Sky News understands that Andrew Griffith, the economic secretary to the Treasury, and James Cartlidge, the defence procurement minister, have called in executives from BAE Systems, Babcock International and QinetiQ for discussions on the impact of a tsunami of environmental, social and governance (ESG) guidelines.

Chris Cummings, chief executive of the Investment Association, which counts institutions managing trillions of pounds of assets, will also attend.

One source said there were indications that UK-based investors were underinvested on a relative basis in companies including BAE and QinetiQ.

"The government does not support campaigns of disinvestment of those helping to defend peace and rule-based order," the source said.

It comes at a delicate time for the defence industry, parts of which have seen a surge in sales in the wake of Russia's invasion of Ukraine.

BAE, which has a market capitalisation of about £28bn, saw its shares soar after the outbreak of war, but they have since drifted down.

Its group finance director, Brad Greve, is attending the meeting.

A BAE Systems spokesperson said: "We welcome the opportunity to be part of discussions with industry peers and representatives from government on ESG investing in defence.

"The conflict in Ukraine has driven greater recognition of the value of the defence industry, but it's important that we continue to enhance understanding of the role our sector plays in contributing to both national security and economic prosperity."

Sir Roger Carr, BAE's former chairman, sought to address the issue head-on at the end of his tenure, telling investors: "Companies like ours in the defence industry have an important role to play in enabling governments to provide security, defending the lives and freedoms of people around the world and supporting international stability."

A Treasury source said the objective of the meeting was to understand whether ESG factors were acting as a barrier to investment in the defence industry, and how the government might be able to help overcome these barriers.

An IA analysis suggests that the total value of capital invested in the aerospace and defence industry through IA Sector funds is just over £20bn.

Research from Morningstar cited by the IA showed that Europe's six largest listed defence companies listed in Europe - BAE Systems, Thales and Dassault Aviation in France, Leonardo in Italy, Rheinmetall in Germany and Saab in Sweden - had seen their share prices rise between 35% and 136% since the invasion of Ukraine.

In recent months, ESG investing has begun to face greater scrutiny, with Larry Fink, the BlackRock chief who has been nicknamed "the godfather of ESG", saying this week that he was now "ashamed of being part of this conversation".

Mr Fink warned that the term had become excessively politicised and said he was no longer using it.

The Treasury and the IA both declined to comment.