(2 years, 5 months ago)
Lords ChamberMy Lords, let there be no obfuscation. We know what local authorities have already been trying in relation to BDS. We should be clear that the boycott which the noble Lord, Lord Davies, is anxious to facilitate is aimed at one state only. Local authorities have not been trying to divest from China, Myanmar, North Korea, nor even Russia, but only one state—Israel. The BDS movement is intended to delegitimise Israel, and ultimately destroy the state. Singling out Israel for boycott is out of all proportion to other states in this troubled world, and it is anti-Semitic. That is because it applies double standards and denies the Jewish people own right to self-determination, as defined in the IHRA definition.
The noble Lord, Lord Davies, is also reckless as to the interests of public pension holders, who, if asked, would not want to be drawn into a Middle East conflict and are likely to wish to continue to enjoy the fruits of investment in Israeli technology and medical products, not to mention technology that goes into iPads, iPhones, electric car batteries, and other important everyday products. BDS almost always equates to anti-Semitism, which is why Sir Keir Starmer has come out against it and continues his efforts to rid the Labour Party of the anti-Semitism found to be present in it by the EHRC. It does not help the peace process; BDS fuels a rise in anti-Semitic incidents, and the growing number of assaults on Jews and Jewish community buildings. We cannot allow local authorities to make flag-waving foreign policy decisions, bringing their communities into conflicts which are not relevant. Do we want local government pensions scheme investing in Russia? There is no reason why government policies should not be determinative of this.
Bearing in mind our discussions this afternoon, in the Second World War, over 1 million Jews died in Ukraine. Today, Israel has taken in thousands of refugees from Ukraine, Jewish and non-Jewish. Never again will persecuted Jews have no safe place to go, for Israel is the haven for them and the home for survivors of the Holocaust. This is the moral choice that faces your Lordships in relation to Amendment 54A. It is clear that the amendment of the noble Lord, Lord Davies, is not it.
My Lords, I speak at this stage of the Bill because Commons Amendment 54 was tabled so very late on Report in the Commons, after it had already been through this House where it started. How extraordinary it is that an amendment with such potentially wide-ranging impact should have been tabled so that no meaningful scrutiny was possible, with so little notice that the local government pension scheme advisory board was only able to publish its consent after the amendment was passed in the other place.
The concerns the amendment raises are substantial. They go to the heart of who takes the decision on how an individual’s money is invested. Should it be the Government, or should it be the representatives of the people whose money is being invested, which in this case would be the scheme administrators who fulfil the same functions as pension fund trustees? The crux of Amendment 54 is that it is the Government’s money, and the Government should be the final arbiter of the decision. However, when that was tested in 2020, the Supreme Court disagreed and ruled against that contention, asserting that the funds of members of public centre pension schemes belong to the members. It is not public money.
Amendment 54 from the Government seeks in effect to negate that decision. If it were to become law, the Government could issue guidance or directions—and I quote from the explanatory guidance—that
“public sector pension schemes, including the local government pension scheme … may not make investment decisions that conflict with the UK’s foreign and defence policy.”
The crucial decision of who will make the divestment decisions based on ESG and ethical considerations, if Amendment 54 were in place, becomes more blurred.
Some examples may help to illustrate the frictions that could arise. What is happening in Ukraine is uppermost in all our minds. This is not about anti-Semitism; this is about humanitarian concerns. That is why those decisions are taken. What is happening in Ukraine is something we all care about enormously. Many people are outraged by the Russian regime’s callous disregard for innocent civilians who dare to resist their advance. Suppose an LGPS scheme decided to divest from a Russian-owned organisation that is not on the sanctions list—this was the situation not so long ago with Gazprom —the existence of Amendment 54 on the statute book could have deterred that scheme. That, in effect, would be its consequence, given its vague wording and potentially broad application.
Local councils should have a duty to invest ethically, and they should be able to do so unequivocally in alignment with the UN guiding principles on business and human rights. If what is in those principles are not clear to any noble Lords in the Chamber, perhaps they should Google it. It speaks to a very specific example. In areas of the world where states are in breach of international law with clearly documented and verified violations of the human rights of civilian populations, such as is occurring on a regular and sustained basis in the occupied Palestinian territory, local authorities should be able to exercise their ethical judgment and divest from companies that produce and deal in goods from the illegal Israeli settlements in Palestinian territories. However, through Amendment 54, the Government could mandate that if they were to do so, they would be in conflict with the UK’s foreign and defence policy. That cannot be right.
On another issue, fund administrators also have a responsibility to invest in alignment with domestic legislation, such as meeting our net-zero target by 2050, and with international agreements, such as the Glasgow climate accord, agreed at COP 26 just last year. It is not just a responsibility to safeguard environmental and natural assets that is at stake: ultimately, it is the fiduciary duty of fund managers to act in the financial interests of their members.
In 2020, in his annual letter to CEOs, Larry Fink, CEO of BlackRock, the world’s largest assets manager with $10 trillion of assets under management, stated that
“climate risk is investment risk.”
Mark Carney, too, has warned that continued investments in fossil fuels risks write-offs and stranded assets. Local authorities must be able to divest from sources of oil, gas and coal wherever in the world they happen to be, regardless of whether that decision is in alignment with the Government’s foreign and defence policy. Not only must local authorities be able to meet their ESG requirement, they must also be able to fulfil their fiduciary duty. This amendment will hamper their ability to do both, and it should not be included in this Bill.