Councils across England and Wales could have over £2 billion of pension funds invested in the tobacco industry. Alex Blackburne questions why, given the increasing number of competitive ethical funds available, there should be any excuse for such unsustainable investment.
Last month, an investigation by The Independent found that at least £1.3 billion was currently invested in the tobacco industry by the pension funds of councils across England and Wales.
With emphasis on ‘at least’, the newspaper claims that the “true figure is likely to top £2 billion”. This equates to a contribution of £13m from each of the 152 councils, though not all are culprits.
Councils in the West Yorkshire region are reported to have invested some £125m into an industry that directly and indirectly claimed the lives of 100 million people in the 20th century.
Another local authority – Cornwall Council – was rapped for its £24m contribution last summer, but defended its stance. “We aim to keep a balanced portfolio and investment in tobacco-related industries represents just 2% of the total fund value”.
Alex Folkes, a local councillor and deputy Liberal Democrat group leader in the area, translated this rather impassive declaration: “Only 2% of our investments are promoting death”. The blog post urged Cornwall to withdraw its investment in tobacco.
Speaking to Blue & Green Tomorrow, Folkes highlighted the contradictory nature of the council’s investment policy.
“Cornwall Council has a duty to try to help cut smoking rates across Cornwall”, he said. “If at the same time, we are investing via our pension fund in tobacco companies, then we’re fighting against ourselves.
“We’re doing exactly the wrong thing.”
When put on the spot about its investment policy, Folkes said that the Council explained how it had a “statutory duty” to allow the pension fund managers to invest in any sector, so long as the returns were good.
“If a pension fund holder found that we had invested in something but we could have had a better return somewhere else, then they can sue the pension trust”, he explained.
“I think that’s wrong because I know that there are ethical funds that outperform the stock market and investments as a whole.
“You can’t really tell, just because something’s an ethical fund, whether it’s going to do better or worse than the average.”
Such a philosophy ties in perfectly with the mantra of the vast majority of those in the ethical investment sector. The belief that there must be performance sacrifice in favour of moral is simply untrue, as countless IFAs and fund managers have testified to previously at Blue & Green Tomorrow.
A report by Action on Smoking and Health (ASH) and FairPensions added to The Independent’s findings, and buttressed Folkes’ point.
Christine Berry, policy officer at FairPensions, said, “It’s simply not true that the law requires pension funds to ignore their members’ ethical views.
“It’s time to move on from this tired old myth: savers who care about where their money is being invested have the right to expect a considered response to their concerns.”
In this light, the excuse for choosing unethical and unsustainable funds over ethical or sustainable ones starts to look very weak indeed. Although it’s not as simple as that for local government pension funds,
Folkes added that the investment managers do have a choice.
“As individuals, we can invest in whatever we want”, he continued. “We can say no to something either for moral reasons or simply on a whim, and we suffer the consequences as an individual.”
“The Council’s pension fund has to be a bit more broad-brush, but we can say that we won’t invest in funds that directly contradict the work we are doing as a council.
“In this case, we have a public health duty to campaign against people smoking, and the tobacco companies have a duty to their shareholders to encourage more people to smoke, because that’s how they sell more cigarettes.
“As long as this is the case, we shouldn’t be doing both within our pension fund.”
Cambridgeshire County Council was the latest to be criticised for investing £25m, or 1.9%, of the pension fund it oversees, in tobacco.
Cambridgeshire County Councillor Steve Count, said, “This is a complex area with certain legal and financial obligations that govern investment and maximising returns to benefit current and future pensioners and to minimise the cost of the scheme to council tax payers.”
Once again, trussing up the argument in red tape seems to make an adequate excuse.
“Due to this complexity we have asked for further independent advice and investigations into investment in the tobacco trade before any decision is made. We will also be asking our fund managers to be mindful of our current discussions when looking at investment.”
Camden Council was reported to have the highest proportion of investment in tobacco, with 3.7% of its pension fund invested in the industry. Councillor Theo Blackwell, cabinet member for finance, said, “As a council we do not encourage people to use tobacco and actively carry out work to discourage its use, but like every pension fund across the country we have a legal responsibility to our members and, in the case of local government pension funds, council tax payers to secure the best investment returns available.
“Investments made by the pension fund are carried out by experts within the financial sector, operating within a framework provided by the council to maximise returns as, ultimately, any deficit between the assets of the pension fund and its liabilities are met by council tax payers.
“No doubt some people will see this as a grim investment but tobacco is a legal product and, in a time of financial pressure for local authorities, pension funds should not become a further burden on local council tax payers.”
Blackwell’s words advocate healthy returns and unhealthy contradiction over ethics, so it appears another council is guilty of succumbing to the performance myth.
Tobacco is one of the most unethical industries around, along with sectors such as pornography, the arms trade and child labour. The World Health Organisation (WHO) claims that there are currently 5.4 million smoking-related deaths every year worldwide – a figure that is constantly rising; the figure is predicted to reach 1 billion by the end of the 21st century, if trends continue unchecked.
Statistics from Kantar Media show in which areas of the UK individuals are most likely to smoke, and the subsequent attitudes towards it.
Scotland and Wales emerge as the places that house the most smokers, with 29.7% and 28.9% of the population, respectively. Interestingly, the biggest agreement to the smoking ban in public places, is also in Scotland, with 77% of the population behind it. This means there is a strange crossover between people who smoke, and people who want it banned.
The infographic shows that you’re more likely to be a smoker if you live in the North than you are if you live in the South, too.
It is depressing that global tobacco companies, such as British American Tobacco, have won awards for their sustainability policies. Apparently, producing the greatest single cause of preventable death is somehow sustainable.
Julian Parrott, partner at independent financial advisers, Ethical Futures, said that the councils’ investment in tobacco “runs contrary to attempts to improve health [and implement] smoking bans in council-run schools and premises”.
He added that there was legislation in place for trustees to have a say in what industries their pension invests in.
“Pension fund members have the opportunity to request that trustees of the funds develop and consider a Statement of Investment Principles (SIP) for their pension fund policy”, Parrott said.
“An SIP was enshrined in pension law in 2001 and gives the members a chance to lobby for policies that take account of environmental, social and governance issues when making investment decisions.
“Councils have often been leaders in adopting these polices, so it is surprising to see these statistics.”
The ASH and FairPensions report goes onto say that regardless of the unethical nature of the industry, the tobacco sector actually faces an uncertain future, stating that it could “disappear entirely” if global smoking numbers slowly decline.
“So far, tobacco companies have pulled off the trick of boosting profits in the face of falling sales and that has kept share prices high”, commented Martin Dockrell, director of policy and research at ASH. “But it can’t go on forever, and the problem is not just falling sales.
“All around the world, the big tobacco companies face a perfect storm of tougher regulation and higher taxes while more governments sue for billions of dollars in health care costs.”
The message to councils in England and Wales is very clear: seriously consider more ethical and sustainable investment to reduce the risk placed on trustees’ finances.
Continued and increasing growth in the sustainable investment sector means it is forecasted to have a bright, prosperous future.
As an individual, you can take charge of your finances by actively choosing where your savings and investments are held. Opting for sustainable investment is the wisest choice.
Your IFA should be able to answer any questions you have. If they are unable to answer or if you don’t have an IFA, fill in our online form and we’ll help connect you with a specialist ethical adviser.
Make your money make a difference.
Infographics: Ben Willers. Photo: acidpix via Flickr
How Going Green Can Save A Company Money
What is going green?
Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.
The first step in going green
There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.
Making needed changes within the company
After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.
Reducing the common paper waste
Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.
Make money by spreading the word
Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.
5 Easy Things You Can Do to Make Your Home More Sustainable
Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.
1. Weather stripping
If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.
Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.
Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.
2. Programmable thermostats
Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.
Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!
3. Low-flow water hardware
With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.
Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.
Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.
4. Energy efficient light bulbs
An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.
New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.
5. Installing solar panels
Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.
Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.
From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!
These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.
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