Islington Council has again pushed back its final decision over ethically divesting its pension fund due to unfinished impact assessments.
The Town Hall’s pensions committee was due to give an update on the decision over how and when it would pull its passive investments from companies listed by UN as “compliant in human rights abuses” in Palestine.
But despite the decision already having been delayed from July, the council said it was not ready to make it.
A report put to the committee clarified that the corporate director of resources must first consult with pension fund members about restructuring the fund, along with “carrying out the necessary equalities impact [EIA] assessment”.
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It stated that the assessment is currently being reviewed by the council’s equalities team.
The next update will be given at the committee meeting in December.
In August, the council pledged to divest the £2.6m it holds in indirect shares in companies linked to illegal activity in the West Bank, after campaigning from pro-Palestine activists.
Committee chair Cllr Paul Convery had previously revealed there were 10 companies in the banking, IT, travel and tourism sectors and others who made up the “small proportion” of firms linked to human rights abuses.
He acknowledged there was a “strong moral imperative” to divest.
The committee has a legal responsibility to ensure its pension fund generates enough money to sustain the benefit.
The Town Hall’s proposed solution, in its current form, to is to restructure the fund by “consolidating the two passive equity pooled funds” into one.
This would give the council the power to exclude certain companies from investments.
The committee report stated that Legal & General Investment Management (LGIM), who handle the pension fund, said this would be “the simplest and cheapest way” to enable the fund to divest.
Previously, Cllr Convery also said he did not foresee any “major legal block to [the] council divesting”, a statement confirmed in July’s pension committee meeting.
This could all change if the new government was to pass a bill brought before the House of Commons last year by the previous Conservative administration.
The Economic Activity of Public Bodies (Overseas Matters) Bill would “prevent public bodies from being influenced by political or moral disapproval of foreign states”.
This may have prevented councils from campaigning against, boycottting, seeking divestment from or sanctioning an international territory, unless this was in keeping with the government’s own foreign policy.
However, the council’s current legal advice has said the government is unlikely to pursue the bill.
If it was to become law, LGIM could be forced to “liquidate” the Town Hall’s investments.
Neighbouring council Waltham Forest committed to divestment from all arms companies in August this year, dialling up pressure on other local authorities.
In September, Cllr Convery told the Local Democracy Reporting Service that Islington was “committed to ensuring the pension fund achieves maximum growth from its investments, while also abiding by our environmental and societal responsibilities”.
Council officers estimate that divestment would cost £27,000 a year, alongside a a one-off transition cost of around £539,000.
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