Hay Festival has suspended its sponsorship with an investment management firm “in light of claims raised by campaigners and intense pressure on artists to withdraw”.

Noted figures including comedian Nish Kumar, singer Charlotte Church and Labour MP Dawn Butler have pulled out of the literary festival in Wales, taking place until June 2.

It comes after the campaign group Fossil Free Books called upon festival sponsor, Baillie Gifford, to “divest from the fossil fuel industry”, claiming in a statement that the company “currently has between £2.5-5 billion invested in the fossil fuel industry and nearly £10 billion 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”.

Julie Finch, chief executive of Hay Festival Global, said in a statement that the charity’s first priority is “our audience and our artists.”

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

In another statement to social media, 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 a number of withdrawals, Ms Finch said in a statement: “In light of claims raised by campaigners and intense pressure on artists to withdraw, we have taken the decision to suspend our sponsorship from Baillie Gifford.

“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.”

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.”

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.”

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.”