1. The continuing and expanding occupation of Palestinian territories by Israel is illegal
Israeli settlements on Palestinian territory continue to expand in number and size. These are illegal under international law and constitute war crimes and crimes against humanity under the Rome Statute of the International Criminal Court (Rome Statute). The Fourth Geneva Convention prohibits an Occupying Power from the individual or mass forcible transfer and deportations of protected persons, as well as from transferring parts of its own civilian population into the territory it occupies. The confiscation of land to build or expand settlements in occupied territory is prohibited, and the extensive destruction and appropriation of property for the benefit of settlements violates a number of provisions in the Hague Regulations of 1907 and the Fourth Geneva Convention. Israeli settlements also exhibit clear and systematic discrimination against Palestinians as a people, with a civil administration for settlers residing and working in the illegal settlements, and a military administration for Palestinians across the occupied territories.[i]
2. UN report on listed activities by companies which support the occupation
In February 2020 the UN Human Rights Council published a report on business enterprises involved in ten “listed activities” in the occupied Palestinian territories that raised particular human rights concerns[ii]. These covered the supply of equipment for demolishing existing Palestinian homes and settlements and the construction of illegal Israeli ones; the provision of utilities and banking and other services for maintaining and expanding Israeli settlements; the supply of surveillance equipment for Israeli settlements, the wall and checkpoints; the appropriation of existing natural resources by settlements and transfer of settler waste to Palestinian villages; practices that systematically disadvantage Palestinian enterprises; and the reinvestment of benefits from settler activities in supporting and expanding illegal settlements.
3. USS holdings in companies engaged in listed activities
A recent report has identified 50 leading businesses that are actively involved in illegal Israeli settlements, together with the top investors and creditors in those businesses[iii]. The report summarises the UN listed activities that each company is involved with, which support the maintenance and expansion of illegal Israeli settlements.
As of June 2023, USS holds shares in 19 of those 50 companies[iv]. These are Airbnb, Alstom, Altice, Bank Hapoalim, Booking Holdings, Carrefour, Caterpillar, Cisco Systems, CNH Industrial, Expedia Group, Heidelberg Materials, Motorola Solutions, PUMA, Siemens, Solvay, TUI Group, Vinci/Semi, Volvo Group and WSP Global.
USS also held shares in 9 of the top 10 creditors providing loans and underwriting to those 50 companies, and 5 of the top 10 investors in those companies. These holdings are BNP Paribas, HSBC, Société General, Deutsche Bank, Barclays, Santander, Crédit Agricole, UniCredit, ING, Legal and General, and Allianz.
4. Examples
Some examples from the report give insight into how these companies support the illegal occupation.
Airbnb advertises hundreds of listings of properties for rent in the illegal settlements. These generate significant profits for the hosts and help financially support the settlements.
Altice International is a telecommunications company whose subsidiary, Hot Telecommunications Systems, provides cable and telecommunication services to the illegal settlements, including building infrastructure on confiscated Palestinian land. The company pays royalties to the settlements.
Bank Hapoalim has provided financing for multiple construction projects in Israeli settlements as well as loans to regional settlement authorities, and provides financing for the Jerusalem Light Rail project which connects the illegal settlements in the occupied eastern part of Jerusalem with the western part of the city.
Booking Holdings and Expedia provide booking services for a range of hotels, guesthouses, and holiday apartments in the occupied West Bank, Israeli settlements in the illegally occupied territories, including the eastern part of Jerusalem.
Caterpillar. Heavy machinery manufactured by Caterpillar is extensively used by the Israeli military, including wheel loaders, armoured excavators, mini-loaders, and armoured bulldozers, which have been used for unlawful operations such as large-scale house demolitions and land-clearing missions in Palestinian towns.
Cisco provides IT network hubs in the Sha’ar Binyamin Industrial Zone in the regional council of the Mateh Binyamin settlement and the Shomron region council in the occupied West Bank, with plans for additional hubs in the Modi’in Illit, Kiryat Arba and Beitar Illit settlements.
CNH industrial heavy equipment has been used repeatedly during the last ten years in the construction of illegal Israeli settlements, industrial zones and related infrastructure in the occupied Palestinian territories.
Heidelberg Materials The company’s subsidiary Hanson Israel supplies building materials such as concrete to Israeli settlements in the West Bank and East Jerusalem.
Motorola Solutions has been involved in Israel’s illegal settlements for more than 10 years. The company designed and manufactured the surveillance system “MotoEagle”, which is used in dozens of illegal settlements in the West Bank, in the wall around Gaza and in Israeli military base.
PUMA is a sponsor of the Israeli Football Association, which governs teams from Israeli settlements, which play on stolen land. Palestinians are not allowed to enter settlements for recreational purposes, to play or train on the pitches or watch the games.
Siemens traffic control systems have been installed on Roads 5 and 443 in the occupied West Bank, as part of an Israeli road system, on which Palestinians are forbidden from travelling. The company has a €1.1bn contract with Israel Railways. The trains operate most services on the A1 Fast Train line which crosses the Green Line into the occupied West Bank in two areas, using appropriated Palestinian land for an Israeli transportation project for the exclusive benefit of Israelis. WSP Global managed the electrification project for part of the A1 train line.
Solvay provides materials for Elbit unmanned aerial vehicles. Drones are used for surveillance by the Israeli military in the occupied territories of the West Bank, East Jerusalem and Gaza, as well as in military operations in the Gaza strip.
TUI Group subsidiaries offer guided tours that are solely branded as visiting Israel, but include sites in illegal settlements in the occupied West Bank and the occupied Syrian Golan.
5. Investments in territories illegally occupied and USS policy
Amongst USS documents such as their policies on Responsible Investment or their Stewardship Code Reports we have not been able to find direct reference to policies on investing in illegal activities.
With regard to other USS investments where such issues have arisen, in the case of Russia’s attempted occupation of Ukraine and annexation of Ukrainian territories[v], USS stated “Like many others, we have been shocked and saddened by the events of the last few days and our thoughts and prayers go out to those suffering in Ukraine in the wake of Russian aggression. In terms of our own position, there is clearly a financial as well as a moral case for divestment with respect to our Russian holdings….”.
Concerning Myanmar, in 2022 USS identified 25 investments in companies with a reported link to the military government[vi]. They stated “Our initial discussions with these companies focused on how they were protecting and assisting their local workers in Myanmar while requesting they withhold money from the military junta. In 2022, and following discussions with local NGOs, the emphasis of the engagement changed, and we started asking companies to withdraw entirely from Myanmar as the country spiralled into civil war. Our main area of concern has been the Yadana Gas Field project, which provides one of the main sources of income for the military junta.” USS appears to be applying ethical concerns without mention of the financial basis in this particular case.
6. Critique of the USS position
As described above, USS is investing in companies that are both profiting from the occupation of Palestinian territories, and directly supporting the maintenance and expansion of those settlements, thus supporting acts which violate multiple human rights laws.
Large organisations in the UK are required to address and report on modern slavery by the Modern Slavery Act 2015 and 2020. USS’s latest report[vii] includes the statement that “We are committed to acting ethically and with integrity in all our business dealings and relationships”. How this is consistent with investing in companies which are transparently and consistently violating international laws is not apparent.
But it is not at all clear that USS’s ethical investment policy takes any stance on illegal activities. If a company is judged to be a profitable investment, the fact that it is engaged in illegal activities appears to be irrelevant. A striking case of this is Glencore[viii]. In the past decade this company has been involved with bribery and corruption on a global scale, resulting in an unprecedented level of fines of over one billion US dollars. In the whole period covering the revelation of the scale of the charges, the eventual multiple guilty findings, and the on-going criminal charges, USS continued to hold shares in the company, with over £160m in shares in 2022 for example.
USS’s response to criticisms like those above is the same as its response to critics of its investments in fossil fuels – it quotes legal advice that USS “can only take non-financial factors into account where they do not create a material risk of a negative financial impact on an investment and it has good reason to believe that the Scheme’s members share each other’s views.” [ix]
But in all these cases there is always a choice of a company with equal financial return but without the ethical problems, which it should be mentioned are inevitably linked to increased litigation, economic and political risks. The fiduciary duty referred to would not prevent USS making that choice if it had good reasons to believe that members would agree or at least not oppose this. It can hardly make an assumption about this without a suitably comprehensive survey of members*. Until this is done ethical concerns will continue to be ignored. It is as simple as that.
DivestUSS
24th October 2023
[i] UN General Assembly 14th September 2022. Seventy-seventh session Item 69 of the provisional agenda. Report of the Independent International Commission of Inquiry on the Occupied Palestinian Territory, including East Jerusalem, and Israel https://www.ohchr.org/sites/default/files/documents/hrbodies/hrcouncil/coiopt/2022-10-19/Report-COI-OPT-14Sept2022-EN.pdf
UN General Assembly Agenda item 68 (c) 21st September 2022, Report of the Special Rapporteur on the situation of human rights in the Palestinian territories occupied since 1967, Francesca Albanese, and references therein. https://www.ohchr.org/en/documents/country-reports/a77356-situation-human-rights-palestinian-territories-occupied-1967
[ii] UN Office of the High Commissioner for Human Rights, 30th June 2023.https://www.ohchr.org/sites/default/files/documents/hrbodies/hrcouncil/sessions-regular/session31/database-hrc3136/23-06-30-Update-israeli-settlement-opt-database-hrc3136.pdf
[iii] Exposing the financial flows into illegal Israeli settlements, Don’t Buy Into The Occupation 5th December 2022.
[iv] What are Public Market investments? USS data for 30th June 2023.
https://www.uss.co.uk/how-we-invest/where-we-invest/public-market-investments
[v] Russia-related investments, USS statement 3rd March 2022. https://www.uss.co.uk/news-and-views/latest-news/2022/03/03032022_russia-related-investments
[vi] USS publishes Stewardship Code Report 2023, USS news 14th June 2023, page 53. https://www.uss.co.uk/news-and-views/views-from-uss/2023/06/06142023_uss-publishes-stewardship-code-report-2023
[vii] Statement on slavery and human trafficking, USS 4th September 2023. https://www.uss.co.uk/modern-slavery-act
[viii] USS and Glencore: What ethical policy? DIvestUSS Novermber 24th 2022. https://divestuss.org/uss-and-glencore-what-ethical-policy/
[ix] Responsible investment – what must USS do and how far can it go? Legal advice to USS from CMS Cameron McKenna Nabarro Olswang LLP 23 August 2023, Para 1.7. Accessible from https://www.uss.co.uk/how-we-invest/responsible-investment
- Note added 14th November 2023: As far as we are aware no survey has been done which covers a representative sample of all USS members – active, deferred and retired. We understand that USS does run regular surveys of active members, although the results appear to be sporadically reported on. The most recent results are summarised briefly in the USS 2023 Stewardship Code Report, page 27. This noted that 59% of members placed a high importance on ESG factors, when thinking about the investment choices USS makes on their behalf.