The local government pension scheme (LGPS) advisory board is investigating whether to provide pension funds with further legal advice following fresh allegations that LGPS administering authorities are breaching the law in relation to the ongoing humanitarian disaster in Gaza.
The Scheme Advisory Board (SAB) is also planning to ask the local government minister for a statement on issues raised by the Palestine Solidarity Campaign (PSC).
Last week the campaign group sent LGPS administering authorities a legal opinion that they are under an obligation to take steps to divest from companies enabling violations of international law by Israel in its war and occupation of Gaza and the West Bank.
It has also written to the Secretary of State Angela Rayner “informing her that she too is under a legal obligation to issue guidance to prevent all LGPS funds investing in companies enabling Israel’s crimes”.
The LGPS advisory board said the international law matters raised by PSC’s latest initiative “are clearly more in the competence of central than local government”, as acknowledged by the PSC’s position paper.
Research circulated by the PSC earlier this year stated that LGPS funds in England & Wales had £12.2bn (€14bn) invested in companies that further Israel’s violations of international law.
PSC director Ben Jamal said: “This legal opinion puts all councils and the Secretary of State on notice: divestment from companies enabling Israel’s atrocities is not optional, it’s a legal imperative.”
‘Evolving situation’
In an update on its website, the SAB said the PSC letter asks for a response within 21 days, but that “the Board believes that it is more important to take the necessary time to consider the arguments made and the appropriate response to them”.
It noted that after the PSC last year sent letters with similar allegations, the SAB had commissioned legal advice and that although the principles in that advice still applied, “we recognise that that the situation in Gaza is an evolving one and we need to consider whether, and if so what, further advice it would be helpful to provide funds and who would be best placed to provide that”.
It also said that the latest letter and position paper from the PSC presented more extensive, complex and specialist legal arguments than last year’s letter, and made no reference to the subsequent legal advice the SAB had obtained.
“In the meantime,” the SAB said, “funds may wish to review their Responsible Investment policies in relation to human rights abuses and ensure they are both satisfied with the content of those policies and confident they are being applied effectively in practice.”
In the legal advice commissioned by the SAB last year, senior barrister Nigel Griffin stated that, in his view, local authorities were not subject to obligations imposed directly by international law and nor was there “any public law obligation to have regard to such matters”.
He made clear that his legal opinion was solely about what administering authorities might be obliged, rather than entitled, to do by way of refraining or divesting from certain investments.
In a more general legal opinion commissioned by the SAB, Griffin earlier this year concluded that a local authority pension fund can take into account “ESG” or non-financial factors when making investment decisions if they do not cause financial detriment to the pension fund and there is good reason to think that scheme members would support the decision.
Avon consults members
According to the PSC, 17 councils have committed to support divestment from companies “complicit in Israel’s violations of international law”.
Avon Pension Fund is this month surveying its members to ask them if they think the fund should continue investing in aerospace and defence companies.
According to a local media report, earlier this year the Avon pension fund committee voted to 10 to three to continue investing in aerospace and defence rather than divest.
At the time the chair of the committee said the committee’s final decision would be informed by a member consultation.
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