Merton Council has firmly rejected a petition calling for the termination of financial and procurement links with companies associated with Israel, warning that such actions could trigger expensive legal disputes and jeopardise the stability of its pension fund. The decision underscores the complex legal and financial constraints facing local authorities amid growing pressure to take ethical stances on international conflicts.
Petition from Suspended Councillor
The petition was submitted by Caroline Charles, an Independent councillor for Ravensbury ward, who was suspended from Merton's Labour Party in January 2024. Cllr Charles believes her suspension resulted from her public advocacy for a "ceasefire now" in the Israel-Palestine conflict. In her petition, she urged the council to divest pension funds and end procurement contracts with firms she described as "complicit in Israel's oppression of Palestinians."
The document, lodged ahead of the first Full Council meeting of the year, argued that Merton Council should not invest in companies enabling what it termed "Israel's grave violations of Palestinian rights." It cited broader UK trends, noting that local authority pension funds collectively invest at least £4.4 billion in such companies.
Legal and International References
The petition referenced several international rulings to bolster its case, including the International Court of Justice's July 2024 finding that Israel was responsible for apartheid, the UN General Assembly's September 2024 call for sanctions, and the International Criminal Court's November 2024 arrest warrants for Israeli leaders over alleged war crimes. These references aimed to frame the divestment as a moral and legal imperative.
Council's Response and Constraints
In a response published before the council meeting, Merton Council officers acknowledged the petition but emphasised their fiduciary duties. They highlighted that the Merton Pension Fund's primary objective is to ensure sufficient funds for pension benefits, with all investments managed through the London Collective Investment Vehicle (LCIV).
The LCIV, established in 2015, pools assets worth approximately £50.8 billion for 32 London local authority pension funds. Merton Council stated that participation in this collective vehicle prevents it from altering individual holdings for political or ethical reasons, as investments are monitored centrally under environmental, social, and governance guidelines.
Officers also stressed the need to maintain stable contribution rates for the council and local taxpayers, underscoring the financial risks of deviating from established investment frameworks.
Procurement Limitations
Regarding procurement, the council warned that its powers are severely limited without central government approval via a Procurement Policy Note on Israel and Gaza. Excluding companies based on ethical concerns would be "extremely difficult" and could expose the authority to potential legal challenges, further complicating any divestment efforts.
Broader Context and Similar Actions
This rejection occurs amidst a wider movement urging local authorities to divest from Israel-linked firms. For instance, in August 2024, Waltham Forest Council announced it would withdraw £773,000 from its £1.1 billion pension fund invested in arms producers, following campaigns related to the Gaza conflict. However, Merton's stance illustrates the varying approaches councils take, often influenced by legal and financial considerations.
Cllr Charles, who has served since 2022, resigned from the Labour Party over its stance on the Palestine conflict, stating her commitment to ceasefire advocacy. Her case highlights the personal and political tensions within local governance as councillors navigate divisive international issues.
Merton Council affirmed it will continue to pursue responsible investment principles within the existing legal framework, balancing ethical concerns with its statutory obligations to residents and pensioners.
