The health risks of smoking are well-documented in the western world. It is a potentially deadly habit, dangerous not just to smokers but the people around them. However, in some countries the risks are not so well understood, and the wider tobacco industry has a much larger impact.
As the prevalence of smoking has declined in industrialised countries in northern and western Europe, North America and the western Pacific region, it has increased in countries in Asia, South America and Africa.
The industry sees the developing world as an opportunity. In 1990, an internal document from British American Tobacco (BAT), the second largest tobacco company in the world, assured its employees, “We should not be depressed simply because the total free world market appears to be declining. Within the total market, there are areas of strong growth, particularly in Asian and Africa… It is an exciting prospect.”
BAT – only one sample of an entire industry, remember – sells cigarettes in at least 38 African countries, and holds more than a 90% market share in many.
According to research by the World Health Organisation (WHO), 80% of the world’s 1.3 billion smokers now live in low and middle-income countries. WHO has accused tobacco companies of actively subverting and discrediting efforts to control tobacco use, particularly in these poorer countries, where marketing practices have been particularly aggressive.
This means that the burden of death will likely shift from the developed world to the developing world. It has been estimated that over the next two decades, 70-80% of deaths caused by tobacco smoking will occur in developing countries.
These nations will also have to bear not only the human costs, but also the social, environmental and economic costs of the tobacco industry, with nations and individuals paying for the treatment of smoking-related illnesses. Meanwhile many of the poorest smokers spend much of their income on tobacco, rather than essentials like food, healthcare and education.
Tobacco cultivation in poorer countries also has a negative impact. Of course, the more land that is used for growing tobacco, the less is available for food production. But this is not all.
Farmers are vulnerable to harmful illnesses such as a green tobacco sickness, a type of nicotine poisoning that comes from handling tobacco leaves. Tobacco companies have also been implicated in the use of child labour in the major tobacco producing countries including Argentina, Brazil, China, India, Indonesia, Malawi, and even the US.
Despite all this, tobacco is often lauded as a defensive stock for investors, as its sales are not really influenced by the strength of the economy or macroeconomic situations.
In the UK, local councils and pension funds have come under fire recently for investing in the tobacco sector, while simultaneously promoting public health and providing assistance to help local people quit smoking. Some funds have sought legal advice over this clash of interests.
Disregarding ethical issues for the moment, though, it is hard to see tobacco as a sustainable investment in the long-term. As consumption of cigarettes decreases in the developed world, tobacco companies’ profits have been supported by increasing sales in emerging markets.
However, Amanda Sandford, research manager at the anti-smoking charity ASH, explains that this success is unlikely to last. She says there are “very good signs” that developing nations will follow the example of developed ones in regulating smoking.
“We are seeing a bit of a turnaround, or at least a halt in what was an escalating situation in developing countries”, she says.
“But it does take time, of course, for these to be fully implemented, and at the same time of course the tobacco industry is still trying to fight and undermine these laws, wherever they can.”
With this uncertain future in mind, Simon Clements, sustainable and responsible investment (SRI) fund manager at Alliance Trust Investments, says that tobacco represents not just an unethical investment, but also an untenable one.
“Tobacco can offer good returns, but for long-term investors the question of the sustainability of these returns has to be questioned”, he says.
“This is driven by the fact they have a shrinking market; they can’t invest and they face stricter and stricter regulation.”
Instead, he argues, investors can seek out companies and sectors that offer a genuine defensive earnings stream with a defensible competitive advantage, while enjoying growth driven by products that actually improve, rather than cut short, people’s lives.
The examples Clements uses are Kroton Educacional, a for-profit education firm that is one of the best performers on the Brazilian stockmarket, and Novo Nordisk, the global leader in the provision of insulin products.
He adds, “Both of these companies have performed as well as tobacco companies over time, and should also perform better in the future, given they do not face the same headwinds.”
Investing in tobacco means you are profiting from suffering and supporting a damaging and exploitive industry. If it’s a steady financial return you’re after, it’s wise and moral to look at alternative, similarly defensive companies, rather than ones whose prosperity depends on addiction, a lack of education and poor public health, and whose core product leads to serious illness and, ultimately, death.
Like our Facebook Page
Emerging Research In Seagrass Restoration: What Does The Future Hold?
Sustainable Bites: How To Make Your Diet Eco-Friendly
Coffee Farms & Cloud Forests: Colombia’s New Eco Initiatives
Electric Cars: Are They Worth The Switch?
Maximizing the Efficiency of Deliveries: Strategies for Sustainable Businesses
The Rise of Sustainable Cloud Computing
Navigating Towards A Greener Future: Sustainable Practices In Maritime
5 Reasons That Diamonds Can Be Excellent Green Investments
Why Should We Invest in Eco-Friendly Homes?
Eco- Friendly Homes Integrating Environmental Consciousness into Modern Real Estate
The Future of Sustainability In The Logistics Industry
Can Eco-Friendly Businesses Embrace VPNs to Bolster Cybersecurity?
Doubt No More: Electric Vehicle Charging Dynamic Load Balancing Is The Answer
Fun Activities That Will Help Kids Appreciate Nature More
Eight Different Eco-Friendly Developments in the Food Industry
UK Lags EU in Installing Heat Pumps to Slow Climate Change
5 Key Areas to Look at When It Comes to Business Sustainability
Addressing Leadership Challenges in Green Entrepreneurship
Holding Eco-Friendly Coins is Greener and More Profitable
5 Reasons That Diamonds Can Be Excellent Green Investments
- Features2 months ago
What is the Eco-Friendliest Option to Wash Your Dishes?
- Environment7 months ago
6 Home Improvements You Can Make to Help the Environment
- Environment11 months ago
How to Ensure Your Home’s Eco-Friendly During Construction?
- Business10 months ago
The Pulp & Paper Industry is Reaching its Sustainability Goals