Islington Council has suggested it could be the first local authority to fully end all financial investments linked to “conflict and genocide”.
By Josef Steen, Local Democracy Reporter
Islington Council has suggested it could be the first local authority to fully end all financial investments linked to “conflict and genocide”.
The local authority is planning a six-week consultation with workers over proposals to eliminate £5m in pension fund holdings in firms profiting from the war in Gaza and Israel’s military occupation of the West Bank.
Leader of the Council, Una O’Halloran (Labour), told the Local Democracy Reporting Service (LDRS) she was “utterly horrified” by the war in the Strip, and that the council would work to make sure the pension fund reflected the borough’s values.
She added that the council had taken “swift bold action” in the last two years to limit its financial exposure to companies the United Nations (UN) has listed for economically exploiting Israel’s occupation of Palestinian territories, widely considered illegal.
The Israel-Hamas war has seen an estimated 73,000 Palestinians and 2,000 Israelis killed. In 2025, a United Nations commission of inquiry said Israel had committed genocide in Gaza.
The latest proposals could see the council sell off £5m in indirect shares in companies identified as potentially profiting from human rights abuses and war crimes arising from the conflict, including Palantir Technologies. The “passive” investments make up around 0.22% of the total pension fund, the council said.
Islington claims it has been a “trailblazer” in ethical investment, having already withdrawn the fund’s holdings in arms manufacturers, including those supplying the Israel Defence Forces (IDF).
The latest development comes after sustained pressure on the council from campaigners, who have explicitly called for the council to divest £2.6m from companies “complicit in illegal settlement activity” in the West Bank.
Even though Islington joins several councils who have promised to divest from arms producers, all local authorities are limited in their ability to divest because they are legally obliged to ensure the fund continues to make a profit, known as their “fiduciary duty”.
When a petition signed by 2,300 people calling for this reached the Town Hall in December 2024, Islington declared it had already divested from up to 19 weapons companies involved in conflict and human rights abuses, including those arming the Israel Defence Forces (IDF).
At the time, Islington’s pensions committee said because its remaining investments were indirect, going further would be a knotty and lengthy process because it was impossible to pick and choose which holdings to drop.
But on Thursday (March 19), the council said that after receiving “comprehensive” legal advice, it had found a “technical” solution to opt out of “compromised holdings”.
‘A common sense decision’
Statutory guidance and existing laws allow councils to make ethical decisions around pension fund investments, but only if they are backed by members, and if it does not hurt the fund financially or undermine Environmental, Social and Governance (ESG) principles.
If members approve of the final proposals later this year and divestment goes ahead, the council said this will bring its exposure to 0.0%. Islington claims this will make it the first local authority to do so.
However, the proposals come amid a change of control over London boroughs’ pension funds. The London Collective Investment Vehicle (LCIV), the capital’s mega-pension fund, will soon begin pooling and managing funds in line with its own ethical investment criteria.
The council told the LDRS it “believes [this criteria] will meet our needs, which will be decided following [the] consultation”.
Leader of the Opposition, Cllr Benali Hamdache, said: “Divesting from war crimes and planetary destruction is a common sense decision, and I’m sure that workers will enthusiastically back a more ethical approach to investments.
“But the reality is that Islington Council can go further. There are still too many companies that we invest in that are complicit with apartheid and genocide,” he said.
On Wednesday, March 11, the council started its consultation process which will first ask 300 members of the fund picked at random for input on the questions it will ask. The Town Hall plans to then hold a full, six-week consultation in May.
The day before, a cross-party group of politicians from across London’s boroughs, including Islington’s deputy leader, went to the LCIVs offices to immediately divest from any firm “enabling Israel’s grave violation of international law”.
