Scottish QC gives opinion that LAs can divest from tobacco

Earlier this year the Local Government Association obtained a legal opinion from Nigel Giffin QC which has been widely publicised and is available on the LGPS website.  That opinion has been interpreted in different ways, but the consensus seems to be that in practice it has given very little more leeway to local authority pension committees to divest from tobacco stocks.  The Law Commission has also referred to that opinion in its recent report on fiduciary duties.

However, I have recently discovered that another QCs opinion was obtained in Scotland last year from a QC named O’Neill.  A copy of this is attached also.  This QC is quite clear that local authorities can divest from tobacco stocks.  In his observations he notes that much of the Trust case law is now quite old (20-30 years), that in any event more recent statute law is what governs the LGPS, and that the public policy environment around tobacco has changed substantially in recent decades.  He doesn’t mention the Framework Convention on Tobacco Control as a material factor, which I believe would have strengthened his opinion, but nevertheless the acknowledgement that public policy is a material factor, to be considered alongside others such as financial returns, is an important development.

The attachment contains both legal opinions, but please note that the pdf file has 6 blank pages at the beginning.  Scroll down to page 7 please to read in full.  Does anyone have any observations to make on the relative merits of these observations?  In particular, given the public health role of local authorities in England and their investments in smoking cessation and tobacco control, should LAs be able to use similar grounds as charities in excluding tobacco stocks from their pension fund investments?