Islington Council in London is considering the high cost of a proposal to divest its pension fund from companies operating in areas of the West Bank administered by Israel.

Papers provided by Council staff to the Pensions Committee for its meeting on 26 September estimate one-off costs of £539,000 plus additional costs of £27,000 per year. However, these do not include the potential adverse impact on the investments of divesting from successful companies operating in these areas.

UK Lawyers for Israel (UKLFI) has written to members and staff of the Pensions Committee drawing their attention to a significant report by JLENS and the Anti-Defamation League (ADL).

This shows that a typical index-linked fund of $1 billion would have underperformed by $500 million over the last 10 years if BDS targeted companies were excluded – instead of growing to $3.365 billion, it would have only grown to $2.865 billion.

This report is highly significant because Islington Councillors have been correctly advised that to comply with their fiduciary duties they must be able to demonstrate that “the decision would not involve a risk of significant financial detriment to the Fund”.

UKLFI also points out in its letter that it is incorrect to assume that companies included on the database of business enterprises involved in certain activities in the West Bank, drawn up by the Office of the High Commissioner for Human Rights of the UN (OHCHR), are committing or participating in violations of human rights. The OHCHR has expressly stated that the preparation of the list did not include any legal assessments of the activities of the businesses included. Many of these businesses benefit Palestinians and contribute to better relations between Palestinians and Israelis.

UKLFI’s letter further notes that Western Sahara and Northern Cyprus are illegally occupied by Morocco and Turkey respectively, which have encouraged large numbers of their civilians to settle there. Divesting from companies on the OHCHR list without also divesting from the many major companies active in Western Sahara and Northern Cyprus would be discriminatory contrary to section 29(6) of the Equality Act 2010. There is no OHCHR list of these companies, but UKLFI has drawn the attention of the Islington councillors and staff to reports of these companies’ activities here and here.

In addition, failure to have due regard to the propensity of boycotts and divestment to promote hostility and persecution of Jews from the Middle Ages to the present day would be contrary to the Public Sector Equality Duty in section 149 of the Equality Act 2010.

 UKLFI also notes that in order to comply with fiduciary duties, Councillors must demonstrate good reason to think that scheme members would share the concern. The report by Council staff refers to a planned consultation exercise, which may be intended to address this. However, UKLFI points out that any such exercise should draw the attention of those consulted to the various points raised in its letter.

Jonathan Turner, UKLFI Chief Executive, said “The Council must come clean and tell the people of Islington how much this racist proposal would cost them”.