UK Pensions – Could ethical veganism impact on future pension fund investments?
In an employment tribunal preliminary hearing on 3 January 2020, Judge Robin Postle ruled that ethical veganism satisfies the tests required for it to be a philosophical belief, with the result that it was protected under the Equality Act 2010. For a belief to be protected under the Act, it must meet a series of tests including being worthy of respect in a democratic society, not being incompatible with human dignity and not conflicting with fundamental rights of others. The ruling means that ethical vegans are entitled to protection from discrimination.
An ethical vegan (also known as a “moral vegetarian”) is someone who not only follows a vegan diet but extends the philosophy into other areas of their lives, and opposes the use of animals for any purpose. The Judge gave much weight much to the fact that Mr Casamitjana’s belief impacts on all areas of his life.
The complainant, Mr Casamitjana, had complained that his employer, the League Against Cruel Sports (LACS), had sacked him after he raised concerns that its pension fund was invested in companies involved in animal testing. LACS claimed Mr Casamitjana was dismissed for gross misconduct.
LACS offered a contract-based pension scheme which until 2015, auto-enrolled its staff into an “ethical” fund. The employer subsequently changed the default investment fund, and offered an ethical fund only as a “self-select” option for employees. Mr Casamitjana argued this was insufficient but LACS stated on its website “There are pension funds available that offer more ‘ethical’ choices – but these are generally not available for organisations to offer automatically, because they often have higher financial risk and higher administration charges that fall outside the regulations.”
It is possible that the case may open the door for veganism to form part of pension trustees’ environmental, social and governance (ESG) considerations. Currently though, issues which are non-financial in nature (such as members’ ethical views) may be taken into account only in limited circumstances.
Nevertheless, the case does illustrate the importance for trustees and providers to understand exactly how their pension scheme assets are invested. Strong governance around investment decisions is essential, so that fund choices can be justified if challenged. For defined contribution default funds, the primary objective is to provide good member outcomes and value for those members’ investments. However, it is difficult for trustees to take into account member beliefs where there is no overall consensus among members and where the impact of taking the belief in question into account is, or could be, financially detrimental.
The tribunal’s preliminary ruling did not consider whether the claimant had been unfairly dismissed as a result of discrimination because of his philosophical beliefs. There will be a further hearing on the substantive issues of potentially unfair dismissal and discrimination on 20 February 2020.