LGPS funds mulling divestment from Israel-related assets

Funds within the Local Government Pension Scheme (LGPS) are considering their investments linked to Israel amid divestment campaigns.

The LGPS has been under pressure from members and campaigners to divest from Israel for several years, even before the 2023 Hamas terrorist attack on the country, which sparked the current conflict.

Some funds are considering divestment from companies linked to Israel or supplying weapons to the Israeli government, while others have been engaging with portfolio companies to raise humanitarian issues.

Today, the Palestine Solidarity Campaign released data it has gathered through freedom of information requests from LGPS funds that it claims shows £12 billion worth of investments in companies supplying the Israeli military.

Companies highlighted by the campaign group include BAE Systems Caterpillar, Lockheed Martin and RTX Corporation.

The £12 billion figure includes an estimated £4 billion invested in Amazon and Google’s parent company Alphabet, which the campaign said it had targeted because of cloud computing services provided to the Israeli military.

The International Court of Justice issued a order in January last year requiring Israel to take all steps possible to prevent a genocide in the region. The International Criminal Court has issued arrest warrants for the commander-in-chief of Hamas as well as Israel’s prime minister and minister of defence, citing alleged war crimes.

In October last year, the LGPS Scheme Advisory Board sought a legal opinion after several funds were accused acting unlawfully because of investments linked to Israel’s military activity in Gaza.

Nigel Giffin KC’s response stated that the local authorities responsible for LGPS funds were “not well placed to know whether… crimes have in fact been committed or are likely to be committed in the future”.

However, in a separate opinion on the broader issue of divestment and non-financial considerations, Giffin highlighted a previous case involving the Palestine Solidarity Campaign. This ultimately resulted in a Supreme Court ruling in 2020 that lifted the government’s ban on “politically motivated boycotts” and allowed funds to make divestment decisions based on relevant non-financial factors.

The Universities Superannuation Scheme has divested from some assets linked to Israel, but it has also emphasised that this decision was made for financial and fiduciary reasons rather than political.