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The London Borough of Tower Hamlets plans to divest all funds from companies who deal in arms. Councillors decided last month to audit where pension assets are invested, and to bring a report to the pensions committee and cabinet on how the divestment will be accelerated.
The move follows campaigning by local groups about the war in Gaza, though the council also cites Ukraine, Somalia and other conflicts in its decision.
Last September, the pensions committee requested legal advice about divestment of funds associated with arms dealing. An update was provided by asset pool the London CIV in November, where the committee found the council can divest following “due process and a declaration of intent to do so”, unanimously supported by the committee.
“Public pension funds should not be used to facilitate the mass murder of thousands of innocent men, women, children and infants,” council documents state. “The people of Palestine, and all those living in war-torn countries, should not face death; injury; or displacement from weapons funded from public money in Tower Hamlets.”
They added that “council staff have a right to know where their money is being spent”, resolving to call for a complete audit of where any funds are invested and to publicly declare an intent to divest all funds away from companies who deal in arms.
Councils caught between pressure groups and legal uncertainty
The London Borough of Waltham Forest took a similar decision last July, following pressure from campaigners. Previously, Islington council decided to divest £2.6m from companies listed by the United Nations but in December reportedly U-turned on this, citing legal concerns. The decision not to proceed comes after UK Lawyers for Israel wrote a letter to the council, and after advice from counsel that “the Council would be highly likely to face a judicial review challenge”.
The pension funds of London boroughs typically invest in pooled funds with the London CIV, the collective investment vehicle for the capital’s 32 boroughs and the City of London. The CIV created a monitor of companies with investments within the Occupied Palestinian Territories back in 2021, saying it has engaged with these companies and fund managers, divesting from Booking.com, for example. The CIV published its own statement on Israel and the Occupied Palestinian Territories on 1 July last year, also mentioning its stewardship activity on Uyghurs, Yemen and Myanmar.
The issue of divestment on ethical grounds has played out in town halls over a number of years and intensified during the war in Gaza. The previous government sought to stop this with investment guidance forbidding boycotts on ethical grounds. The Palestine Solidarity Campaign subsequently won a Supreme Court case against the government in 2020, whose judgment the government sought to override with legislation. In 2023, the economic activity of public bodies (overseas matters) bill was introduced, which would have outlawed boycotts of foreign states, but the bill did not pass ahead of the last general election. It is unclear if the current government plans to pursue it. Tower Hamlets, Waltham Forest and Islington councils are held by Labour.
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