The Waltham Forest Pension Fund has confirmed it can divest from companies linked to the arms trade without any material impact on its financial position, marking a milestone in its responsible investment strategy.

The announcement followed an analysis of the fund’s current portfolio, which concluded that divestment could be achieved without detriment to its approximately 35,000 members.

The findings were presented at a Pension Committee meeting on 25 March, fulfilling a 2024 commitment to explore divestment in a financially responsible way.

The fund said the transition would begin once suitable alternative investments became available through the London Collective Investment Vehicle (CIV), the investment pool for London local authorities.

It described the development as the result of years of “determined and methodical work”, with the committee undertaking extensive financial analysis to ensure any move away from arms-related investments was carried out prudently and in line with its fiduciary duty.

The decision builds on Waltham Forest Pension Fund’s move to fully divest from fossil fuels in 2016, making it the first local government pension scheme (LGPS) fund in the UK to do so.

That move has since been followed by a number of other local authorities.

Alongside the divestment plans, the fund has also agreed, in partnership with the London CIV, to adopt a new framework designed to strengthen its ability to implement further ethical exclusions.

This could include exclusions from companies identified by the United Nations as being linked to human rights abuses, subject to the availability of suitable investment options and no material financial detriment.

Waltham Forest Pension Fund chair, Cllr Johar Khan, described the decision as a "key moment" for the fund and one of "real pride".

“This next step has taken years of careful work, detailed analysis and a focus on doing the right thing in the right way," Khan said.

"Our members expect their pensions to be invested responsibly, and we are proving that it is possible to align our investments with our values without compromising financial strength.

“When we make a commitment, we follow through. Our fossil fuel divestment was a complex operation which took over five years to process, but we did it, and we did it responsibly. Now, we are on track to achieve arms divestment in less than half that time.

“We won’t stop here. We will continue to push for further exclusions to ensure that investment decisions are aligned with globally recognised principles on human rights and humanitarian law.”

He added that collaboration with London CIV partners would be key to delivering the next phase of the strategy, acknowledging that the process remained complex but reiterating the fund’s intention to continue leading on responsible investment.

The fund emphasised that all future investment decisions would remain subject to its overriding requirement to avoid any material negative financial impact on members, while continuing to align its portfolio with evolving environmental, social and governance (ESG) principles.

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