Can ESG Redefine the Future of Defence Procurement?

In recent years, the imperative to integrate Environmental, Social, and Governance (ESG) principles into defence procurement has gathered unprecedented momentum. Historically, defence procurement has prioritised robustness, cost efficiency, and cutting-edge technology to ensure national security. However, the evolving geopolitical landscape, coupled with the urgent global climate agenda and heightened social accountability, demands a paradigm shift: defence acquisition must now reconcile operational excellence with sustainability and ethical governance.  

The US Department of Defence embedded climate and environmental considerations across planning, infrastructure, and supply-chain resilience in its Climate Adaptation Plan and 2022 Sustainability Plan, tying mitigation and adaptation to operational readiness. 

Embedding ESG principles in defence procurement unlocks long-term value, enhances supply chain resilience, and aligns defence strategies with global sustainability commitments, while navigating the unavoidable challenges unique to the sector. 

The Case for ESG Integration in Defence Procurement 

Defence procurement is no longer immune to the global ESG movement, which is shaping corporate governance and investment worldwide. Embedding ESG requirements does not undermine defence priorities; instead, it reinforces accountability in managing environmental impact, social responsibility, and transparency. Integrating ESG into defence procurement fosters innovation, promotes transparency, and encourages the development of sustainable technologies such as energy-efficient military platforms and low-emission manufacturing processes.  

Environmental stewardship is critical as the defence sector accounts for an estimated 1–2% of global CO₂ emissions, approximately 500 megatons to 1 gigaton annually, primarily emitted by military platforms (65–70%) and stationary assets (around 30%). The UK Ministry of Defence reported emissions of 3.1 million tonnes of CO₂ equivalent between April 2022 and 2023, representing half of the UK central government's emissions and 1% of the nation's total greenhouse gas emissions. This carbon footprint necessitates urgent action through green procurement and sustainable supply chains, making ESG considerations a strategic priority.  

Socially, ESG compliance boosts worker welfare and human rights standards within often complex supply chains, while governance mechanisms help prevent corruption, enhance public trust, and improve regulatory compliance. According to Sustainalytics' 2025 ESG risk ratings for military contractors, European defence manufacturers generally manage ESG risks more effectively than their counterparts in North America and Asia, reflecting the region's stricter regulatory standards. Robust governance practices, therefore, improve defence procurement integrity and stakeholder confidence.  

Industry responses: targets, commitments, and recent cases 

Major defence suppliers are setting measurable climate targets and publishing progress, which procurement officials should treat as verifiable performance signals. 

Lockheed Martin has set a 2030 target to reduce absolute Scope 1 and 2 emissions by 36% from a 2020 baseline and to match 40% of its global electricity use with electricity generated from renewable sources by 2030. These commitments are published in the company's sustainability management plan.  

BAE Systems has set a target to achieve net zero for Scope 1 and 2 emissions by 2030 and to work towards net zero by 2050, with targets aligned to science-based methodologies and publicly reported in its climate-related materials.  

MBDA has published a roadmap that outlines a path to net-zero greenhouse gas emissions by 2050 for the group, demonstrating that European prime contractors are integrating long-term carbon pathways into their business planning.  

These are not academic commitments. They are measurable corporate targets that contracting authorities can reference in tenders and when evaluating suppliers. 

Challenges in Embedding ESG in Defence Procurement 

Despite the clear benefits, defence procurement confronts several ESG-related challenges. The complex technological requirements and special materials involved often lack sustainable substitutes. Developing environmentally friendly alternatives for military aircraft, naval vessels, and weapons systems demands significant R&D investment, potentially increasing short-term costs.  

Moreover, balancing social responsibility with defence effectiveness presents dilemmas; ensuring that products meet stringent national security standards while adhering to labour practices and human rights norms is not straightforward.  

Additionally, ESG compliance protocols often entail extended reporting and audits, which can protract procurement cycles and risk operational readiness in defence.  

From a financial perspective, defence companies' heavy reliance on energy-intensive manufacturing processes results in substantial emissions across scopes 1, 2, and 3.  

The latter, accounting for over 90% of the total footprint, involves emissions generated during the operational use of defence products such as tanks and fighter jets. Though there is growing demand for fuel-efficient defence equipment, the commercialisation of green alternatives lags due to low immediate ROI and long innovation timelines.  

Strategic ESG Practices Transforming Defence Procurement 

Leading governments and organisations are responding with comprehensive sustainability strategies that are embedded in their defence procurement frameworks. 

The UK Ministry of Defence aims to achieve net-zero emissions in its operations and infrastructure by 2040 and a carbon-negative military estate by 2050. The Defence Supply Chain Strategy complements this bold strategy, optimising supply chain resilience, reliability, and environmental sustainability.  

Key ESG-driven procurement initiatives include: 

• Green Technology Adoption: Increasing use of energy-efficient materials, autonomous systems to reduce resource use, and alternative energy sources for military applications.  
  

• Circular Economy Integration: Emphasising the continuous reuse of materials in designing and manufacturing defence equipment to minimise waste and resource depletion.  
  

• Robust ESG Due Diligence: Morningstar Sustainalytics recommends a case-by-case evaluation of defence contractors' ESG risks, encouraging investments mainly in firms with medium ESG risks, which are prevalent in European markets.  
  

• Governance and Transparency: Enhancing anti-corruption measures, regulatory compliance, and ethical procurement practices to ensure fair competition and public oversight.  
  

• Social Responsibility: Strengthening labour rights within the defence supply chain and promoting diversity and inclusion.    

These efforts underscore a shift from cost-driven procurement to value-based sourcing that factors in long-term environmental impact and societal benefits. 

Recommendations for ESG Integration in Defence Procurement 

To capitalise on ESG benefits while mitigating risks, defence procurement leaders should: 

• Embed ESG in Procurement Policies: Develop clear, sustainable procurement guidelines that prioritise suppliers with strong ESG performance metrics and certifications.  
  

• Invest in Innovation: Allocate R&D resources to accelerate the development of green technologies tailored for defence applications, striking a balance between cost and long-term operational and reputational benefits.  
  

• Enhance Supply Chain Transparency: Use data-driven platforms for real-time monitoring of supplier ESG compliance to avoid risks associated with unethical practices.  
  

• Foster Cross-Sector Collaboration: Engage with governments, industry consortia, and ESG experts to harmonise standards and share best practices. 

  
  

• Prepare for Regulatory Evolutions: Stay ahead of emerging ESG reporting requirements and adapt procurement systems accordingly to ensure compliance.  

  
  

Conclusion: ESG as a Catalyst for Sustainable National Security 

ESG integration in defence procurement is no longer a theoretical ideal but a practical necessity that aligns national security with global sustainability imperatives. The defence sector's environmental impact, social responsibilities, and governance challenges require a strategic approach that fosters innovation, enhances transparency, and strengthens supply chains. While initial costs and complexities exist, the long-term benefits include resilience against climate risks, improved stakeholder trust, and operational efficiencies. 

By embedding rigorous ESG practices, defence organisations can safeguard not only their national security mandates but also the planet's future sustainability. The path forward lies in balancing the imperatives of defence readiness with the demands of sustainability, thereby creating a defence procurement ecosystem that is resilient, ethical, and future-ready.