Will Sunak persevere with the Boycott Bill to outlaw local councils’ ethical investment decisions?

By Richard Burden, Balfour Project Trustee

Britain has a new Prime Minister and at least some different faces in Cabinet from those who were there a few weeks ago. Although headlines are understandably dominated by questions about the approach the Sunak Government will take on the massive economic challenges facing the country, it also remains to be seen how far it will be different from the Johnson and Truss administrations in other areas of government policy. One signal will be whether or not he goes ahead with the commitment made in the May 2022 Queen’s Speech to a “Boycott, Divestment and Sanctions” Bill that both Boris Johnson and Liz Truss pledged to take forward.

The notes which accompanied the Queen’s Speech (p151) stated that the proposed legislation will outlaw public bodies, including local government, from engaging in “boycott, divestment, sanctions campaigns against foreign countries or those linked to them; the sale of goods and services from foreign countries; UK firms which trade with such countries, where such an approach is not in line with UK government sanctions.”

In other words, it will be for central government, and central government alone, to make such decisions. No elected local council nor any other public body in the UK will be allowed to make their own judgements on these matters when making commercial or other decisions.

If passed into law, the so called “BDS Bill” will drive a coach and horses through Britain’s compliance with Guiding Principles on Business and Human Rights published by the United Nations to which the UK signed up over a decade ago.

Both the UN Guiding Principles and an Action Plan to implement them published by the UK Government itself make clear that it is the corporate responsibility of businesses  to uphold  human rights in their own operations and to monitor  the  human rights records of those with whom they have commercial dealings. Neither document suggests it is acceptable for businesses to simply pass the buck to government to tackle these issues alone.

In recent years, elected councillors and those running other public bodies have also come to recognise that they carry similar corporate responsibilities, whether through incentivising their own business partners to respect ethical standards and human rights through the procurement and investment decisions they make, or by refusing to deal with those whose actions fail to live up to acceptable standards.

Are Ministers really saying that they expect lower standards of corporate social responsibility in the procurement and divestment decisions of elected Councils, public sector pension funds and other public bodies than they expect of private businesses?

Look closer at the Government’s briefings, however, and it becomes clear that their target is ethical investment/divestment decisions by public bodies in one specific part of the world – Israel and Palestine.

Indeed, Michael Gove MP, now back in Government as Levelling Up Secretary, has claimed that boycott and divestment decisions targeted against Israel are antisemitic and that they threaten to “take us back to the darkest place humanity has known.” That, he says is why new laws are needed.

Mr Gove’s claims have no foundation. Under the Equality Act 2010 and other anti-discrimination laws, it is already rightly illegal for any public body to engage in or legitimise antisemitism – whether in their commercial dealings or in any other way.

Public bodies are also already debarred from discriminating against companies purely on the basis of nationality – whether Israeli or anything else.

But public bodies do have the right, in accordance with the Government’s own guidelines on business and human rights, to take a commercial partner’s behaviour into account when deciding whether or not to do business with it, whatever its nationality. That includes consideration of any collusion by the commercial partner with human rights abuses at home or abroad.

There are different views about the how far Israel upholds human rights within its own borders. However, not only will the proposed BDS Bill prohibit boycott or divestment decisions affecting Israel itself, By also explicitly outlawing action against bodies “linked to” foreign countries it will also affect divestment from commercial dealings with Israeli settlements in the Occupied Palestinian Territories: settlements that are explicitly illegal under international law.

Israel’s documented breaches of international law in the Occupied Palestinian Territory are already under investigation by the International Criminal Court. Respected Israeli and international human rights NGOs have recently published evidence that the Israeli government is guilty of the crime of Apartheid in its actions. In 2020, the United Nations also published a database of 112 companies whose commercial dealings in the Occupied Palestinian Territories raise, in the words of the UN, “human rights concerns.“ Three UK-registered companies – JCB Excavators, Opodo Ltd and Greenkote PLC – are on the UN list.

Even the UK’s own Foreign, Commonwealth and Development Office advice to business highlights the reputational and other risks of commercial dealings with settlements and it makes clear the UK government does not encourage or support such dealings.

The proposed BDS Bill runs counter to this advice.

Michael Gove’s overblown claims about decisions to boycott or divest from those complicit with Israel’s human rights abuses are not unique. They reflect the kind of smears which have been made against others who have accepted their corporate responsibility to stand against such abuses. Last year, some pro-Israel advocacy groups alleged that the decision by Ben and Jerry’s to stop selling their ice cream in illegal settlements was antisemitic. Indeed, Israel’s President even claimed the ice cream company’s action was a “new kind of terrorism”. The absurdity of these slurs was rightly called out by many people at the time – including in the UK by Hannah Weisfeld, Director of the Jewish pro-peace, group, Yachad. UK Ministers should heed her words.

This is not the first time that Conservative Ministers have tried to outlaw that right of public bodies to take ethical considerations into account when making investment decisions. Margaret Thatcher tried it over Apartheid South Africa in the 1980s and she failed. The Cameron Government tried it in 2016 in explicit cooperation with the Israeli Government of Binyamin Netanyahu. That attempt also failed after the conflict between their plans and the UN/ OECD guidelines on business and human rights was highlighted and in a successful legal challenge.

Earlier this year there was another attempt to do so when, with Government support, Parliament passed an amendment to a Pensions Bill which, if implemented, will outlaw ethical investment decisions by public pension fund trustees in terms similar to the proposed BDS Bill.

Now on the statute book as an Act of Parliament, it remains to be seen whether or not this legislation will stand up in court any better than previous attempts to do the same.

It also remains to be seen whether the BDS Bill resurfaces under Rishi Sunak. If it does, it should concern everybody who cares about the right of public bodies – including the local councillors whom we elect – to make ethical investment decisions. It is wrong for the Government to try to prohibit action against human rights abuses by Israel and against the illegality of its actions in the West Bank and Gaza. But the implications of the Bill go far wider than Israel and Palestine.  The Bill’s proposed wording is so widely drawn that it would also threaten the legality of divestment decisions taken by public bodies in response human rights abuses anywhere the world – from Saudi Arabia to Myanmar and China – not to mention other ethical investment decisions related to issues ranging from the arms trade to environmental sustainability.

For all of those reasons we have to stop it.

Richard Burden is a Trustee of the Balfour Project. He was MP for Birmingham Northfield 1992-2019 and is a former Chair of the Britain-Palestine All-Party Parliamentary Group.

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