The Edinburgh international book festival (EIBF) has announced the end of its 20-year partnership with Baillie Gifford. Last week the Hay literary festival also dropped its sponsorship from the investment management firm after a series of last-minute drop-outs.

The singer Charlotte Church, the comedian Nish Kumar and the politician Dawn Butler were among those due to appear at Hay who decided to boycott the festival because of Baillie Gifford’s links to Israel and fossil fuel companies. By the end of the festival’s second day, Hay’s organisers announced the sponsorship has been “suspended” for 2024.

According to a release from EIBF, the festival’s board and management “believe their ability to deliver an event this August that is safe and successful for audiences, authors and staff has been severely compromised, following the withdrawal of several authors and threats of disruption from activists.”

Jenny Niven, the book festival’s director, said “it is with great regret” that the partnership has ended and that pressure on her team “has simply become intolerable”.

She said she did not believe “undermining the long-term future of charitable organisations” is “the right way to bring about change”.

She and her colleagues “continue to believe that Baillie Gifford is part of the solution in transitioning towards a more sustainable world and that the firm operates in line with our ethical fundraising policy”.

The pressure for authors and speakers to drop out of festivals sponsored by Baillie Gifford came via the latest statement put out by campaign group Fossil Free Books this month, that has now been signed by more than 700 writers and publishing industry professionals. The statement reiterated the group’s previous demands that the company cease its investments in the fossil fuel industry, and also demanded that Baillie Gifford divest from companies linked to Israel, as it believes “solidarity with Palestine and climate justice are inextricably linked”.

A spokesperson for Fossil Free Books said the group welcomed the news. “Over the last 18 months, research by multiple human rights NGOs has shown that Baillie Gifford holds investments worth billions in fossil fuel companies and companies with links to Israeli occupation, apartheid and genocide,” the spokesperson said.

“Our primary demand has always been for Baillie Gifford to divest, and for festivals to use their relationships with Baillie Gifford to call on the firm to divest. Nevertheless, we are grateful to EIBF for showing leadership and listening to its authors and workers.”

Nick Thomas, a partner at Baillie Gifford, said the firm’s sponsorship of the festival, which had been in place since 2004, “was rooted in our shared interest in making Edinburgh a thriving and culturally vibrant place to live and work”.

“We step back with the hope that the festival will thrive this year and into the future,” Thomas said. “We hold the activists squarely responsible for the inhibiting effect their action will have on funding for the arts in this country.

“The assertion that we have significant amounts of money in the occupied Palestinian territories is offensively misleading. Baillie Gifford is a large investor in several multinational technology companies, including Amazon, Nvidia and Meta. Demanding divestment from these global companies, used by millions of people around the world, is unreasonable and serves no purpose. Much as it would be unreasonable to demand authors boycott Instagram or stop selling books on Amazon.”

Baillie Gifford is also not a “significant fossil fuel investor”, Thomas said. “Only 2% of our clients’ money is invested in companies with some business related to fossil fuels. We invest far more in companies helping drive the transition to clean energy.”

This year, the book festival will take place from 10 to 25 August. The funding for this year has already been provided and deployed.

Baillie Gifford remains the sponsor of several literary festivals, including the Cheltenham literature festival and the Cambridge literary festival, as well as the Baillie Gifford prize for nonfiction.

Speaking at the Hay festival, last year’s Baillie Gifford prize winner, John Vaillant, said he there was “more value” in “staying in the room” and “staying engaged” with Baillie Gifford than in boycotting the firm.

“If you want to parse their portfolio it’s really different from Goldman Sachs or Merrill Lynch or BlackRock,” said Vaillant, author of Fire Weather, a book about the blazes that ravaged Canada’s forests in 2016.

“They don’t host prizes, they don’t invite conversation of this kind. I’m uneasy [about Baillie Gifford’s sponsorship] but my default mode when I’m uneasy is to try and keep in conversation.”