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Tobacco screened out of new BlackRock fund



Asset management firm BlackRock has launched the BlackRock Developed World ex Tobacco Index Fund, in a bid to meet demand from charities, pension schemes and other organisations that want their ethical values to be reflected in their investments.  

The new fund will allow investors to exclude stocks in the controversial tobacco and weapons sectors whilst still providing low cost exposure to the global equity markets. BlackRock’s charities business is one of the largest ethical active and passive funds in the UK.

Doug Shaw, head of BlackRock’s Charities Business, said, “Many investors, not least UK charities, want to invest in a way which is consistent with their own ethos and values.” He added that the new fund was designed to meet the demands of investors to gain global equity market exposure whilst still screening out sectors that do not match their values.

The launch of the fund follows UK council pension funds seeking legal advice over whether investing in tobacco companies clashes with their new responsibilities to promote public health. Councils have come under fire for investing in tobacco companies while spending significant amounts of money on helping smokers quit.

Essex councillors criticised the council’s decision to invest £5m of its £3.6bn pension fund in large tobacco companies. Julie Young, Labour councillor in Essex, commented, “It seems hypocritical to invest in large tobacco companies one day and then invest in stop smoking services the next.”

Freedom of information requests also found that Scottish public sector pension schemes invested £204m in the tobacco industry last year, along with £1.1bn in fossil fuel companies and £113m in arms. The revelations led to campaigners saying the public sector is letting down its employees.

Further reading:

Public sector workers let down by ‘dodgy pension investments’, says campaigners

Council pension fund seek legal advice over contentious tobacco investments

Essex councils admits hypocrisy in tobacco investment

British councils announce £44m investment in tobacco firms

Describing tobacco as a ‘defensive stock’ is offensive