On the go: Local council pension schemes can now invest against the government’s foreign policy, after the Supreme Court ruled a ban on politically motivated boycotts was unlawful.
Judges voted by a majority of three to two on Wednesday against legislation introduced by the ruling Conservative party in 2016, which restricted divestments from UK defence companies and foreign countries by local pension schemes.
The decision was the culmination of nearly three years of face-offs in the courts between the government and campaigners, who saw the legislation as an infringement on local democracies by a party that has repeatedly objected to regional boycotts against national policy.
Ben Jamal, director of the Palestine Solidarity Campaign, a Palestinian rights group that brought the case to the Supreme Court, said the ruling should deter the government from future attempts to limit how local authorities can invest ethically.
The decision “has very, very broad implications, not just for Palestine”, he said. “It is establishing a principle.”
Socially responsible investing has rapidly climbed up the agenda of the UK’s 89 local authority pension funds in recent years, particularly as many of the roughly 5m members demand greater transparency around how their taxpayer-funded savings are managed.
Large amounts of money are likely currently invested in major defence companies including BAE Systems, Meggitt and Rolls-Royce, which are all constituents of the FTSE 100 index.
In a statement, the Ministry of Housing, Communities and Local Government said it was committed to stopping “local boycotts” and “ensuring public bodies take a consistent approach to investments”.
It added: “We will therefore bring back new legislation that addresses the technical points raised by the Supreme Court.”
