Islington Council Proposes Historic Divestment from Firms Profiting from Gaza War
Islington Council has announced plans to potentially become the first local authority in the UK to fully divest its pension fund from companies linked to "conflict and genocide" in Gaza and the West Bank. The council is initiating a six-week consultation with workers to eliminate approximately £5 million in holdings from firms accused of profiting from human rights abuses and war crimes arising from the Israel-Hamas conflict.
Council Leader Expresses Horror Over Gaza War
Council Leader Una O'Halloran (Labour) stated she is "utterly horrified" by the war in Gaza, emphasizing that the council aims to align its pension fund with the borough's ethical values. She highlighted that Islington has taken "swift bold action" in recent years to reduce financial exposure to companies listed by the United Nations for exploiting Israel's occupation of Palestinian territories, which is widely considered illegal.
The Israel-Hamas war has resulted in an estimated 73,000 Palestinian and 2,000 Israeli deaths. In 2025, a United Nations commission of inquiry concluded that Israel had committed genocide in Gaza, adding urgency to divestment efforts.
Details of the Proposed Divestment
The latest proposals target £5 million in indirect shares in companies like Palantir Technologies, identified as potentially profiting from the conflict. These "passive" investments constitute about 0.22% of the total pension fund. Islington claims a "trailblazer" status in ethical investment, having previously withdrawn holdings from arms manufacturers, including those supplying the Israel Defence Forces (IDF).
This move follows sustained pressure from campaigners who have called for divesting £2.6 million from firms "complicit in illegal settlement activity" in the West Bank. In December 2024, a petition with 2,300 signatures prompted the council to declare it had already divested from up to 19 weapons companies involved in conflicts and human rights abuses.
Legal and Financial Challenges
All local authorities face limitations due to their fiduciary duty to ensure pension funds remain profitable. Initially, Islington's pensions committee noted that further divestment from indirect investments would be complex and time-consuming. However, on March 19, the council revealed it had found a "technical" solution to opt out of "compromised holdings" after receiving comprehensive legal advice.
Statutory guidance allows ethical decisions if backed by members and if they do not financially harm the fund or undermine Environmental, Social, and Governance (ESG) principles. If approved later this year, divestment would reduce Islington's exposure to 0.0%, setting a precedent.
Opposition and Broader Context
Leader of the Opposition, Cllr Benali Hamdache, supported the move, calling it a "common sense decision" but urged the council to go further, citing ongoing investments in companies "complicit with apartheid and genocide." The consultation process began on March 11, with 300 randomly selected fund members providing initial input, followed by a full six-week consultation in May.
This development coincides with changes in London boroughs' pension fund management. The London Collective Investment Vehicle (LCIV) will soon pool and manage funds based on its ethical criteria, which Islington believes will meet its needs post-consultation. Additionally, on March 10, a cross-party group of London politicians, including Islington's deputy leader, visited LCIV offices to demand immediate divestment from firms "enabling Israel's grave violation of international law."
