Home > Uncategorized > The Framework Convention Alliance – Building on BRICS’ commitment to strengthen FCTC implementation

The Framework Convention Alliance – Building on BRICS’ commitment to strengthen FCTC implementation

The Framework Convention Alliance – Building on BRICS’ commitment to strengthen FCTC implementation.

In January the BRICS countries (Brazil, Russia, INDIA, China and South Africa) met to discuss emerging health threats, chief among these being non-communicable diseases such as cancer and chronic lung disease.  In doing so they recognised that smoking is a key driver of these diseases, and recommitted themselves to implementing the Framework Convention on Tobacco Control (FCTC).  What might this mean for pension fund managers?  These countries comprise 3 billion people, some 40% of the world population, so what they do counts.

In Europe and Australasia, the tobacco markets are rapidly becoming ‘dark’, meaning the ability of tobacco companies to market their products is disappearing step by step.  These regions have led the world in the last two decades in implementing effective tobacco control.  Just this week New Zealand announced cross-party support to introduce standardised packaging, following the lead of Australia.

During this same period the tobacco companies have expanded into other markets by buying up local companies and using aggressive marketing techniques, long since banned in Europe, as part of free market globalisation.  They continue to see emerging markets as their future.

The FCTC and the renewed BRICS commitment offer hope that developing countries will be able to speed through the tobacco transition.  In the UK it took 50 years from the discovery that smoking causes lung cancer in the 1950’s until Government really clamped down hard on tobacco company activities.  With tobacco control knowledge transfer via the world wide web and the World Health Organisation, and the force of the FCTC, developing countries can suffocate the tobacco companies much more quickly than was the case in the West.

That can only put pressure on the share prices and dividends of the companies.  Imperial is already under pressure due in large part to a high level of exposure to the declining European market.  Philip Morris and BAT have much higher exposure in the rest of the world, with PMI particularly vulnerable to plain packaging laws, due to its premium brands.

Of course the BRICS  will need to protect policy from the pernicious influence of the tobacco companies, which is still all too prevalent in much of the  world.  But if the BRICS countries can achieve the sort of tobacco control policy successes seen in California, the UK and Australia in the next few years, many other countries will surely follow suit.

In doing so, they will prevent British, American and Japanese tobacco companies inducing ever more cancer, lung and cardiovascular disease in their populations.  And give fund managers a lot more to think about!



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