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

http://www.reportingproject.net/troubles_with_big_tobacco/

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.