The United Nations is urging local government pension schemes (LGPS) to divest from companies linked to Israel’s settlements in the West Bank and East Jerusalem – which are illegal under international law.
Professor Michael Lynk, the UN’s special rapporteur on human rights in occupied Palestinian territories, says that even investing in firms with “indirect” links to the settlements would “violate” the pension schemes’ ethical obligations.
The LGPS – which are responsible for the pensions of hundreds of thousands of Scots council workers – say they take human rights issues “seriously” and have a policy of engagement with companies rather than divestment. The funds are legally bound to get the best returns for investors.
The Ferret previously revealed that Strathclyde Pension Fund (SPF) and Lothian Pension Fund (LPF) had links to companies listed by the UN for involvement with Israeli settlements in the West Bank. The UN’s blacklist named 112 companies acting in violation of “internal law and UN decisions”.
Both the SPF and LPF currently invest in Booking Holdings Inc, whose Dutch subsidiary, Booking.com, has business links to the occupied territories. Both council funds have been criticised for investing in arms companies trading with Israel.
Now Professor Lynk, an expert appointed by the UN Human Rights Council to monitor the human rights situation in Israeli settlements, has claimed that “85 per cent of LGPS funds whose investments could be ascertained have holdings in enterprises included in this UN Database.”
In a letter sent to LGPS the associate human rights professor at Western University, Canada, said that pension funds should “extricate themselves from any direct and indirect involvement with the settlement economy”.
Referring to the “relentless growth” of Israel’s settlements “in defiance of international law”, Lynk argued it was “imperative that investors accept their international responsibilities.
He added: “Pension funds have a duty to act ethically and not to be involved in social harm. Pension investments with companies that are engaged, directly or indirectly, with the illegal Israeli settlements on occupied Palestinian territory violate these ethical duties and entrench an unjust situation.”
Lynk’s concerns were echoed by Mick Napier, of the Scottish Palestine Solidarity Campaign (SPSC), who said that after lobbying council funds for years the human rights group had concluded they are “virtually human rights-free zones”.
Napier added: “Some Scottish local authority pension funds have divested from companies who profit from the Israeli occupation economy after campaigning by Time to Divest. Dropping all companies listed on the 112-strong database will be an important step towards Scottish local authority pension funds abiding by their ethical investment policies.”
In reply a spokesman for SPF confirmed it had links to one of the companies named in the UN’s list. They said: “The only interest Strathclyde has in any of the companies on the UN list is through a parent company. It will ask the portfolio manager to engage with the company and investigate.
“The fund is also a member of the Local Authority Pension Fund Forum, which is using the UN report as part of its engagement with companies operating in the Israeli settlements/occupied Palestinian territory.”
The LPF said it was often “challenged” about its approach to responsible investment and these issues are “considered in great detail”. The fund’s policy is not to divest, a spokesperson explained, not least because this could lead to legal challenges.
They added that environmental and social issues can affect the financial performance of companies and that the fund “integrates them into the decision-making processes”.
“By engaging with the companies in which it (LPF) owns shares, it strives to improve the sustainability of corporate strategy to the benefit of shareholders, and to the benefit of wider society,” the spokesperson added. “In contrast, a policy of disinvestment merely passes shares to potentially less responsible share owners, who are less likely to hold management to account. This achieves nothing in terms of sustainability.”
A row broke out in April – as reported by The Ferret – after the SPSC accused the SPF of hiding controversial investments by switching from direct shares in “problematic” companies into a type of holding called pooled funds.
In July Norway’s largest pension fund KLP divested from 16 firms listed in the UN database over their involvement with Israeli settlements in the occupied West Bank.
Booking Holdings Inc and Booking.com were asked to comment.
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