Public Questions – 4 September 2025

 

Question 1 – Mr Ashraf

As-Salaam Alaikum, 

Good Morning Chair, Councillors and Officers,

My question concerns SYPA’s fiduciary duty and its alignment with the urgent need to divest from entities complicit in Israel’s violations of international law in Palestine. Recent disclosures confirm SYPA holds £118 million in arms manufacturers (including BAE Systems and Rolls-Royce) and £4.8 million in Israeli investment, of which £1.9 million comprises Israeli government bonds, initiated in 2024 amid the International Court of Justice’s genocide investigation. These investments directly contradict SYPA’s Responsible Investment Policy, which mandates investments to "do no harm. Yet, SYPA has consistently cited fiduciary duty and operational constraints within the Border to Coast Pensions Partnership (managing 80% of SYPA’s £11bn fund) as barriers to divestment. I argue this interpretation is legally incomplete, financially unsound, and ethically indefensible.   

Fiduciary Duty Encompasses More Than Short-Term Returns, SYPA’s narrow view of fiduciary duty ignores material risks:   

Reputational & Legal Liability: Continuing investments in companies implicated in war crimes (e.g., BAE Systems’ provision of F-35 jets used in Gaza) exposes SYPA to legal challenges under international law, including the Rome Statute which is applicable via the United Kingdom's International Criminal Court Act of 2001. The UN has explicitly called on states to sever economic ties with Israel, noting complicity risks.   

Member Sentiment: SYPA has no mandate for investing members' money in companies profiting from genocide or Israeli government bonds. The 7,000 strong petition (including signatures of over 700 scheme members) collected in a short space of time along with recent polling of the UK general public supporting an arms embargo and sanctions on Israel (https://palestinecampaign.org/polling-reveals-huge-public-support-for-arms-embargo) strongly suggests that members would oppose these investments. SYPA has recently also conducted a survey of its scheme members, which it is yet to publish fully, but which may further demonstrate member sentiment. SYPA has a fiduciary duty to take account of the views and interests of members, some of whom may have been harmed morally or directly through these investments.  

Precedents: Councils like Manchester, Bristol, and Islington have divested from similar assets, proving fiduciary duty accommodates ethical divestment.   

Pooling Arrangements Are Not Absolute Barriers. SYPA claims divestment requires unanimous agreement from all 11 Border to Coast funds. However, this misrepresents options:  

Segregation of Assets: SYPA can work with Border to Coast to create exclusion-led pooled funds or segregate contentious assets for phased divestment. Other pools (e.g., Brunel) have engineered such solutions for climate goals.   

Leverage as a Major Investor: As part of a £64bn pool, SYPA holds influence to demand ethical screens. Withholding further investments until exclusion policies align is a legitimate fiduciary tool.   

Divestment of Directly Held Assets: SYPA retains control over 20% of its portfolio (£2.2bn), including Israeli bonds. Divesting these immediately is wholly within SYPA’s power.   

Financial Stability Supports Principled Action SYPA’s funding level stands at 159–160%—far above liabilities. Arms investments constitute just 1% of total assets (£118m). Divesting this fraction poses no material risk to members’ benefits but mitigates long-term reputational and legal harm. As has been previously noted, divestment is "morally, legally, and financially justifiable" given this buffer.  

The Path Forward: A Fiduciary Imperative

Continuing these investments violates SYPA’s own policies and legal norms. The International Criminal Court’s investigation into Gaza atrocities, coupled with ICJ rulings on plausible genocide, escalates the legal peril of inaction. Fiduciary duty requires SYPA to:   

Conduct an immediate fiduciary risk assessment evaluating legal, reputational, and financial exposure from these holdings.   

Demand Border to Coast establish an exclusion screen for companies on the UN’s list of settlement violators and arms suppliers to Israel.   

Divest directly held Israeli bonds and reinvest in local impact initiatives (e.g., South Yorkshire Debt Fund) that align with SYPA’s place-based strategy.   

 

My Question to the Authority that should be answered directly and not as part of a general, amalgamated response is: 

Given the legal, financial, and ethical imperatives, will SYPA commit by December 2025 to:

1. Immediately divest its £1.9m in israeli bonds from its directly managed portfolio? 

2. Commission an independent fiduciary risk assessment of all israel-linked holdings, including BAE Systems and Rolls-Royce, evaluating continued investment under UK and international law? 

3. Formally table a motion at the next Border to Coast meeting to create an exclusion policy for companies complicit in human rights abuses in Palestine?   

 

Silence is complicity. 

Fiduciary duty is not a shield for inaction, it is a mandate to protect members’ interests holistically.

The world is watching South Yorkshire Pensions Authority.

We all are watching South Yorkshire Pensions Authority.

 

Response

1. Immediately divest its £1.9m in Israeli bonds from its directly managed portfolio? 

Contrary to your email, no Israeli government bonds are held directly by SYPA.  These are held within the Border to Coast Multi-Asset Credit Fund as part of a mandate run by PIMCO.  As this is a pooled fund, with multiple investors, SYPA is not able to divest from any individual holdings.

We have been engaging with Border to Coast over the course of several months to understand PIMCO’s rationale for the purchases of their Israeli government bond holdings, the Environmental, Social and Governance (ESG) risks PIMCO took account of as part of this evaluation and their continuing choice to retain these assets.  To-date, we have been extremely disappointed by the lack of detailed insight and transparency provided to Border to Coast by PIMCO.  We have expressed our concerns to Border to Coast and are actively working to obtain more credible responses from PIMCO. 

 

2. Commission an independent fiduciary risk assessment of all Israel-linked holdings, including BAE Systems and Rolls-Royce, evaluating continued investment under UK and international law? 

Border to Coast and its underlying managers carry out risk assessment as part of their investment process and ongoing monitoring.  More details on the approach can be found within Border to Coast’s Responsible Investment Policy - Border-to-Coast-RI-Policy-2025-FINAL-EXTERNAL.pdf.

 

As one of the largest funds in the Local Government Pension Scheme it is expected that the South Yorkshire Pension Fund has holdings in many large multi-national companies. The holdings identified are managed by the Border to Coast Pensions Partnership who engage with companies to ensure that they are making appropriate assessments of the implications of their operations in conflict affected areas.

 

The Authority does not invest in companies associated with the manufacture of controversial weapons, such as cluster munitions and land mines - these are subject to various international restrictions - and this is a very common position in the pensions industry. However, investment managers can and do invest in major defence contractors such as BAE Systems, where there is a financial case for doing so. Indeed, companies supplying arms will be doing so under the explicit terms of licences from the relevant government and it would be unreasonable (in terms of the legal principle known as Wednesbury reasonableness) to disinvest in a company acting with specific legal sanction.

 

3. Formally table a motion at the next Border to Coast meeting to create an exclusion policy for companies complicit in human rights abuses in Palestine?   

Decisions taken by Border to Coast and their underlying managers regarding the investment risk from a company’s Environmental, Social or Governance activities need to reflect the financial materiality of the issue. Revenues from Israel and the Occupied Palestinian Territories for the investee companies you have referenced are unlikely to be financially material in making decisions on investment or disinvestment. As noted above, companies exporting arms and military technology do so under very strict licensing conditions imposed by domestic governments. Further, the Supreme Court held in its judgement on the Palestine Solidarity Campaign case that it is not appropriate for political preferences, whether local or national, to take precedence over what is required under a pension scheme’s fiduciary duty.

 

As touched upon in the response to question 1, the Pensions Authority does not directly own the shares and bonds of individual companies and government entities. Rather, it invests largely through pooled funds which are ultimately managed by Border to Coast.  It is worth noting that Brunel’s approach, whose segregated account approach you referenced, has been rejected by the Government and the pool will effectively be discontinued in the coming months.

 

The Authority encourages engagement by Border to Coast with investee companies to ensure that they are fully considering the impact of their activity in conflict affected areas through appropriate risk assessment. The standards which are expected of companies are set out in the collectively agreed Responsible Investment Policy.  SYPA has identified that this is an area where they would wish to see policy tightened in future and will be lobbying for this in the next annual review. In addition, the Chair of SYPA has raised at the Border to Coast Joint Committee the need to actively address these issues.

 

Question 2 – Ms Smith

As a member of SYPA in receipt of a pension I completed the member survey  - it’s shocking to me that SYPA have taken so long to provide any sort of information about the outcome of that survey and have not taken the trouble to provide me, as a member with any information about when or how the results of the survey would be disseminated or acted upon.

In a brief summary of the results of the Responsible Investment Survey published by the SYPA on its website, 90% of members stated that they wanted clear, transparent communication about how their pensions are invested.

In spite of this call for clear communication, the SYPA has failed to communicate the results of the Responsible Investment Survey with members - as a member myself, I have not been informed that a summary of results was published on the SYPA website. Moreover, the summary is incomplete: it entirely fails to report the results of questions relating to the arms trade. This is a significant omission: especially when over 700 SYPA members signed a petition to the SYPA explicitly demanding divestment from arms companies complicit in the genocide of Gaza.

 

The SYPA is duty-bound to consider the views of members in its decision-making, yet it is failing to reveal what those views actually are to members themselves. What practical steps will the SYPA to rectify its lack of transparency in regard to the members survey results, and how will it ensure accountability to members in its implementation of the outcome of the survey results?

Secondly, as far as I can see there is no information on the website about the extremely serious concerns raised at the last meeting about the fact that SYPA holds investments in Israeli Government bonds. This should surely be a matter of grave concern to each of you who sit as councillors as members of SYPA, and I would have thought each of you would be concerned to raise questions about this investment. I therefore request a detailed explanation of how this investment came about, and what steps are being taken to cease all investment in Israeli Government bonds.

Response

The Authority undertook the Responsible Investment survey to inform the work being undertaken on the Investment Strategy Review and its next annual review of its responsible investment policies. Both of these pieces of work are due to report back to the Authority in March 2026 and it had been intended to publish the full results alongside these pieces of work although a summary of the results was published on the website as a news story during August, after Authority members had been briefed on the results. Following interest from scheme members the full results as provided by the external market research company that undertook the work have been published on the website.

 

It should be understood that this is not a referendum but a piece of research which establishes to some degree the views of a self-selecting sample of scheme members on a range of issues. The Authority’s duty is to consider these views as part of its overall decision making process and act in the best interests of all scheme members avoiding material financial impact on the returns achieved for scheme members.

 

As indicated in answers to other questions officers of the Authority continue to pursue answers in relation to the fund manager’s rationale for investment in Israeli government bonds. To date no satisfactory answer has been received. When a satisfactory answer is received it will be published.

 

 

Question 3 – Finn Cross – Unable to attend in person

I understand that North Yorkshire has moved to remove its holdings in UK equities and, as a result of that process, no longer hold shares in Shell or BP.  Is this something that SYPA would consider and, if not, why not?

 

Response

North Yorkshire has recently divested from Border to Coast’s UK Listed Alpha Fund.  For information, this is not the same UK equity fund South Yorkshire Pensions Authority (SYPA) is invested in.

We understand this divestment was part of a change to North Yorkshire’s long-term investment strategy - and this was not a decision related to holdings in BP and Shell.  Essentially, North Yorkshire made this change to help de-risk its portfolio as a result of its increased funding level.  The proceeds were invested into a bond fund, which is expected to have a lower risk/return profile than equities.

SYPA is in the early stages of reviewing its own long-term investment strategy and expects to recommend an updated investment strategy to its Pensions Committee in March 2026.  This will primarily focus on:         
     

• Risk and return profile of our investments
• Cashflow and liquidity considerations
• Climate considerations and net zero alignment

It is worth noting SYPA’s view that engagement with energy companies is more effective than divestment when it comes to having a real-world impact.  As a responsible investor, we are able to engage with companies and utilise our shareholder rights to vote at company's annual general meetings.  This gives us a voice at the table, which we can use to try and sway company management.  If we divest from these companies, we think it's important to keep in mind the following:

• We lose our voting rights - our seat at the table is gone.
• By divesting from energy companies like BP and Shell we may be making a statement – but we would not actually be denying these companies of capital.  The shares we sell would immediately be bought by another investor, perhaps an investor who is less focussed on the transition to a lower emission world than SYPA.
• Divesting from energy companies will make SYPA’s own portfolio emissions figures look better - but it doesn't have any impact on actual global emissions.  We want to see our portfolio emissions reduce over time, but via the route whereby the larger emitters are actually moving to a more sustainable approach themselves, rather than simply selling our holdings in those companies.  That’s how we believe we can make a real-world difference.

 

Question 4 – Richard Burnham

In the minutes from the Committee meeting of Thursday 13th March, point 15 b states that

the Committee 'Requested officers review the impact of SYPA advocating for active exclusion where engagement has demonstrably failed and provide the results in a report at the 18 December 2025 Authority meeting.'

 

When a decision is made that engagement has demonstrably failed, as is clearly the case for Shell and BP, how will SYPA work with BCPP to facilitate exclusion of these companies from SYPA's holdings?

 

What steps will SYPA take to encourage partner funds within BCPP to follow suit in excluding Shell and BP?

 

Response

 

The work to respond to the resolution made at the Authority’s March meeting is ongoing and it is too early in that process to identify whether the result will be a decision to promote disinvestment in specific cases and this will be a decision taken by members of the Authority in due course.  

Given the way in which the investment pooling process works while SYPA might advocate for disinvestment in particular circumstances it is not able to implement such a policy in relation to its holdings in pooled investment vehicles and therefore the implementation of such a policy will depend upon the Authority’s ability to build alliances with other partner funds. The likelihood of being able to successfully build such alliances will form a consideration in the advice which officers will provide to members of the Authority in December.