A BID to stop one of the biggest publicly run pension schemes in the world based in Scotland from continuing investment in arms firms has failed.
The Glasgow City Council-administered Strathclyde Pension Fund has been criticised after it emerged two years ago it had investments worth £83 million in 11 of the 20 companies with the biggest global involvement in arms manufacture.
The fund which local authority workers across the former Strathclyde region are members of is estimated to have £189 million invested in various arms companies.
Scotland’s largest local authority pension scheme had shares worth £19.6 million, as of December 2014 in the top two arms-producing and military services companies alone, Lockheed Martin, the manufacturer of Trident nuclear weapons, and Boeing.
As of two years ago, the pension scheme had assets of more than £13.9 billion, paid 70,000 pensioners and had a further 130,000 members either paying into the fund or waiting to retire from 12 local authorities, including Glasgow, plus over 200 other large and small employers.
SNP group leader on Inverclyde council Chris McEleny made the call for a ban on arms investments in a letter to Ian Gow the convener of the Strathclyde Pension Fund Committee.
He said: “I have recently been contacted by constituents who have raised concerns that the Strathclyde Pension Fund invests in worldwide arms companies as part of its investment strategy.
“I am sure you can understand that there are many people that do not believe that this type of investment is within the spirit of the fund’s Responsible Investment Strategy.
“As you are aware there has been a change in political leadership across the region and I am hopeful that this will be reflected in future investments ensuring that the scheme makes ethical investments that support the wider fund.”
He hoped that the fund managers would ensure that fund growth is “not on the back off profits generated by arms sales, many of which may be used in conflicts around the world.”
But Richard Keery, investment manager of the fund said it was “unable to support calls for divestment”.
He also said it did not hold information “that would allow us to identify which countries these companies [the fund invests in] sell arms to”.
He said the fund’s postion was that it gets regular calls from lobby groups to divest from one sector or another – fossil fuels, tobacco and defence in particular.
The fund’s position was that disinvestment or screening out of individual sectors has never been part of SPF strategy as this “restricts investment opportunity, tends to increase volatility and may impair investment returns”.
“Divestment based on a subjective, ethical viewpoint is not permissible and potentially subject to legal challenge in the context of a fund which is investing for the purpose of paying pensions liabilities to its members. The effectiveness of disinvestment is also questionable as it reduces investor ability to engage and influence,” says the SPF position.
Mr McEleny said he was “disappointed” that the scheme is “not listening” to concerns.
“There is a growing consensus that people are not comfortable with this type of investment. Members of the Scheme that I have spoken to do not want their pension pot used to invest in Arms Dealers across the world.
” I would urge the elected committee that manages the scheme to challenge this and ensure that the pension pot grows to pay future pension liabilities on the back of an progressive ethical investment policy, not investing in arms dealers.”
A Glasgow City Council spokesman said: “The reasons for refusal are given in the response you referred to.”