Councillors responsible for the £10bn Merseyside Pension Fund have delayed a decision over its investments in companies active in occupied Palestinian territories.
Earlier this week, MPs backed an amendment to the upcoming public service pensions and judicial offices bill, which will allow ministers to issue guidance against public sector pension schemes from pursuing politically motivated boycotts and divestment policies.
Conservative MP Robert Jenrick tabled the amendment, having cited the Boycott, Divest and Sanctions movement against Israeli settlements in an article in The Times written on February 21, along with the deliberations being made by Wirral Council over its policy on the matter.
The Merseyside Pension Fund is invested in nine companies listed by the UN as having a presence in the regions, which are recognised by the UK government as currently being illegally occupied by Israel. Some companies active in the regions have been accused of facilitating their development.
I’ve never known any issue to attract so many emails, so many comments, from so many people
Councillor Brian Kenny, Wirral Council Pensions Committee
The government says that it seeks “a just peace between a stable, democratic Palestinian state and Israel, based on 1967 borders, ending the occupation by agreement”.
In November, the Wirral Council Pensions Committee was asked by a member about its investments in these nine companies, which include Expedia and Motorola, and their compatibility with the fund’s responsible investment policies.
The committee agreed to consider a report into the matter at a meeting on February 23.
Engagement, not divestment
The committee attended two workshops as part of its research into the issue, attending a session on responsible investment in December and another on human rights in January.
At the February 23 meeting, councillors debated over asking the fund’s director of pensions, Peter Wallach, to engage directly with the nine companies active in the occupied territories. They did not discuss divesting from the businesses.
Labour councillor Brian Kenny spoke out against the proposals, suggesting that they would inappropriately single out Israel. The Labour Party opposes the BDS movement.
“I’ve never known any issue to attract so many emails, so many comments, from so many people as the issue before us today,” he told the committee.
Kenny also suggested that the proposals would represent a conflict with the committee’s fiduciary responsibilities. Pension trustees are required to make decisions with the aim of maximising investment returns.
The committee’s legal officer reminded Kenny that Wirral councillors are, however, allowed to consider ethical factors as long as a policy is considered to command the support of the fund’s members. Any subsequent action cannot cause a material detriment to the fund.
Independent councillor Jo Bird, who in November 2021 was expelled from the Labour Party after speaking at a ‘Labour Against the Witchhunt’ meeting, reiterated that no decision over divestment would take place at the February meeting and that the discussion was about further engagement.
The Wirral Council Pensions Committee has published a letter on its website written to Bird by Amnesty International at the start of February, which called on the Merseyside fund to divest from companies operating in the settlements.
“This would send clear signals to other companies, fund managers and pension funds that are linked to Israeli settlements via their business relationships that such connections are increasingly regarded as unethical and unacceptable,” wrote Peter Frankental, Amnesty International’s programme director economic affairs.
A BDS bill could also block divestments
The committee voted seven to four to delay making a decision over the matter to a later meeting.
Kenny sought the delay since taking action now could constitute a waste of time, given the potential scope of Jenrick’s amendment to the upcoming pensions bill.
A separate government BDS bill is also expected, which in theory could make it even harder for schemes to boycott investments associated with Israel.
MPs back amendment against political divestments by LGPS
MPs in the House of Commons have approved an amendment that would allow ministers to issue guidance stymieing the ability of public sector pension schemes, including the Local Government Pension Scheme, to pursue politically motivated boycotts and divestment policies.
The Local Government Pension Scheme Advisory Board, which is engaging with Michael Lynk, the UN special rapporteur on human rights in the occupied territories, had expected Jenrick’s amendment to fail given the prospect of the BDS bill. The amendment was backed by 296 votes, with 81 against.
Former pensions minister Sir Steve Webb had similarly told Pensions Expert he expected the amendment to lack sufficient support in parliament.
Alongside Amnesty International’s letter, Wirral Council has published a letter from UK Lawyers for Israel, which reminded councillors of their fiduciary responsibilities to their members and said there was no consensus for divestment from areas under Israeli administration.
