The Pensions Committee of Tower Hamlets Council met on Tuesday 15 September 2026 to discuss the divestment and exclusion considerations for the Pension Fund. The committee resolved to proceed with a targeted exclusion and divestment approach concerning companies listed on the UN Office of the High Commissioner for Human Rights (UNOHCHR) database, while deferring decisions on other specified lists pending further due diligence.

Pension Fund Divestment and Exclusion Considerations

The committee considered a report detailing the Pension Fund's exposure to companies appearing on five screening lists, as mandated by a Full Council motion passed on 22 July 2026. This analysis, conducted by London CIV and Marsh, involved cross-referencing hundreds of underlying holdings across seven portfolios.

The committee resolved to note the content of the report, the previous Council motion, and the committee's own resolutions from 30 July 2026. They also noted the confidential papers from London CIV and Marsh, which included methodologies, limitations, and implementation considerations. A key clarification was made that the UN list referenced in the July resolution refers to the UN Office of the High Commissioner for Human Rights (UNOHCHR) database, not the UN Refugee Agency (UNHCR).

Key Decisions Made:

• Targeted Exclusion for UNOHCHR Database: The committee confirmed the Fund's wish for London CIV to progress a targeted exclusion and divestment approach for companies within the scope of the UNOHCHR database. London CIV was requested to provide a final implementation plan, including timetable, expected transaction costs, tracking implications, and the treatment of pooled vehicles.
• Further Due Diligence on Other Lists: No automatic exclusion or divestment decisions were made at this stage for the other four lists specified in the Full Council motion. This was due to their breadth, which could materially alter the Fund's investment risk and return profile. London CIV, along with officers and the Fund's advisers, was requested to undertake further due diligence on these lists. This will include assessing list governance and evidential standards, overlap and duplication, the Fund's actual exposure, investability, projected risk, return, and tracking error, transaction and ongoing costs, stewardship alternatives, and consistency with the Investment Strategy Statement (ISS) and Funding Strategy Statement (FSS).
• Actuarial Assessment: The Fund Actuary was requested to assess the potential impact of each option on achieving the discount rate and affecting funding risk and employer contribution stability.
• Delegation of Authority: Authority was delegated to the Senior LGPS Officer, in consultation with the Chair, Corporate Director Resources, and the Monitoring Officer, to agree necessary operational steps with London CIV. A report on implementation and outcomes is to be provided at the next scheduled meeting.
• Inclusion in ISS and RI Policy: Any enduring exclusion framework approved following further analysis will be reflected in the Fund's ISS and Responsible Investment (RI) policy, subject to necessary consultations and advice.
• ESG Training: A request was made for special training on Environmental, Social and Governance (ESG) factors for the Pensions Committee and the Pension Board.
• Sustainability Survey: The committee noted the Sustainability Survey Questionnaire, which supports the Fund's consultation with scheme members regarding ESG matters.

The committee also noted the updated legal opinion by Nigel Giffin KC on fiduciary duty in the context of the Local Government Pension Scheme (LGPS) and his initial opinion to the LGPS Scheme Advisory Board (SAB). The current Investment Strategy Statement (ISS) and the final Statutory Guidance issued on 29 June 2026 regarding the preparation and maintenance of an ISS were also noted.

The report highlighted that while Full Council can express wider policy positions, decisions concerning the investment of Pension Fund assets must be made by the Pensions Committee, adhering to statutory LGPS governance arrangements. The committee must act for a proper pensions purpose, consider relevant professional advice, and take into account both financial and non-financial factors lawfully, without fettering its discretion. The report also noted that LGPS pools are generally not permitted to implement bespoke Responsible Investment policies for individual Partner Funds, but collaboration between funds with aligned approaches is encouraged.

The analysis indicated that excluding companies based on the UNOHCHR database would represent a relatively targeted approach with a likely small impact on expected returns. In contrast, excluding companies based on the other four lists could represent a potentially material change, affecting approximately 10% to 21% of the index individually, which could significantly reshape the investable universe and the Fund's risk/return characteristics. The combined effect of all lists would require further quantification.

The committee was reminded of its fiduciary duty to act in the best interests of its members, ensuring decisions align with this responsibility and prioritise the long-term financial well-being of the membership. This includes managing ESG factors and considering both financial and non-financial risks in line with legal obligations. The report also noted that any investment strategy must be consistent with the pool framework, as divergence could lead to regulatory intervention.

The meeting concluded with the committee resolving to exclude press and public from the remainder of the meeting to discuss exempt information related to the Pension Fund's investments.