The Hay literary festival has dropped its principal sponsor after boycotts from speakers and performers over the firm’s links to Israel and fossil fuel companies.

The singer Charlotte Church and the comedian Nish Kumar were among the latest to pull out over the investment management firm Baillie Gifford’s sponsorship of the festival. On Friday afternoon, the festival said it was ending its sponsorship deal with the company.

The Hay chief executive, Julie Finch, said the decision had been taken “in light of claims raised by campaigners and intense pressure on artists to withdraw”.

“Our first priority is to our audience and our artists,” she added. “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.”

Though Baillie Gifford’s sponsorship has been “suspended” for 2024, the festival plans, as it does each year, to review all its sponsorships before next year’s event. Festival organisers also plan to meet with Fossil Free Books (FFB), the group that has been leading the campaign against Baillie Gifford, after this year’s festival.

Baillie Gifford began its relationship with the Hay festival in 2016 and was its principal sponsor. A spokesperson said: “It is regrettable our sponsorship with the festival cannot continue.”

Church pulled out of her scheduled appearance on Thursday night, issuing a statement via her social media channels to say that she had decided to boycott the festival “in solidarity with the people in Palestine and in protest of the artwashing and greenwashing that is apparent in this sponsorship”.

Kumar, the Labour peer Shami Chakrabarti and Dawn Butler MP were also among those scheduled to appear who chose to drop out over the issue.

Announcing his withdrawal on X, Kumar shared a latest statement from FFB 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 that profit from Israeli apartheid, occupation and genocide”, as it believes that “solidarity with Palestine and climate justice are inextricably linked”.

Some signatories to FFB’s statement decided to still attend Hay, including George Monbiot. Before he began his event discussing neoliberalism on Thursday night, the Guardian columnist and campaigner said he had decided not to boycott the festival, partly because he believed the Hay festival to be “a good cause”.

“We can’t just point to one instance of this Earth-eating, people-eating system and say that, and that alone is the problem,” he added.

Responding to FFB’s statement last week, Baillie Gifford reiterated that just 2% of its clients’ money was invested in “companies with some business related to fossil fuels”, compared with the market average of 11%.

A spokesperson for the asset manager also told the Guardian that divesting in the way FFB had asked was not possible, because of regulations that all UK asset managers must follow. “When it comes to subjective ethical situations relating to particular sectors (such as fossil fuels) or countries (such as Israel), our clients set the parameters and determine what to exclude or divest,” they said.

A Fossil Free Books organiser said: “Hay festival is right to listen to the concerns of hundreds of book workers who are working to create fossil-free and genocide-free festivals. Hay must now develop a fundraising policy that rules out any future sponsorship by companies that invest or profit from the fossil fuel industry, Israeli occupation, apartheid or genocide, and any other human rights abuses.”

Baillie Gifford remains the sponsor of a number of literary festivals, including the Edinburgh international book festival and Cheltenham literature festival, as well as the Baillie Gifford prize for nonfiction.

Edinburgh has put out a statement responding to FFB’s statement and festival boycotts, saying it wants to “work together with Fossil Free Books, and other groups, as we move towards a more sustainable future”, while organisers “continue to speak to Baillie Gifford, and our other sponsors, about these complex issues”.