Exclusive: Council invests £15m in arms firms linked to deadly Yemen War
Last updated Jan 20, 2022

A North Yorkshire County Council pension fund invests £15m in arms companies that have built weapons for the deadly Saudi Arabia-led bombing campaign in Yemen.

The revelations come as part of a series of investigations by the Stray Ferret into controversial investments made by the North Yorkshire Pension Fund, which is controlled by the council.

The Stray Ferret obtained a full list of the companies the pension fund invests in through a freedom of information request.

The council’s pension fund is now facing renewed calls to divest from arms firms. However, its own responsible investment policy, last updated in July 2021, clearly states that it will not implement an “exclusionary policy” against companies that are deemed by some to be questionable.

It says:

“Whilst the Fund recognises that there is the potential for investment in certain sectors to cause harm, it will not implement an exclusionary policy against investment in any particular sector or company purely based on social, ethical or environmental reasons”.

Ethical questions for council

The fund has an investment worth £11m in the UK’s largest arms manufacturer BAE Systems.

Company reports analysed by the Campaign Against Arms Trade (CAAT) found BAE Systems, via the UK government, has sold at least £15bn worth of arms and services to the Saudi military since the Yemen conflict began in 2015.

According to UNICEF, over 10,000 children in Yemen have been killed in the conflict, which is between a Saudi-backed Sunni group and Shia Muslims.

Professor Anna Stavrianakis is an expert on the global arms trade and is a Professor of International Relations at the University of Sussex. She told the Stray Ferret the pension fund’s investment in BAE Systems raises ethical questions for NYCC.

She said:

“The basic ethical premise of investment is that you invest now to secure a better future for yourself. If you do that by investing funds in a company that in an extremely direct way has contributed to the deaths of other people, it is not that much of a stretch to say there’s an ethical issue there.

“If I was a council employee I would be asking where is my money being invested, and at whose expense is my future being secured? They can be painful questions to answer.”

‘Death and destruction’

North Yorkshire Pension Fund also holds £3.7m in Raytheon Technologies, an American defence company that manufacturers the controversial Paveway bomb.

Fragments of the bomb were found following a 2019 Saudi-led air strike in Yemen that killed six civilians, including three children.

A Paveway bomb being dropped. Credit – Raytheon

In 2019, the European Center for Constitutional and Human Rights (ECCHR) submitted a 300-page document accusing European arms executives at firms, including BAE and Raytheon, of “aiding and abetting” alleged war crimes in Yemen by the Saudi-led coalition.

Kirsten Bayes from the Campaign Against Arms Trade, called on North Yorkshire County Council to reconsider its pension fund’s investments into arms companies.

As well as BAE Systems and Raytheon, the pension fund also invests £7.3m in Safran and £6.9m in Rolls Royce, which are both major manufacturers of military equipment.

Ms Bayes said:

“Arms companies make their money from death and destruction. Council tax payers and pensioners in North Yorkshire will be shocked to learn that their funds are invested so heavily in such a violent industry.

“We would call on the trustees of the pension fund to reconsider their investments in weapons makers. Their money could instead be helping to create new, green jobs in the high growth industries of the future. That would be a better deal for everyone.”

Councillor defends the investment

Harrogate Borough Council Conservative councillor Jim Clark has sat on the Pension Fund’s committee of councillors since 2001 after a career in finance. He represents all the district councils in North Yorkshire.

He defended the investment in BAE Systems when asked by the Stray Ferret. He said the £11m holding represents a “very, very small” part of the fund’s total investments and that the fund’s main responsibility is to maximise its value, although he said “various people have different views on that”.

Cllr Jim Clark

Cllr Clark believes by remaining as an investor in companies that are deemed by some to be controversial, it can use its power to influence decision-making.

He said:

“Theres no point saying ‘just sell the shares’. If you have no shares you have no way of influencing decisions made, people tend to forget that when they make comments that haven’t been properly thought through.

“Successful companies will always listen to their shareholders. It’s very important that they do.”

Cllr Clark was unable to provide evidence of how the North Yorkshire Pension Fund has influenced decision-making at BAE Systems.

BAE Systems and council respond

The Stray Ferret approached both BAE Systems and Raytheon for comment.

A BAE Systems spokesperson said:

“We provide defence equipment, training and support under government to government agreements between the UK and the Kingdom of Saudi Arabia.‎ We comply with all relevant export control laws and regulations in the countries in which we operate and our activities are subject to UK government approval and oversight.”

Gary Fielding, treasurer of North Yorkshire Pension Fund for North Yorkshire County Council, said: 

“The pension fund needs to get the balance right on responsible investment and ensuring funds are available to pay pensions without further call on local taxpayers.

“Rather than divesting from companies, the fund believes active engagement gives it, in collaboration with other pension funds, greater influence in effecting change within companies”.

In the final part of our investigation into the council’s pension fund, we reveal it holds over £20m in cancer-causing tobacco companies despite the council being in charge of public health.