Leighton Andrews, Minister for Public Services
This statement provides the Welsh Government’s views on the UK Government’s proposed changes to the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2009. These changes include proposals to restrict local authorities’ rights to divest from trade and investments that they consider to be unethical, where these counter UK foreign policy.
The Department for Communities and Local Government proposes to issue statutory guidance on the investment policies of the Local Government Pensions scheme which would give effect to the Secretary of State’s view that boycotts, divestments and sanctions against foreign nations and the UK defence industry are inappropriate, other than where formal sanctions embargoes and restrictions have been put in place by UK Government.
Effective democracy is more than placing a mark on a ballot paper every few years. Strong and effective democracies need engaged and active citizens. Some of these will engage in local issues, others will focus on national and global concerns. Our wellbeing goals, set out in our Wellbeing of Future Generations Act, recognises that the kind of Wales we want includes one which is globally responsible with safe and well connected communities.
Pensions Administrators must ensure the interests of their members are well served. This is a long standing principle. It means securing financial returns on their investments for the benefit of their members. But it does not mean disregarding wider ethical, social and environmental issues.
Social, environmental and corporate responsibility is an important part of both institutional choices and individual active citizenship. It includes making decisions about how and where they invest. Within the safeguards that already exist, it must be reasonable for elected members to be able to reflect in their investment choices the values that they hold and that they believe their members share.
During the apartheid era, in defiance of the then UK Government’s foreign policy, many active and concerned individuals engaged in boycotts and disinvestment campaigns. I do not believe that any of us would now regard their actions as wrong, or would do anything other than welcome the outcome they helped secure.
The Welsh Government believes that the suggestion that national foreign policy should overrule the ethical, and risk-based, decisions of local pensions authorities in making their investments is inappropriate. Such investment decisions should be made as part of a careful consideration of the risks and values appropriate to investors and within the context of the fiduciary duty to their members’ interests which continues to apply.