A high-profile literary festival has dropped its sponsorship with a company accused of investing billions in fossil fuels and businesses linked to the Israeli defence industry.

Hay Festival said on Friday it had suspended its sponsorship with investment management firm Baillie Gifford after figures including comedian Nish Kumar, singer Charlotte Church and Labour MP Dawn Butler pulled out of the event.

The festival is currently taking place in Wales until 2 June.

The group Fossil Free Books had urged Baillie Gifford to divest from the fossil fuel industry, in which campaigners claimed it had between £2.5bn and £5bn invested.

The activist group also said Bailie Gifford had nearly £10bn invested in companies with direct or indirect links to Israel’s defence, tech and cybersecurity industries.

A spokesperson for Baillie Gifford said the suggestion it is a large investor in the occupied Palestinian territories is “seriously misleading”.

Stand-up comic Kumar, 38, announced his withdrawal when he posted a statement from Fossil Free Books on X, and said dropping out “was the right decision for me”.

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Church, 38, who is a pro-Palestinian campaigner, said she was boycotting and not attending the festival “in protest of the artwashing and greenwashing that is apparent in this sponsorship”.

Following several withdrawals, Julie Finch, chief executive of Hay Festival Global, said organisers suspended the sponsorship “in light of claims raised by campaigners and intense pressure on artists to withdraw”.

“Our first priority is to our audience and our artists.

“Above all else, we must preserve the freedom of our stages and spaces for open debate and discussion, where audiences can hear a range of perspectives.

“Hay Festival Global is a charity. We are grateful to all those artists, partners and audiences who engage and contribute to the conversation, on stage and off.

“We look forward to welcoming you this fortnight, in person and online.”

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A Fossil Free Books organiser said: “This announcement shows the power we have when we unite as workers.”

The statement added: “Our primary demand remains that Baillie Gifford divest.”

A spokesperson for Baillie Gifford said: “It is regrettable our sponsorship with the festival cannot continue.

“The suggestion that Baillie Gifford is a large investor in the Occupied Palestinian Territories is seriously misleading,” it added.

“It is based on conflating two different types of exposure.”

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The statement said the companies the firm has invested in, which have commercial dealings with the state of Israel, have not violated any laws in doing business with the country.

The statement continued: “We are not a significant fossil fuel investor. Only 2% of our clients’ money is invested in companies with some business related to fossil fuels.”

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It added: “Baillie Gifford is a long-standing supporter of literature and the arts.

“This support is driven by our contention that we should contribute to the communities in which we operate, in the hope that the organisations we work with gain lasting benefits.”

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