Tobacco: investing in death

Over the past six months, it has emerged that pension funds from a number of councils across England and Wales invested significantly in the tobacco industry. Sadly, they are not alone in funding a sector that is directly responsible for hundreds of thousands of deaths worldwide.

There were 450,571 deaths among adults aged 35 and over in England in 2009. Of this figure, 81,700 were estimated to be caused by smoking. That’s an 18% contribution.

Given these shocking statistics, you might be puzzled as to why asset managers, financial institutions and companies continue to pump money into the tobacco industry. But there is a simple one word explanation: profit.

Though the industry manufactures and promotes the leading cause of preventable death and disease in the UK, it is, unfortunately, extremely lucrative. High global demand and good production-to-sales ratios mean big profits.

But essentially, each and every tobacco industry investment is funding preventable death.

To put the impact of smoking into perspective, B&GT has produced a new infographic to visualise the 81,700 deaths it caused in 2010, using figures from Action on Smoking and Health (ASH).

Click to enlarge.Of the 81,700, 37,500 were cancer related, 22,300 were respiratory, 20,600 were cardiovascular diseases, and the remaining 1,200 were digestive tract related.

The solution: to cut investment to this destructive sector.

Martin Dockrell, director of research and policy at ASH, thinks investment in the sector is baffling.

“It is hard to find an ethical justification for a product like tobacco”, he says.

“It is deadly, killing half of life long users, and it is addictive, with two thirds of users saying they want to quit.”

Beyond its contribution to mortality, Dockrell adds that there are other, similarly strong arguments against tobacco investment.

“You can’t even justify it in terms of job creation; it diverts agricultural land in developing countries and draws heavily on child labour.

“It remains poorly regulated and widely available largely because a small number of companies have been making big profits. That may change dramatically over the next few years.”

On a more positive note, though not for the industry, Dockrell says that we could be on the verge of a decline in tobacco sales, driven by a natural deterioration in the attractiveness of the industry.

“Smoking rates have been falling in the most lucrative markets so fast that analysts estimate that within a few decades there will be countries where almost nobody smokes any more.

“Governments from Nigeria to Nunavut are suing the companies for billions of dollars, and treasuries tackling deficits have been turning increasingly to tobacco taxes, but most important of all, a growing number of countries are considering plain packaging for tobacco products.

“This would make the product harder to sell, but it would hit the high profit premium brands hardest of all.”

Two of the largest tobacco brands in the world – British American Tobacco and Imperial Tobacco – have revenues of £14 billion and £28 billion respectively, with more or less every single penny paid for by a growing death toll.

Ultimately, it’s down to the shareholders and institutional investors to force the tobacco industry to close up shop. But individuals, en masse, can also make a difference.

Are you investing in the tobacco industry? If you don’t know the answer, ask your IFA or bank to explain where your money is invested.  Alternatively, you can fill in our online form and we’ll connect you with a specialist ethical advisor who can put you on the right track.

Related links:

Council tobacco investments: incongruous and unethical

Infographics: Ben Willers.