In a public meeting in Bath on 28 March, the Avon Pension Fund Committee voted to maintain its current approach to investing in Aerospace & Defence.
The pension fund invests £18m or 0.3% of its £6 billion assets in companies involved with defence*, which primarily supply NATO partners and the UK government.
The pension fund doesn’t manage the investments directly. Brunel Pension Partnership hold the investments on the Fund’s behalf in highly diversified funds which invest in many different companies globally.
The Committee considered two possible approaches to the Aerospace & Defence sector: A) stop investing in Aerospace & Defence, B) continue to invest in companies which comply with UK and other laws in all sectors, including Aerospace & Defence.
As part of its decision, the Committee considered multiple inter-related factors: financial returns, local employment in defence, the role of Aerospace & Defence companies in UK & NATO defence, the impact of the current exclusion approach, petitioners’ views on the Israel-Palestine conflict and the Committee’s desire to hear the views of the pension fund members.
The Committee noted that divestment – and establishing a new fund excluding Aerospace & Defence companies – would have cost the Fund c. £1.5 million** in one-off and ongoing costs, shared across multiple employers in the Fund.
The Committee also heard that its investments in Aerospace & Defence comply with UK laws and that companies in which the Fund invests include Bae Systems and GE Aerospace, which both provide Ukraine with defence products.
The pension fund’s approach to investments in Aerospace & Defence is underpinned by selective exclusions around controversial weapons and heightened risk assessments for companies operating in the sector.
Speaking after the meeting, Councillor Paul Crossley, Chair of the Avon Pension Fund Committee said:
We’ve thoroughly reviewed our investments in Aerospace & Defence and explored two practical options. At the end of the debate 10 Committee members voted to continue investing in Aerospace & Defence, and 3 voted to divest.
Now that the Committee have made a decision in principle, we will consult our members, which will inform the Committee’s final decision. We will report back in public on the members views as soon as practical in 2025.
We will also focus on ensuring our existing exclusion policy, introduced in 2024 to protect human rights, continues to be robustly implemented by our fund managers, who will continue to engage Aerospace & Defence companies.
We remain committed to ensuring our investments address a broad range of environmental, social and human rights issues, and to engaging with our many stakeholders.
For information about the Avon Pension Fund Committee meetings, including agendas, papers and minutes visit the B&NES Council website.
* e.g. BAe Systems, General Dynamics, Boeing, Northrop Grumman, Rheinmetall, Saab, Thales
** total additional one-off & ongoing costs in year 1 would be c.£1.5 million. One-off costs associated with moving to new Paris-aligned fund/s excluding A&D companies c. £500,000. Creating a new fund excluding A&D, with APF as sole investor, cost c.£750,000 p.a. Excluding other impacted funds in Multi Asset Credit & Global High Alpha equity c. £300,000-£500,000. See the March 2025 Committee papers ‘4. Alternative fund costs’.
Our members LGPS pension benefits are guaranteed by law and do not depend on investment returns.