Smoking concerns may prompt ban on SIC investment in tobacco firms
John RobertsonConcern about the number of Shetlanders still smoking themselves to death may prompt Shetland Islands Council to stop investing funds in tobacco companies. The move could cost around £390,000 a year in lost income but some councillors believe it is a price worth paying.
An attempt to boycott Imperial Tobacco and British Allied Tobacco was made at yesterday’s meeting of the executive committee, led by Betty Fullerton, the former NHS Shetland chairwoman. But the committee was told that the decision was one which only the whole council can make.
However, the chance to act will arise in the next few weeks when the council sits down to review its investment policies. It will not be an easy decision to make, given that spending plans have already been agreed for using the £390,000 tobacco gains and any political decision to wilfully cut council income during financial hard times may anger many in the community.
Councillor Jonathan Wills was concerned about how much the “tobacco epidemic” was costing the council in lost working time. And, with one Shetlander a week dying from tobacco-related illness, according to his figures, he wondered how making money from tobacco sat with the council’s corporate policy on a healthier and fairer Shetland.
He said if the local authority continues profiting from what is essentially the sale of drugs it should perhaps also turn the empty Craigielea home into a brothel because that would be a money-spinner too.
Mrs Fullerton said there was no safe level of tobacco consumption and it bore a cost for the council in sickness and time for employees to smoke.
A loss of £390,000 would be acceptable, she said, because it would help save the country money and the council. Alternative ways of investing council funds might even perform as well as tobacco shares, she said.
She won support from councillor Caroline Miller who said the effect of tobacco use on families was “absolutely horrendous”.
But councillor Alastair Cooper felt he had to point out that disinvesting itself of tobacco shares did not mean people in Shetland would smoke any less. “We’re kidding ourselves if we’re saying that,” he told the meeting. It would be more effective to put some of the profits into persuading council staff to give up.
Councillor Gary Robinson had his doubts too, predicting that in a few years’ time there will be a pronouncement that people should stop drinking alcohol too. What would the council invest in, he asked, if everyone got to ban their pet dislikes?
Councillor Robert Henderson said ceasing tobacco investments was “not going to make the slightest difference in Shetland whatsoever”.
The issue of ethical investment of funds for profit has cropped up many times over the years, usually at meetings of Shetland Charitable Trust. Despite hours of passionate debate absolutely nothing has changed.
Yesterday’s debate was prompted by a report into three different scenarios which would help the council avoid its funds being used for dodgy purposes, such as the manufacture of arms and torture implements, nuclear weapons and exploitative mining.
The first scenario looked at the example set in Norway where the £370 billion government pension fund – one of the biggest retirement funds in the world – ensures that funds are not invested in 54 excluded companies. Interestingly one of them, Serco, is a bidder to take over the NorthLink shipping contract for Shetland and Orkney.
Only six of the companies feature on the UK Stock Market and boycotting them over the past 10 years would have cost the council around £1.4 million a year in lost income, according to council treasury accountant Colin Bain.
The second scenario involved boycotting the two UK Stock Market-listed tobacco companies, resulting in around £390,000 a year less to the council. Shares in tobacco often do better than general shares in the Stock Market, despite the decline of smoking in the West.
The third scenario featured the FTSE for Good index, which measures the performance of UK companies which have globally recognised high standards of corporate responsibility. It excludes tobacco, nuclear power and the arms industries.
If the council had been adhering to that investment system it could have cost it around £1.28 million a year in lost income.
Acting head of finance Hazel Sutherland warned that the council had set a budget based on achieving a 4.5 per cent return on its investments so any changes to the policy could result in a shortfall and therefore a budgeting problem for the local authority.
Jonathan Wills
Dirty money
The SIC’s long awaited report on ethical investment, discussed at the Executive Committee on Monday this week (13/2), did not give the full picture. During questions, it emerged that the writers of the report had not actually spoken to or corresponded with staff at the Norwegian State Pension Fund, which was cited as a prime example of ethical investment.
Nor did the report attempt to compare the overall success of the ethical Norwegian fund with the performance of other funds. It only considered six of the 54 companies in which the Norwegians refuse to invest and it did not examine important British examples of ethical investment policies, such as those of the Methodist Church and the Co-op Bank.
This unbalanced and selective document did not discuss “active investment” at all. Active investment is where, instead of refusing to hold shares in a delinquent company, you send representatives to the annual shareholders’ meeting and use your influence to persuade the company to follow ethical guidelines and improve its performance, so as to comply with international standards on “environmentally and socially responsible investing” (ESRI).
The report appeared to have been written to an agenda, presumably set by the council’s political leadership and designed to rubbish the idea of ethical investment and to make its advocates appear as unrealistic idealists.
It would no doubt be convenient to swot us aside like this but the issue will not go away. As long as the council and the Shetland Charitable Trust earn income by investing in nuclear weapons or cluster bombs, land mines, tobacco firms or other morally repugnant shares, the campaign for ethical investment will continue, whether some of us are on the council and the charitable trust or not. Ultimately it will succeed, because the vast majority of local citizens are uneasy about taking dirty money.
Cllr. Jonathan Wills
Independent, Lerwick South ward
Bill Gibson
Do not consider investing in the not so clean Pharma Industry
http://www.cbc.ca/news/canada/montreal/story/2012/02/09/montreal-champix-ads.html
and a short video from the FDA
https://www.youtube.com/watch?v=ep3U0SVfpW4&feature=related
Bill Gibson
Another example of the dodgy Pharmaceutical Industry
http://www.naturalnews.com/034975_Risperdal_diabetes_lawsuit.html
H. Tait
I agree with Bill.
BTW, anyone who is interested in their own health should be watching Naturalnews.com
Sam Thomson
Yet again more proof how stupid the council are. With all the cuts they are making they should be investing wherever they’re going to make the most money. I’m sick of this culture where smokers are picked on and it is seen as a dangerous habit. It is every persons own choice to smoke or not and will carry on regardless if e council invests in tobacco companies are not. Idiots.
Ron Stronach
I have to agree with Sam on this, if the SIC lose money by not investing, you are not harming the Tobacco companies, just yourselves. Other investors will simply make their fortune instead.
I dont smoke but I think the whole world has gone bonkers on the issue of tobacco, hell in my mothers time the government of the day were encouraging people to smoke. Yes its bad for you, but so is other things too.
Its a personal choice whether to smoke or not, its your health, where would the government be without the revenue?
Bill Gibson
Maybe the Council should send representation to this Conference to see just how safe their investments are
http://www.gtnf-2012.com
Michael Garriock
Given councillors in virtually the same breath were discussing cuts, which once again the more vulnerable in society seem to be going to have to bear a significant brunt of, and could, unless done and monitored with extreme care, arguably directly contribute to deaths. This seems an incredibly strange moment for them to suddenly feel the need to attempt to sanctimonously scramble towards a scrap of moral high ground.
Common sense would tend to lead one to conclude that now would be a very good moment to grab every possible penny available, and be glad of it, rather then getting collective drawers in a knot over how it was earned. The stance may be admirable, but its also arguably misguided and irrelevant, and very diffcult to see as anything but irresponsible in the present public funding climate.
To quote a once oft used old Shetland adage, “da Loard sent hit, even if da deevil brang hit”.
I would suggest councillors might like to consider what they were elected to do. I may well be wrong, but I’ve always gleaned the impression the the #1 and core role is that of providers of necessary public services competently and efficiently, in a value for money manner. Preachers/protectors of lifestyle choices and morals ranks near the bottom of the list, if they even make the list at all.
Colin Hunter
I believe there is a certain irony in using money derived from investments in such things as the tobacco industry, to do good in society, to help people who may even have been harmed by prolonged use of tobacco themselves. There are those who will say that it is immoral to invest money in such industries, but as long as it is legally available, people will do it. It’s human nature! Immoral or not, if it provides a good return, use that return to help undo the harm done by the tobacco companies. Give some of it to cancer research or something!
James King
Dear Sir
The Council report compares how the fund would have done without tobacco stocks compared to the FTSE All Share Index. With respect, this is a false comparison. Tobacco stocks are classed as a defensive share, because they tend to perform well in hard times, as indeed they have done in recent years. As we all know the stock market as a whole has not done well for at least 5 years. However, there are many other defensive stocks available, which although they will not have performed so well financially as tobacco (products for addicts tend to be fairly recession proof!), will have performed much better than the FTSE All Share Index. Thus, to compare to that index just by removing tobacco is overly simplistic, and contrary to what any investor would do when looking for alternative investments to tobacco.
As another commenter notes above, Norway has a very successful no-tobacco policy, and its own reports suggest it has done well financially. Similarly, New Zealand has reported no discernible effect on its fund.
Finally, as tobacco stocks are defensive in nature, when the market turns these stocks will not be so attractive financially. Now might be a good time to sell, as no one can predict when the market will turn.