Waltham Forest Council to pull investments from firms linked to arms trade

A London council has said it will withdraw its pension investments in firms linked to arms producers.

Labour-run Waltham Forest Council says £773,000 of its £1.1bn pension fund “appears to be invested in companies that may derive some element of income from arms”.

It says the decision is in line with its “beliefs” and it has updated its “ethical investment policy”.

Local campaign group Waltham Forest for a Free Palestine (WF4FP) has been calling for the council to take the action, known as “divesting”, because of the ongoing Israel-Gaza conflict.

Israel says it is defending itself, following the deadly attacks last October by the Palestinian militant group Hamas, which is proscribed by the UK government and others as a terrorist organisation.

The decision was taken by the council’s pensions committee, whose members act as trustees and have the job of deciding how the fund should be invested in the best interests of the scheme’s members.

The BBC understands the move is to include cutting financial ties with firms involved in supplying arms not only to Israel, but to any country.

Its chair, councillor Johar Khan, said the north-east London authority had taken a responsibility to invest the fund ethically, which it took “extremely seriously”.

“We work hard to balance this responsibility with the important task of ensuring the fund performs well and continues to support the people who rely on it,” Mr Khan said.

The local authority told the BBC the decision to divest was subject to a “robust definition” of the term “arms trade”, but this definition may become “better refined as the sources of information become more comprehensive”.

It said while a small portion of its pension fund was held in firms involved with producing arms in some way, the fund had “zero investment” in companies that had arms identified as their main source of income.

Mr Khan said: “This is a complex task that will take some time, and we will keep the community and the pension fund recipients informed as we progress.”

Waltham Forest said it would also encourage other councils in the capital to divest in this way, which would be done through the London Collective Investment Vehicle (LCIV), which manages pooled pension funds on councils’ behalf.

The decision was announced at a special meeting of the council’s pensions committee, attended by members of WF4FP.

They were invited to present a petition calling for the council to divest from firms the group believed were “complicit” in arms dealing.

A spokesperson for WF4FP said the group was “extremely pleased” with the decision and hoped it would set a precedent with other London boroughs.

Although Israel is a major weapons exporter, its military has been heavily reliant on imported aircraft, guided bombs and missiles for its campaign in Gaza.

Waltham Forest’s decision follows calls on the UK government to halt weapons exports to Israel.

The government says it is “reviewing the advice” on exports to Israel and “no decision has been made”.

The campaign group We Believe in Israel is calling for any such plans to be scrapped.

Its executive director Catherine Perez-Shakdam said: “Israel has an unequivocal right to self-defence, particularly in the face of threats from terror groups that the UK itself has proscribed.

“We fully acknowledge the concerns about civilian safety (in Gaza); however, the responsibility lies with Hamas, which continues to incite violence and endanger innocent lives.”

Many public bodies and private companies hold pension funds in firms that some consider to be unethical in some way. These include tobacco, gambling and alcohol firms, as well as arms.

Justin Wray, of the Pension and Lifetime Savings Association, said: “Pension schemes have a significant interest in ensuring that the companies they invest in operate to high standards. Funds of all types will typically apply screening along environmental, social and governance (ESG) principles relevant to the types of investment strategy they offer.”

“Where they are not happy with the actions of the company they may take the decision to divest,” he explained.

However, he added that, following Russia’s invasion of Ukraine in 2022, there had been “renewed debate about the ethics of investing in arms manufacturers”.

In April, the former Conservative government issued a joint statement with the Investment Authority, which said: “Investing in defence companies contributes to our national security, defends the civil liberties we all enjoy, while delivering long-term returns for pensions funds and retail investors.

“Investing in good, high-quality, well-run defence companies is compatible with ESG considerations as long-term sustainable investment is about helping all sectors and all companies in the economy succeed.”

Waltham Forest’s decision has also been welcomed by national campaign group the Palestine Solidarity Campaign (PSC), which believes many other local authorities have pension investments in firms linked to the arms trade.

Its director Ben Jamal said the decision was a “huge breakthrough” in its campaign.

“We thank the councillors of Waltham Forest for standing on the right side of history,” he said.

“We look forward to them putting this policy into action as soon as possible, and hope other councils around the country will quickly follow suit.”

The PSC has previously reported 52 of the 86 Local Government Pension Scheme funds across England and Wales had investments totalling £1.1bn in firms supplying weapons or systems to Israel. This was based on data supplied under the Freedom of Information (FOI) Act, in 2021.