UK Islington Council weighs divestment from Israel-linked firms

After a new report found overwhelming support from pension fund members, Islington councillors hope the borough will be the first local authority in England to divest from arms manufacturers. [GETTY]Islington Council has been given a clear mandate to pursue divestment from companies linked to Israel and human rights abuses after more than 80% of pension fund members backed the move on Monday, councillors have told The New Arab. The Labour-run north London authority is now weighing its next steps after an independent consultation found overwhelming support for proposals to strengthen its responsible investment policy, divest from companies operating in illegal Israeli settlements, and sell its £1.4 million stake in US technology firm Palantir, which generates significant revenue from military contracts, including with the Israeli army. While councillors say the consultation demonstrates strong backing from pension fund members, they acknowledge the council must first overcome legal hurdles before any final decision on divestment can be taken. "The people whose money it actually is want to see this divestment happen," Green Party councillor and London Assembly member Benali Hamdache told The New Arab. "So I think it's really important that that's heard." The report was presented to the council's pensions committee on 21 July following a six-week consultation of pension fund members. Chaired by Labour councillor Paul Convery, the meeting attracted around 20 members of the public, the largest attendance he said he had seen at a pensions committee meeting. Although the committee accepted the report's recommendations and agreed to seek further legal advice, campaigners who have spent more than two years pressing for ethical divestment expressed frustration that councillors did not immediately commit to removing the investments. "I think people came to this meeting expecting that there would be full steam ahead," Hamdache said. In England, local authorities oversee pension funds worth millions of pounds, providing retirement income for council workers ranging from cleaners and social workers to councillors themselves. Campaigners have increasingly urged councils to use those investments to influence global human rights issues by divesting from companies complicit in abuses. To produce the report, the council commissioned a digital consultation asking pension fund members whether they supported three proposals relating to investments in companies implicated in human rights abuses. The first proposed strengthening the fund's responsible investment policy so that companies linked to human rights concerns would first be engaged through shareholder votes before investments were withdrawn if concerns remained unresolved and divestment would not significantly harm the fund's financial performance. Some 87% of respondents supported the proposal, while 7% opposed it. Among those who disagreed, the most common concern was that financial returns should remain the fund's priority. The second proposal asked members whether the fund should divest from companies listed on a UN database of businesses operating in illegal Israeli settlements in the occupied Palestinian territories. The consultation stated that doing so would represent only a minor adjustment to the portfolio and was unlikely to have a significant financial impact. Support for the proposal stood at 83%, compared with 10% who opposed it. Those against the measure largely argued it was politically motivated or not in the best interests of the pension fund. The third proposal concerned the fund's £1.4 million investment in Palantir Technologies. Although the software company does not manufacture weapons, it earns significant revenue from military contracts, including with the Israeli army. 80% of respondents supported divesting from Palantir, while 13% opposed the proposal, again primarily citing concerns that financial returns should take precedence. Despite the overwhelming backing across all three proposals, council officers told the committee that it had a legal duty to consider the concerns of members who opposed divestment, while ensuring any investment decisions do not significantly harm the fund's financial performance. Convery dismissed suggestions that ethical investing necessarily comes at a financial cost, describing it as "mythology" that responsible investment reduces pension returns. He argued that proceeds from divested assets are routinely reinvested elsewhere, as had happened with many pension funds shifting away from fossil fuel companies towards renewable energy investments. The proposal concerning companies operating in illegal Israeli settlements is expected to face the greatest legal scrutiny. During the committee meeting, Convery warned that councils pursuing similar policies could face legal challenges and said authorities should proceed carefully to ensure they meet their fiduciary obligations. "Islington council does have a really big spotlight on it," Hamdache said. "It does have a looming fear of a judicial review." Convery said he had already been advising other councils considering similar consultation processes, urging them to be "very careful" during the preparatory stages to minimise legal risks. Following local elections in May, several councils across London and elsewhere are exploring stronger ethical investment policies after newly elected councillors, particularly from the Green Party, campaigned on pro-divestment platforms. "It's really important that other boroughs step up their ambition," Hamdache said. "I think there's a strength in numbers." The pensions committee has accepted the consultation report and will continue seeking legal advice ahead of its next meeting on 15 September, though Convery has not confirmed whether councillors will make a final decision on divestment at that session.