Green councillors have criticized Liberal Democrat councillors for voting against their own party policy on ethical investment in pensions.
The Greens had called on the City of Edinburgh Council to investigate ways in which the Lothian Pension Fund could be invested in socially responsible companies. Their motion to Council echoed the wording of a motion which was passed by the Liberal Democrats conference in 2006.
Despite this, Liberal Democrat councillors voted to water down the motion, taking out references to ethical investment.
Councillor Maggie Chapman, the Green Finance spokesperson on the Council,
“It is a disgrace that the city council, which prides itself on positive policies such as its Fair Trade status still invests in companies that profit from the production and sale of weapons of war and torture. For example, some of the pension fund is invested in BAE Systems which has profited hugely from the Iraq war, and also supplies weapons for sale in Saudi Arabia, Zimbabwe and Indonesia.
“We want the Council to use its investment muscle for the positive benefit of communities around the world. Other Scottish councils have gone down this route and I am shocked that Liberal Democrat councillors ignored their own party policy in knocking out my motion.”
The Labour group backed the original motion but, without Liberal Democrat support, the motion as presented fell. An amendment by the Conservatives did not receive support from other parties, and the joint Liberal Democrat/SNP amendment (see notes) was passed.
Notes to editor
1. The motion from Maggie Chapman read:
That the Council:
1. Notes the City of Edinburgh Council has a good track record of positive policies, including being a Fair Trade city and having a corporate social responsibility policy for its investments
2. Notes that the Lothian Pension Fund holds shares in BAE Systems, Lockheed Martin, Boeing, Northrop Grumman and Raytheon, which are the world’s top five arms companies (by military revenue) [Defence News, 25/07/05]
3. Notes that
(a) such companies receive major subsidies from the taxpayer to export their wares and that, if the subsidies were to be withdrawn, share values of (and thus pension investments in) arms companies are likely to drop substantially
(b) at the end of 2006, the five largest UK arms producing companies accounted for less than 2% of the FTSE all-share index, even including their civil work
4. Believes that selling military equipment overseas can be detrimental to peace, justice and human rights as well as to development
5. Notes that an increasing number of pension funds are engaging with companies, considering this to be socially responsible investment.
However, such engagement is not appropriate where the product is the problem, such as with arms and tobacco
6. Notes that several Scottish Pension Funds, such as those in Dumfries and Galloway Council, Fife Council and Falkirk Council, have ceased investing in all or some of these companies on ethical and financial grounds
7. Notes that there are many ethical investment opportunities available, and the frequently better and more reliable returns provided by these companies, for example Vestas Wind Systems, would provide viable alternatives that have sustainability of communities and the environment at the heart of their agendas
8. Urges the Lothian Pension Fund to be managed according to ethical principles appropriate to the interests of the beneficiaries and to investigate the means of implementing this within the law
2. The Liberal Democrat/SNP amendment read
That the Council:
1) Notes the City of Edinburgh Council has a good track record of positive policies, including being a Fair Trade city and having a corporate social responsibility policy for its investments.
2) Notes that an increasing number of pension funds including Lothian Pension Fund, Lothian Buses and Scottish Homes are engaging with companies, considering this to be socially responsible investment
3) Notes that there are many environmentally sound investment opportunities available that have sustainability of communities and the environment at the heart of their agendas.
4) Calls on the Director of Finance (by end December) to produce a report on the feasibility of investing part of the portfolios managed by the department on the basis of environmental considerations as part of building a balanced and properly diversified investment portfolio.
5) Also calls on him as part of this report to consider amending the Statement of Investment Principles to include reference to investing in environmentally sound companies as part of building a balanced and properly diversified investment portfolio.
6) Also calls on him as part of this exercise to consult with the participating employers.
3. The motion passed by Liberal Democrat conference is here http://www.libdems.org.uk/conference/agenda.html?id=681&navPage=conferenceagenda.html