Responsible Investor

Peter Wallach, head of pensions at Merseyside, said: “This is a sensitive subject that we are addressing thoroughly. The pension fund is a signatory to the UN Principles for Responsible Investment (UNPRI) and our trustee board has voted in favour of engagement with companies on these issues rather than divestment, as outlined in the PRI. The UK taxpayer underwrites the pensions of the Merseyside fund and we have taken legal advice, which has told us that if a company is undertaking legal business then there is no reason not to invest in it.” In the 1984 Cowan v Scargill case, the High Court ruled that the pension fund of the National Union of Mineworkers could not prohibit investment overseas or in industries in direct competition with the coal industry, which it said could damage returns on the fund’s investments. The ruling has since been held up as a fiduciary test for pension funds to invest for maximum returns only. However, a legal opinion from UK law firm Freshfields in October, 2005, challenged

this orthodoxy, saying that Cowan v Scargill had been interpreted too broadly. It said: “the courts would in many circumstances view investment decisions that are made having regard to environmental, social and governance (ESG) considerations as appropriate.” Non governmental organisations argue that the failure to discriminate between civilians and combatants in war zones is a violation of international humanitarian law and that cluster bombs should be banned via international convention such as the Ottawa Convention on anti-personnel landmines that came into force in 1999. 
The Oslo Process, launched in February 2007, was the start of government discussions to this end. Difficulties related to the technical definition of cluster bombs were raised at the second conference, which ended in May 2007. Governments that took part in the conferences promised to devise a treaty to prohibit cluster bombs “that cause unacceptable harm to civilians” before the end of 2008.

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