The Economic Activities of Public Bodies (Overseas Matters) Bill

Following the dissolution of parliament on 30 May 2024, the Economic Activities of Public Bodies (Overseas Matters) Bill – also known as the EAPB (OM) Bill – has ‘fallen’ and would have to be started again from scratch by a new government. The information below relates to the fallen bill and we will update this page further once the intentions of a new government become clear. 

This note focuses only on LGPS investment decisions and what the Bill could mean for LGPS funds.

How does the EAPB (OM) Bill apply to the LGPS?

The Bill could have significant implications for public authorities that are also LGPS scheme managers. The Bill covers both procurement and investment decisions of public authorities. Any LGPS investment decisions made by those public authorities will therefore need to be made taking the Bill into consideration. 

Summary of the EAPB (OM) Bill

The Bill:

  • prohibits public authorities from making a decision to invest or divest based on its moral or political opinion (or the opinion of any pressure groups which are seeking to influence it) of the actions of foreign states abroad; 
  • prohibits the authority going on record saying it would have made that investment or divestment decision if not for the existence of this legislation;
  • includes a number of exemptions although these are in the main restricted to actions which are illegal;
  • provides for sufficiently interested parties to bring about legal proceedings against the authority and/or report the authority to the Pensions Regulator (TPR) if they consider an investment decision to be, or likely to be, in contravention of the above prohibitions;
  • compels LGPS authorities to carefully consider not only the potential for decisions actually being in contravention of the legislation, but also the potential for third parties to bring about costly and time-consuming legal proceedings in relation to decisions they do not agree with, and in doing so authorities may want to revisit their governance arrangements (for example the roles of the pension committee) particularly in relation to investment decisions in order to minimise the risk of challenge.

What will the EAPB (OM) Bill prohibit?

The Bill is designed to prevent public authorities making decisions or statements of intent about investment which results from political or moral disapproval of the actions of a foreign state which has an overseas impact. 

The stated purpose of the Bill is to catch both open participation in boycotts or divestment campaigns, and more subtle ways of singling out countries or territories that could produce similar results. For example, expressing support for engaging in boycotts and divestment campaigns. 

The Bill will not prevent public authorities from complying with formal UK Government legal sanctions, embargoes and restrictions.

How will the EAPB (OM) Bill achieve this aim?

The Bill will prohibit a public authority, when making an investment decision, having regard to a territorial consideration in a way that would cause a reasonable observer to conclude that the decision was influenced by moral or political disapproval of a country or territory’s foreign state conduct.

It seeks to do this in the wording of Section 1 of the Bill:
(2) The decision-maker must not have regard to a territorial consideration in a way that would cause a reasonable observer of the decision-making process to conclude that the decision was influenced by political or moral disapproval of foreign state conduct.

The Bill will also prohibit public authorities having any regard to a third-party’s moral or political disapproval of a country or territory’s foreign state conduct if that third party is trying to persuade the decision maker to act. This applies even when the decision is not influenced by the authority’s own political or moral disapproval of foreign state conduct.

As also set out in Section 1 of the Bill:
(7) The disapproval referred to in subsection (2) is disapproval on the part of— 
(a) the decision-maker, or 
(b) any person seeking to persuade the decision-maker to act in a certain way; 
and those references to the decision-maker include, in a case where the decision-maker is not an individual, the individuals who in fact make the decision for the decision-maker.

The public authority will also be prohibited from publishing a statement indicating that they would have made such a decision if it were lawful to do so.  It is worth noting that the prohibition on statements will apply to the authority, not to individuals - for example, an individual councillor will be able to express support for a boycott without fear of personal liability under the legislation.

This is set out in Section 4 of the Bill:
(1) A person who is subject to section 1 must not publish a statement indicating (in whatever terms)— (a) that the person intends to act in a way that would contravene section 1, or (b) that the person would intend to act in such a way were it lawful to do so.

Are there any exemptions?

Yes, Schedule 2 to the Bill lists those considerations which may be taken into account when making an investment decision without breaching the prohibitions. These exemptions are:

  • financial and practical matters
  • national security
  • international law
  • bribery
  • labour-related misconduct
  • competition law infringements, or 
  • environmental misconduct

At first glance these exemptions may appear pretty broad and/or straightforward but on closer reading, not so much, as they are in the main reliant on the action of the foreign state being illegal in the UK or in some exemptions anywhere else in the world.

For example, the environmental misconduct exemption in Schedule 2 paragraph 10 includes conduct which: 

(3)(b) ..caused, or has the potential to cause, significant harm to the environment, including the life and health of plants and animals, so far so wide. 

However, the exemption only applies where such conduct is also:

(3)(a) offence under the law of the United Kingdom or another country or territory. 

Therefore, an investment decision based solely on considerations of actions which have a significant environmental impact, but is not an offence in the UK or elsewhere in the world, would be caught by the prohibitions of the Bill.

Similarly the labour-related misconduct exemption only applies to consideration of actions which would be an offence or result in a misconduct order in the UK. 

How will the Bill be enforced?

The Bill provides for two routes of enforcement - firstly through legal proceedings and secondly via an enforcement authority. 

Legal proceedings may take the form of a Judicial Review, where appropriate, or by application to the High Court. The High Court may permit an application by a person it considers has ‘sufficient interest’. It may, if satisfied that the legislation has been or is likely to be contravened, make any order that the court thinks appropriate by way of relief and/or any order appropriate to preventing such a contravention. 

TPR will be the enforcement authority in relation to public authorities which are LGPS scheme managers and may make use of existing enforcement powers in pensions legislation. This includes:

  • improvement notices under Section 13 of Pensions Act 2004 directing the Fund to take, or refrain from taking, such steps as are specified in the notice in order to remedy or prevent a recurrence of a contravention of legislation; and
  • fines of up to £50,000 under Section 10 of Pensions Act 1995.

How could the EAPB (OM) Bill impact on LGPS Funds?

Given the resource demands and expertise required for TPR to enforce the Bill together with the fact that very few - if any - LGPS authorities actually make decisions which would contravene the provisions of the Bill, it is not anticipated that the major impact on LGPS authorities would come from the direction of TPR.

It is far more likely that third parties with a wide variety of political and moral agendas will seek to commence legal proceedings against a fund in respect of an investment decision, to either take an action they disagree with or not to take an action they are in favour of. 

For example, a number of pressure groups may be pushing for an LGPS fund to either divest from or retain its holdings in companies associated with and/or invested in the state of Israel in the light of its actions in Gaza. 

The LGPS Fund could decide, rightly based on the financial and practical exemption in Schedule 2 paragraph 4 of the Bill:

Section 1 does not prevent regard to a consideration so far as the decision-maker reasonably considers it relevant to the financial value .... of— 
(a) the ... asset in question

That in its view the actions either: 

  • have or will materially impact on the value of the assets and they therefore should be disposed of; or
  • have not or will not materially impact on the value of the assets and they therefore should be retained.

However, there may have been statements made in the past by members of the authority and/or the pension committee expressing their political or moral view of those same actions. This could lead a ‘reasonable observer’ to believe that the decision was made on those grounds not on financial considerations, thereby opening the door to a potential legal challenge. 

Should such a challenge be successful in reaching court then, regardless of the outcome, the time and resources required to defend a fund’s position could be significant and may also result in adverse publicity for the authority.

What could LGPS Funds do to minimise the risk of challenge? 

While it is not anticipated that many, if any funds would be found in breach of the provisions of the Bill, the risk of costly and time-consuming legal actions will need to be carefully considered.  

It may, therefore, be prudent for funds to review their governance arrangements in respect of investment decisions to mitigate the possibility for, and impact of, such legal proceedings.

For example:

  • Receive clear, independent and documented advice on the implications of potentially contentious decisions prior to the meetings at which they are to be considered.
  • Ensure minutes in respect of investment decisions include clear references to the grounds on which they were taken and the advice received in connection with them.
  • Consider delegating such decisions, which would in the main constitute the implementation rather than the strategy of investments, to officers and / or their pool.


How can BW help?


BW is happy to assist Funds in such reviews, so please contact us if you would find this helpful: or 

Further information, including a copy of the latest version of the Bill and its progress through parliament, can be found here.

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