The UK’s second largest trade union, UNISON, has launched a campaign for members to lobby pension funds to divest from companies supporting the Israeli occupation of Palestine.

It advises members to cite the UK Law Commission’s recent update and guidance on fiduciary duty, which it said made clear where trustees could invoke ethical concerns that were financially important.

The trade union, with more than 1m members mainly in the public sector, said its campaign was primarily focused on Local Government Pension Schemes (LGPS) with more than £200bn (€275bn) in assets, and some private sector defined benefit (DB) plans.

UNISON said it intended to extend the campaign to private sector defined contribution (DC) investors in due course.

Over the last two years, European institutional investors have increasingly become wary of investments in companies associated with the Israeli settlements and occupation in Palestine.

This led to numerous divestments from companies directly associated with supporting the settlements, including banks and construction firms.

However, this has run contrary to recent developments in the US, where the state of Illinois saw its elected chambers unanimously pass legislation requiring the five state-funded pension schemes to identify companies boycotting Israel and divest their holdings.

The UK trade union said its campaign seeks to influence companies, via their pension scheme investors, that are associated with Israel’s occupation, settlements and barrier.

It is a supporter of the international Boycott, Divest and Sanctions (BDS) campaign being run against Israel.

“Some companies have factories located in the West Bank settlements and often employ Palestinian workers, paying them far less than they would have to pay Israeli workers, without providing them with holiday pay, sick pay or the right to join a trade union,” UNISON said.

“Others provide services to the Israeli military, checkpoints or prisons.”

The trade union said investment managers for UK pension funds should be put under pressure to engage with companies and stop involvement in the occupied territories, given the evidence of engagement working on other matters.

It said the occupation was illegal under international law and that companies associated with it were at risk over reputational damage, not to mention litigation.

“Influencing multinational companies is not easy,” it said, “but they will listen to their major investors, including our pension funds.”

In the Netherlands, the €189bn pension fund manager PGGM divested from five Israeli banks involved in funding settlements in areas of Israeli-occupied Palestine.

PGGM’s decision was triggered by a request from main client, healthcare worker scheme PFZW, but resulted in a political storm resulting in the Dutch ambassador’s being summoned by the Israeli government, and pro-Israel protests outside its offices.

The NOK7trn (€806bn) Norwegian Pension Fund Global had previously excluded property and construction companies operating in Israel over concerns they were violating the European Convention on Human Rights.