LGPS seeks UN clarity on Israel investment comments

Lynk, who works with the Office of the High Commissioner for Human Rights, wrote to the Local Government Pension Scheme in December requesting that it divest from any holdings linked to the contested settlements in so-called Palestinian territories, arguing that the LGPS “can play a transformational role in demonstrating the ethical validity of a more robust approach to investing in conflict-affected areas, as well as […] in respecting international humanitarian and human rights law”.

As Pensions Expert reported at the time, he asked that LGPS funds conduct enhanced human rights due diligence for all companies listed on the OHCHR database and beyond that “may be involved in the illegal Israeli settlement economy”, and then to divest from any of those holdings if those companies cannot give assurances that they have removed themselves from that economy. 

In addition, he asked that the LGPS ensured companies in high-risk, conflict-affected areas around the world are a priority for the scheme’s environmental, social and governance strategy.

Minutes from an LGPC meeting last month confirmed that the LGPS Advisory Board, along with the LAPFF, are looking to arrange a call with Lynk to clarify his comments. 

“Of particular interest is whether the letter was sent in a personal capacity or on behalf of the UN,” the minutes stated.

They will also ask how a business identified as one “involved in certain specified activities related to the Israeli settlements in the Occupied Palestinian Territory” can be “removed from the database when it is no longer involved in the ‘specified activity’”.

Councillor John Fuller, chair of the Local Government Association, said he had received a number of emails on the issue, and noted that “other groups hold similar views about investments in companies associated with arms, smoking and climate change”. 

“LGPS pension funds have a duty to scheme members and a responsibility to provide value for money to taxpayers. They should be able to fulfil those responsibilities without being hampered by such pressures,” the minutes added.

Jeff Houston, head of pensions at the Local Government Association and board secretary at the LGPS Advisory Board, reminded the committee that the Law Commission’s position is that administering authorities can consider non-financial factors when making investment decisions, provided that these do not have a material impact on returns.

As Pensions Expert reported in 2020, the option to divest from Israeli settlements on ethical grounds was opened when the Supreme Court ruled in favour of the Palestine Solidarity Campaign in its case against the government. 

At the time, the government said it was committed to stopping “local boycotts” and would be introducing legislation to re-establish the ban.

That legislation has yet to appear, but Jeremy Hughes of the pensions officer group at the Department for Levelling Up, Housing and Communities assured the committee that the government “remains committed to its manifesto commitment to introduce a ban on disinvestments that are not in line with government policies”. 

“This will require primary legislation and they do not currently have a parliamentary slot to introduce this legislation,” the minutes stated.