Islington Council pressing ahead with controversial pension fund divestment plan
Letter sent to fund members highlights current £1.4 million holding in Palantir Technologies and link with 'current conflict between Israel and Palestine'
Labour-run Islington Council is pushing forward with controversial plans to fully divest its £2.2 billion pension fund from companies it says are linked to “the current conflict between Israel and Palestine,” despite a series of legal setbacks.
The decision comes after relentless pressure from the local Unison trade union branch and the Palestine Solidarity Campaign.
Town Hall officials say they have now launched “an extensive member consultation process” to gather feedback in an attempt to satisfy the “member support condition”required by law.
The council is hoping to use member polling data to build a legal shield against the intervention guidelines.
But there are claims, including from the UK Lawyers For Israel, that they letter sent to fund members in recents weeks is “a biased survey on which no reliance should be placed.”
Islington has for some time been known as one of the most active Labour councils in London on divestment.
With the Greens making gains in the most recent local elections, some believe other councils are now expected to follow suit.
Communities Secretary Steve Reed has issued a clear warning, stating that “local authorities must stay out of foreign conflicts.”
He has also said that any council adopting “anti-Israel or targeted BDS (Boycott, Divestment, Sanctions) policies risk facing significant legal action.”
Council officials acknowledge that government pressure and the threat of statutory damages have influenced their approach.
They describe the consultation as a way to build a legal shield against the intervention guidelines.
In letters sent to members of the council’s pension scheme, officials raised concerns about the fund’s “limited exposure to companies appearing on United Nations lists as engaged in activities raising human rights concerns in the Occupied Palestinian Territories.”
Members were also informed of the Pension Fund Committee’s concerns regarding a current holding valued at approximately £1.4 million in Palantir Technologies.
One letter to members explained, “The Committee’s understanding is that Palantir is not a manufacturer or supplier of weapons as such, but that it is heavily engaged in the development of software which has significant weapons applications, that it derives around half of its revenue from sales to the military, and its advanced AI tools and other technological solutions have been deployed in circumstances which include the current conflict between Israel and Palestine.”
In 2024, Islington was forced to halt an earlier version of the divestment plan after legal reviews found “severe risks of statutory challenges.”
Under Local Government Pension Scheme rules, officials note that “non-financial considerations are only permitted if they cause zero significant risk of financial detriment and if administrators have clear evidence of widespread member support.”
UK Lawyers For Israel, one of the objecting groups, argues that pension fund managers are “legally mandated to maximise financial returns.” The group claims that “pursuing non-financial goals (like political or ethical divestment) risks violating this duty unless the council can definitively prove there is zero risk of financial detriment.”
UKLFI has also objected to what it describes as “the targeting of the world’s only Jewish state by councils.”
Jonathan Turner, Chief Executive of UKLFI, added, “Those preparing this survey have inserted their own incorrect assumptions as if they were objective facts and overlooked or ignored contrary information. The result is a biased survey on which no reliance should be placed.”
The council maintains that if the consultation data shows an overwhelming desire for ethical exclusions it will have the mandate required to satisfy the “member support condition” and protect its upcoming Investment Strategy Statement from judicial review.
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