.
It previously operated the Atomic Weapons Establishment as part of a joint venture with Lockheed Martin and Mitie.
However, the government renationalised it earlier this year over concerns that the set up was monopolistic. The decision came as a blow for Serco which had signed a contract to manage the establishment until 2025.
Serco’s rival Mitie is reportedly holding talks about whether to pursue new contracts with the Atomic Weapons Establishment as part of a joint venture with Jacobs. If Serco bows to investor pressure the government will be left with fewer procurement options which could lead to higher costs for the taxpayer.
The company’s share price is up 4.44 per cent this year to date, trading at 129.3p when the market closed on Friday.