Divestment proposed in a petition to Pembrokeshire County Council is likely to be unlawful, financially detrimental and divisive, according to UK Lawyers for Israel (UKLFI).
Pembrokeshire Coastal Path
“Solidarity with Palestine Pembrokeshire”, has submitted a petition calling on the Council to urge the Dyfed Pension Fund to “divest our pension money from companies profiting from genocide”. The Council is one of a number of public authorities in Wales that are members of the Dyfed Pension Fund.
UKLFI has now written to senior councillors and officers at Pembrokeshire ahead of its full Council meeting on 5 March 2026, setting out relevant legal considerations.
Fiduciary duties cannot be ignored
UKLFI’s letter reminds the Council that those responsible for investing Local Government Pension Scheme (LGPS) funds have strict fiduciary duties. These duties were clarified in the Law Commission’s Report on Fiduciary Duties of Investment Intermediaries, endorsed by the Supreme Court in R (Palestine Solidarity Campaign) v Secretary of State, and mandated by government regulations and guidance.
Under that framework, non-financial factors may only be taken into account where:
- There is good reason to think that scheme members share the concern; and
- The decision does not involve a risk of significant financial detriment.
UKLFI warned that divestment on the basis of highly controversial allegations of “genocide” would plainly fail the first condition. The Law Commission itself cautioned that where an issue is clearly controversial, trustees should focus on financial factors rather than become embroiled in political disputes.
The second condition – avoiding significant financial detriment – is equally critical. UKLFI drew attention to legal advice given to other pension funds that both the likelihood and scale of potential financial harm must be considered.
UKLFI also cited analysis indicating that long-term exclusion of companies targeted by the BDS campaign could reduce investment returns very substantially over time. Since the LGPS provides defined benefits, any shortfall would ultimately fall on employers and taxpayers.
UKLFI further pointed out that the petitioners have not identified any specific genocide or defined what “profiting” means. Developing criteria, investigating multiple global conflicts, consulting members, and restructuring investments would in themselves incur substantial costs. A decision taken without properly estimating those costs, UKLFI argued, would risk being irrational.
Public Sector Equality Duty engaged
The letter also warned that the Council must comply with the Public Sector Equality Duty under section 149 of the Equality Act 2010. The Court of Appeal confirmed in R (Jewish Human Rights Watch) v Leicester City Council that this duty applies to full Council BDS resolutions.
UKLFI’s letter noted that Jews share protected characteristics of ethnicity and religion; Israelis share nationality; and Zionism may qualify for protection as a philosophical belief under established case law.
UKLFI argued that adopting a divestment resolution perceived as targeting Israel would risk fostering hostility and discrimination, particularly in the context of sharply rising antisemitic incidents in the UK since October 2023.
The letter drew attention to research showing links between BDS activity and the targeting of Jewish students for harm on university campuses in both the United States and the UK.
Addressing allegations of genocide
UKLFI also challenged claims reportedly relied upon by the petitioners, including assertions about proceedings at the International Court of Justice.
It noted that the ICJ did not find that Israel had committed a “plausible genocide”, but rather that Palestinians have a plausible right to be protected from genocide and that South Africa had standing to bring the claim.
The letter further disputed claims of famine and “relentless attacks” on medical facilities, arguing that some widely circulated statements were based on inaccurate or exaggerated data.
Call for no action
UKLFI urged the Council to take no action on the petition when it is presented at the 5 March meeting.
“Council must act lawfully and responsibly”
Commenting on the letter, Jonathan Turner, Chief Executive of UK Lawyers for Israel, said:
“Local authorities are not free to pursue foreign policy agendas with pension funds. Pension scheme administrators have clear fiduciary duties owed to scheme members, including employers, employees, former employees and their spouses.
Divestments based on non-financial considerations breach those duties if there is a risk significant financial detriment or if they are not supported by a high proportion of members.
In addition, Councils must have due regard to the need to promote community cohesion and prevent discrimination and harassment related to nationality, ethnicity, religion or philosophical belief.”