UK council pension funds are to seek legal advice on whether investing in tobacco companies clashes with their new responsibilities to promote public health.
The Local Government Pension Scheme Advisory Board has prepared a letter to be sent to a Queen’s Counsel asking for advice on fund trustees’ legal position.
Financial News reports that the letter says a local authorities are “struggling to reconcile what they believe to be their fiduciary duty as [pension] scheme managers to maximise investment return, with those of promoting public health and, in particular, supporting anti-smoking measures”.
Local authorities were given a greater responsibility in promoting public health in April, including a duty to improve the health of the people in their areas.
In June it was reported that Somerset, Gloucestershire, Avon and Wiltshire councils had all announced investment into the tobacco industry, mostly in Imperial Tobacco and British American Tobacco.
Meanwhile Sutton, Croydon and Merton came under fire in April because they also had pumped money into tobacco, while spending significant money in public health measures to help smokers to quit. In August, councillors in Essex criticised the local authority’s decision to invest £5m of its £3.6 billion pension fund in large tobacco companies.
Some of the councils have defended their investments by arguing that tobacco is a safe investment.
However, according to the charity ASH – Action on Smoking and Health – councils put too much trust in the tobacco market’s robustness.
Speaking to Blue & Green Tomorrow in June, director of research and policy Martin Dockrell said, “There is a myth that tobacco is a recession proof safe bet, yet over the last year Imperial, which has close to half the UK market, have lagged behind the FTSE 100 by around 20%.”
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