Contribution
My Lords, I apologise that I was unable to speak at Second Reading, but I support the amendment spoken to by the noble Lord, Lord Hendy, which I have signed. The amendment seeks to remind the Government of existing obligations under treaties and other international law with regard to measures in the Bill. Many existing, relevant statutes and treaty obligations apply here. However, the amendment applies in a neutral way across a range of international contexts. It does not single out any country, but instead sets out clear expectations for how pension schemes should “identify, prevent and mitigate” involvement in serious human rights abuses and breaches of international law by taking proportionate steps to responsibly exit investments where necessary.
One example of where the amendment could apply is China, specifically the Uyghur region. International human rights organisations, including Human Rights Watch, have documented crimes against humanity committed by the Chinese Government against Uyghurs and other Turkic Muslims. These crimes include mass detention, forced labour, cultural and religious erasure, and family separation. Pension fund investments connected to supply chains benefiting from forced labour or other crimes against Turkic Muslims raise clear risks of complicity in these abuses.
The noble Lord, Lord Hendy, mentioned Israel and the Occupied Palestinian Territories. Research has found that the Local Government Pension Scheme holds approximately £12.2 billion in companies linked to alleged violations of international law by Israel. This includes investments in firms supplying weapons, surveillance technology and military equipment to the Israeli armed forces, as well as companies engaged in the construction, financing and maintenance of illegal settlements in the occupied West Bank. These activities have been widely recognised as contributing to war crimes and systems of repression and persecution against Palestinians.
The third example is Yemen. Saudi Arabia and the United Arab Emirates have led military operations in Yemen that have repeatedly involved unlawful airstrikes on civilians and civilian infrastructure. This raises serious concerns about investments in companies supplying arms, military equipment or logistical support used in the conflict. As we have heard, the UK already has duties under international laws not to aid or assist serious breaches of international law, and to prevent human rights harms connected to state-linked corporate activity. The amendment simply clarifies how those duties would apply to public pension fund investment and would make them operational in domestic law.
The amendment provides guidance around fiduciary duty versus international legal obligations. As we heard earlier, fiduciary duty requires lawful, prudent and long-term decision-making. It does not require maximising financial return at any cost, nor does it permit public bodies to disregard the UK’s international law and human rights obligations. The clear regulation provided by the amendment would help address uncertainty and hesitation by setting out how those obligations should be reflected in investment decision-making in a lawful and proportionate way.
The amendment would also provide clarity and consistency. At present, administering authorities are left to interpret complex international law obligations on their own. The LGPS advisory board has said that it has reached the limits of what it can do without government guidance. The amendment would place a responsibility on the Government to provide clear advice on these issues, while ensuring that pension funds such as the LGPS are acting within the Government’s legal obligations.
I thank the noble Lord, Lord Hendy, for proposing this important amendment. I very much hope that the Government will look at its content and support its inclusion in the Bill.