THE Scottish investment firm Baillie Gifford has contacted Scottish council pension funds to ask whether they have “concerns” about investing in killer drones.
According to The Ferret, a leaked report reveals that Baillie Gifford are canvassing local council pension funds it helps manage to ask for their thoughts about its £17 million holding in defence company AeroVironment.
Baillie Gifford contacted the funds to “flag” a new purchase of defence stock in its “global alpha” portfolio and state that it was considering investing pension funds in the portfolio.
The firm manages the funds of all 11 local government pension schemes.
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While the report fails to name the defence company involved, it states that it manufactures switchblade drones – which are also known as “kamikaze drones”.
These drones are produced by a company in Arlington, Virginia and have been used by US forces since 2011 – including in Afghanistan and Iraq.
The US news site DefenseScoop also stated that in 2023 Israel placed a bid for 200 of the drones, though it does not detail whether the bid was successful.
In the report, Baillie Gifford states that it accepts that the impact of war is “devastating” but claimed investing in AeroVironment would provide a good financial return due to “floodgates in demand” for its drones opening in the future.
Indeed, Baillie Gifford said it anticipated “significant sales growth” in the company’s drone technology, from £413m in 2023 to up to £1.3 billion in 2028.
“Whilst we absolutely recognise that the impact of war and conflict on a human level is devastating, we also feel that it is also important to recognise the moral responsibility incumbent upon governments to invest sufficiently in defence to protect their own people,” Baillie Gifford is quoted as saying.
“Our decision to invest is on this basis (defence) and is neither predicting, nor reliant on, war, or further escalation of existing conflicts.
“It is built on our view that defence budgets are structurally increasing and that there is a technological upgrade cycle at play as governments look to upgrade their military inventories.”
The report also suggests that no Scottish council pension fund had blocked the investment.
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In fact, it noted that council pension funds were not permitted to exclude specific investments based on “personal, ethical or moral judgments”.
Scottish Greens MSP Ariane Burgess urged councils to reject Baillie Gifford’s investment proposal.
“Claims that funding killer drones will be good for civilians and the environment are transparently absurd”, she told The Ferret.
“For far too long we’ve seen local authority pension funds investing in arms dealers.
“We know the public doesn’t support it – and with the ongoing genocide in Gaza it has never been more important to ensure we’re not acting as its financiers.”
Derek Newton, a campaigner for the Highland Palestine group, asked whether local authorities “really want to be seen to be profiting from wars in which tens of thousands of children are being killed and severely maimed?”
He added: “Baillie Gifford’s ethical position might be summed up as ‘the end of the world is nigh, how can we make money out of it?’”
A spokesperson for Baillie Gifford told The Ferret: “We’ve nothing further to add to the comments you already possess.”
A spokesperson for Cosla said: “We know that administering authorities and pension funds take their responsibilities seriously and must operate within both their legal and fiduciary duties.
“Investment decisions are a matter for the pension funds in line with their duties and this includes taking proportionate and considered action on investment decisions as appropriate.”
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