In May we wrote to the Leader of Norwich City Council calling for action to end complicity in Israel’s attacks on Palestine. It followed the pre-election defeat of attempts to stop public bodies taking human rights into consideration when making financial decisions. The reply we received in June is quite comprehensive and somewhat more than we had expected.
Reply 21 June 2024
Dear Mrs. Collen,
Thank you for your email dated 29th May.
In summary, you have said that you would like to remind the City Council that, as a State Party to the Genocide Convention, the UK has a binding obligation to employ all reasonable means to prevent and deter genocidal acts. You have also stated that in your view this obligation means that Councils must refrain from procuring from, or investing funds in, companies which are enabling plausibly genocidal acts to take place, for example arms companies supplying weapons and military technology used by Israel, as well as financial institutions, like Barclays, which finance these arms companies. It also includes any funds held in the Local Government Pension Scheme that might contribute either directly or indirectly to genocidal acts.
You have asked Norwich City Council to examine its investments and procurement arrangements as a matter of urgency. You also ask for a Statement outlining whether any such investments are held, or arrangements are in place, and if so, a commitment to take action to divest and withdraw at the earliest opportunity.
Ensuring our investments are ethical is a high priority for the City Council, as I hope you would expect, and we are taking action.
The most significant area of investment by local authorities is by way of their pension funds. We have recently written to the Norfolk Pension Fund that administers the investment arrangements for Norwich City Council alongside all other Norfolk bodies admitted to the Norfolk Local Government Pension Scheme (LGPS), in respect of their Disinvestment/Exclusion & ESG (Environmental, Social & Governance) Aspects of Investment Strategy. The pension fund response highlighted that the Pensions Committee regularly reviews its approach to ethical investment and over the years has taken a considerable amount of legal advice in relation to its fiduciary responsibility. It should be noted that the pension funds ESG approach leads to a portfolio with characteristics substantially better than the benchmark global equity indices.
In respect of our own investments, which are limited to our day-to-day treasury management activities, these are invested in approved counterparties which does not include directly investing in equities (companies). However, broader money market funds or on-lending by the financial institutions does present a secondary risk of indirect investment in companies which are involved in the arms trade.
We have specifically considered ethical investments in our Treasury Management Strategy, which is published alongside the budget each year and, through our use of money market funds, we have now capacity to invest in money market funds which have been identified as having environmental and ethical investment purposes.
For short term investments with other financial institutions, which will change on a daily basis, it is of course more difficult to be clear about whether our investments might be subject to further on-lending to companies about whose ethics there could be concerns, however, I share your sentiment that we would not want to inadvertently support companies that are instrumental in bringing the misery of war to others. We have recently asked our treasury management advisors to clarify the extent to which we can do more to screen out investments in those companies involved in the arms industry.
With our advisors help they are supporting the council to invest in Money Market Funds that are Article 8 compliant (part of European Union, Sustainable Finance Disclosure Regulations). Screening strategies can be used for Article 8 funds to include characteristics whereby companies involved in controversial weapons are screened out of compliant investment products.
What Local Authorities can do when buying services, for example banking services, is subject to significant restrictions. At the moment, we are required to follow the Public Procurement Rules, as well as laws such as the Local Government Act 1988. Whilst these laws may be designed to ensure that we get best value when spending public money, they also place significant restrictions on our ability to take ethical considerations into account. By law, we have to make our decisions based on economic considerations and, for example, cannot rule out companies because of their employment practices or the countries that they choose to invest in.
A such, it is not entirely accurate to state that “the very recent defeat of attempts to restrict the right of public bodies to take ethical investment and spending decisions…means that Councils are now free to take human rights and other ethical considerations into account when making financial decisions” – some restrictions remain in place.
However, I hope it is clear that the City Council takes this matter very seriously, regularly reviews the position, and works very hard to ensure that, wherever possible, and within the law, its investments are ethical. I hope this reassures you.
Yours sincerely,
Cllr Mike Stonard
Leader of the Council
29 May 2024
To Cllr Mike Stonard, Labour Leader Norwich City Council and Catton Grove councillor
Copy to Cllrs Paul Kenrick & Jess Carrington, Labour, Catton Grove; Cllr Steve Morphew, Labour Leader, Norfolk County Council, and Catton Grove councillor
Dear Councillor Stonard,
Action to end complicity in Israel’s attacks on Palestinians
As Secretary of the Norfolk branch of the Palestine Solidarity Campaign I am writing to you to express our continued concern about the situation in Palestine and to ask you as Leader of the Council what actions you will be taking in the light of three significant and recent developments:
1.On May 20th the prosecutor of the International Criminal Court applied for arrest warrants for Benjamin Netanyahu and Yoav Gallant, Defence Minister, as well as senior Hamas officials, regarding alleged responsibility for war crimes and crimes against humanity. Netanyahu & Gallant are accused of extermination, causing starvation as a method of war, the denial of humanitarian relief and of deliberately targeting civilians.
2. On May 24th, the International Court of Justice ordered that ‘Israel shall, in conformity with its obligations under the convention on the prevention and punishment of the crime of genocide … immediately halt its military offensive … which may inflict … in Gaza conditions of life that would bring about its physical destruction in whole or in part.’
3. The very recent defeat of attempts to restrict the right of public bodies to take ethical investment and spending decisions which means that Councils are now free to take human rights and other ethical considerations into account when making financial decisions.
As I am sure you are also aware, the ICJ will be hearing a case brought against Israel by South Africa under the 1948 Genocide Convention. In her report in March this year, Francesca Albanese, Special Rapporteur on human rights in the Palestinian territory, concluded ‘that there are reasonable grounds to believe that the threshold indicating Israel’s commission of genocide is met.’
The Norfolk PSC branch would like to remind the City Council that, as a State Party to the Genocide Convention, the UK has a binding obligation to employ all reasonable means to prevent and deter genocidal acts. In our view this obligation means that Councils must refrain from procuring from, or investing funds in companies which are enabling plausibly genocidal acts to take place, for example arms companies supplying weapons and military technology used by Israel, as well as financial institutions, like Barclays, which finance these arms companies. It also includes any funds held in the Local Government Pension Scheme that might contribute either directly or indirectly to genocidal acts.
Given these developments, and a likely change of Government after the election, we would ask Norwich City Council to examine its investments and procurement arrangements as a matter of urgency. We ask for a Statement outlining whether or not any such investments are held, or arrangements are in place, and if so, a commitment to take action to divest and withdraw at the earliest opportunity.
You may remember I wrote previously to ask what action the City Council intended to take following an earlier petition about disinvesting. At that point I received a somewhat cursory response. I hope this time you can provide a fuller reply which addresses the points raised above.
You may be aware that the Norfolk Branch of PSC was launched (in April) to replace the Norwich Branch. We have a broad based membership and an active Facebook page, as well as Instagram. We have an extensive mailing list of PSC members and supporters. Most Saturdays over recent months we have held vigils, leafleting and marches in Norwich, and there are also vigils in places like Cromer & Diss.
The situation in Gaza, and the urgent need for a ceasefire and to end arms sales and other investments that plausibly contribute to genocide, are front and centre of PSC’s focus as we move towards the general election.
I look forward to hearing from you.
With regards,
Claire Collen, Secretary Norfolk PSC Branch
(Catton Grove Constituency)