The Tower Hamlets Pensions Committee has requested special training on Environmental, Social, and Governance (ESG) matters to better understand the complexities of investment decisions, particularly concerning human rights violations.

The committee met on Tuesday, 15 September 2026, to discuss a report on the council's motion concerning pension fund divestment and exclusion considerations. The motion, passed by Full Council in July 2026, called for an analysis of the pension fund's holdings against several specified lists related to human rights violations. These lists include the UN Office of the High Commissioner for Human Rights (UNOHCHR) database, referred to as the UN list, as well as the Boycott, Divestment and Sanction (BDS) National Committee, Who Profits Research Center (Who Profits), American Friends Service Committee (the AFSC), and the UN Special Rapporteur's Economy of Genocide report.

Confidential analyses from London CIV and Marsh were presented. These indicated that while excluding companies from the UNOHCHR database would represent a small portion of the index (approximately 0.4%) with potentially minimal impact on returns, exclusions based on the other four lists could range from 10% to 21% of the index. Such broader exclusions could significantly reshape the investable universe and the Fund's risk/return characteristics. Specific financial implications include potential changes to expected and realised returns, diversification, and tracking error. If the Fund's return falls below the assumed rate for funding purposes, this could weaken the funding position and increase future employer contributions. Additionally, there could be increased transaction costs, market impact costs, tax or operational consequences, and potential difficulties in less liquid assets.

The committee resolved to progress a targeted exclusion and divestment approach for companies within the scope of the UNOHCHR database, requesting London CIV to provide a detailed implementation plan. For the other four lists, London CIV was asked to conduct further due diligence, reporting back on aspects such as list governance, evidential standards, actual exposure, and potential impacts on risk and return.

In light of the intricate nature of these issues, the committee specifically requested training on fiduciary duties, ESG policy, engagement strategies, legal opinions, divestment options, and alternative ethical investments. This training is intended for both the Pensions Committee and the Pension Board and will include topics such as 'Engagement, collaboration and escalation routes' and 'Alternative investment options that adhere to the highest ethical standards'.

The report also reiterated that while Full Council can express policy positions, investment decisions for the Pension Fund must be made by the Pensions Committee, acting in the best interests of its members and adhering to statutory governance arrangements. The committee must consider financial and non-financial factors lawfully and avoid fettering its discretion. Decisions must be evidence-based, proportionate, consistent with the Fund's published strategy and capable of implementation, establishing a rational connection to investment risk or return, or otherwise satisfying legal tests for non-financial considerations. Any enduring exclusion framework approved following further analysis should be reflected, as appropriate, in the Fund's Investment Strategy Statement (ISS) and Responsible Investment (RI) policy, following any required consultation and advice.

Further details on the meeting and the reports discussed can be found in the Public reports pack and the Supplementary Agenda.