Archive for November, 2011




Physicians for a Smokefree Canada has released details of tobacco holdings of the two Canadian mandatory pension funds, including estimates of the dividend income.  Dividend income in total is about 5.5%.

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£75m of public money in tobacco firms – News – Royston Crow

£75m of public money in tobacco firms – News – Royston Crow.


Here’s  a local news story about tobacco investments by Hertfordshire and Cambridgeshire County Councils which between them hold about £75m of tobacco shares.

A spokesman for the CCC fund said:

“A very, very small percentage of holdings in the Cambridgeshire pension fund – 1.9 per cent – is invested in tobacco companies.  We have a responsibility to taxpayers to make sure that money invested attains the maximum level of return within an acceptable degree of risk.  The trustees of the Pension Fund have a single objective, which is to maximise returns to meet the fund’s pension liabilities, and therefore reduce the cost to taxpayers.”

This is a common response, so let’s examine the two points here more closely.  First of all the relatively small proportion of the fund invested in tobacco.  It is typically 1-2% in most of these funds.  If it is such a small proportion, and therefore by implication not worth making a fuss about, then why hang onto these investments?

Secondly, maximising returns.  We know that tobacco costs every area in this country more than tobacco provides in return in taxation.  The cost of ill health and loss of economic output due to tobacco induced diseases such as cancer, COPD and CHD is massive.  Then add in litter clearance, fires, sickness absence etc and you begin to wonder why councils think tobacco is a good investment for their taxpayers.


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Anger as Shropshire Council invests in tobacco « Shropshire Star

Anger as Shropshire Council invests in tobacco « Shropshire Star.


Shropshire Council is the latest local authority to come under fire for investing in tobacco companies.  As usual, the council defends the investments on the basis that it has a duty to maximise returns and cannot divest from tobacco, which simply isn’t the case.  Investing in tobacco is simply incompatible with the proposed new public health role for local authorities.  How can you claim to be improving public health and tackiling health inequalities if you part own the very companies responsible for over 500 deaths in Shropshire every year?

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Norway state pension fund is tobacco free


Tobacco producers excluded from Government Pension Fund Global –

Along with New Zealand, Norway is currently, to my knowledge, the only other state pension fund to become tobacco free.  The link above outlines the reasoning.  The government report comments on the unique status of tobacco as a consumer product:

“tobacco is a product in a class by itself in that it can cause serious health problems when used as intended.”

The report also reflects on the shared societal values about tobacco reflected in the Norwegian government signing the UN Framework Convention on Tobacco Control, and the tight restrictions on tobacco introduced by domestic legislation.

These considerations also apply in other jurisdictions such as the UK where there is cross party consensus on reducing smoking prevalence and severely restricting tobacco marketing.

The Norwegian ethics council produced a report listing 17 companies that are now barred by the pension fund.



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Time to sell Japan Tobacco?

Public sector pension fund managers and the Local Authority Pension Fund Forum have a dilemma today.

Astounding revelations of alleged corporate complicity in smuggling by Japan Tobacco employees, breaches of sanctions against Syria, and even undermining its own internal investigations team when it proved too effective were revealed today.

You can read the full report by the team of investigative journalists here

Now the LAPFF has a policy of constructive engagement with tobacco companies in line with its general policy on corporate social responsibility. This is despite the Framework Convention on Tobacco Control stating that tobacco companies and CSR are mutually incompatible.

Here we have prima facie evidence that JTI has been engaged in deeply unethical behaviour, and indeed appears to be in breach of the agreement it reached with the EU in 2007 on smuggling.

How then can UK local authority pension funds stay invested in this company? They surely don’t believe that dialogue with the company will change anything. After all a legally binding agreement with the EU carrying substantial penalties if breached doesn’t appear to have been effective. The EU authorities will presumably now investigate the allegations.