On appeal from: [2018] EWCA Civ 1284

This appeal concerns the breadth of the ethical investments that the authorities which administer the local government pension scheme are permitted to make. The appellants brought a claim for judicial review alleging that two passages in the guidance issued by the Secretary of State pursuant to the Local Government Pension Scheme (Management and Investment of Funds) Regulations in 2016 was unlawful. The first passage concerned states that “the Government has made clear that using pension policies to pursue boycotts, divestment and sanctions against foreign nations and UK defence industries are inappropriate, other than where formal legal sanctions, embargoes and restrictions have been put in place by the Government”. The second passage states that authorities “[s]hould not pursue policies that are contrary to UK foreign policy or UK defence policy”.

The High Court held that the two passages were unlawful on the basis that the issue of them by the Secretary of State exceeded his powers. The Court of Appeal upheld the Secretary of State’s appeal. By a majority, the Supreme Court allowed the appellants’ appeal and restored the High Court’s order.

The Supreme Court held that the Secretary of State’s inclusion of the two passages in its guidance exceeded his powers. Power to direct how administrators should approach the making of investment decisions by reference to non-financial considerations does not include the power to direct what investments they should not make.

For judgment, please download: [2020] UKSC 16

For Court’s press summary, please download: Court’s Press Summary

For a non-PDF version of the judgment, please visit: BAILII

To watch the hearing please visit: Supreme Court website, 20 November 2019 morning and afternoon session.