Tobacco companies

[Steveam]

Hi all,

I’ve not directly held tobacco shares for many years but I’m now going through my active collectives portfolio (all ITs) and will sell anything holding tobacco shares. I’m going to have a more difficult decision to make regarding tracker ETFs and, to be honest, I’m not sure I’ll make the effort to sort this out.

Despite being an ex-smoker (who still enjoys the occasional cigarette if offered) I realised that I didn’t want to own shares in an industry whose sole or main purpose is to addict people to a product which significantly damages their health. I’ve always hand some difficulty with this as arms companies or drinks companies can all be considered undesirable but I’ve drawn the line with tobacco.

I’ve been influenced in this by a recent TED talk by an oncologist ... 7m deaths a year, health care costs being a public cost which significantly exceeds tax revenues, average age to start smoking about 16 (true for me), ...

Best wishes,

Steve

[Dod101]

I’ve not directly held tobacco shares for many years but I’m now going through my active collectives portfolio (all ITs) and will sell anything holding tobacco shares. I’m going to have a more difficult decision to make regarding tracker ETFs and, to be honest, I’m not sure I’ll make the effort to sort this out.

This has been discussed many times in the past and I will not enter a discussion about the ethics, but I doubt that you will be left holding very much. It is very easy to get exercised by this sort of thing but very difficult to do a lot about it. What about supermarkets which sell tobacco for instance? Are you selling any funds that hold them as well?

Dod

[Steveam]

Hi Dod, Like you I have no interest in getting into an ethical debate about this. To answer your question I quote my original post “shares in an industry whose sole or main purpose” - what I was trying to do here was draw a line (for myself). So supermarkets (your example) do not have as their sole or main business ...

Best wishes,

Steve

[Dod101]

I was being somewhat provocative in citing supermarkets but I do not like drinks companies as they do at least as much damage to society as tobacco. And I would certainly never buy say BAE. You are going to exclude a fair number of ITs I think and I would never do that because (I argue anyway) individual holdings in ITs are outside of my control and constitute a very small (look through) holding compared to a direct holding in the company concerned.

Dod

[colin]

I realised that I didn’t want to own shares in an industry whose sole or main purpose is to addict people to a product which significantly damages their health.

Well good for you Steve !

[mrbrightside]

I’ve not directly held tobacco shares for many years but I’m now going through my active collectives portfolio (all ITs) and will sell anything holding tobacco shares. I’m going to have a more difficult decision to make regarding tracker ETFs and, to be honest, I’m not sure I’ll make the effort to sort this out.

Would an appropriately researched 'ethical fund' suit your purposes better rather than endlessly pondering over what shares an IT/ETF might hold ?

[StepOne]

I was being somewhat provocative in citing supermarkets but I do not like drinks companies as they do at least as much damage to society as tobacco.
Dod

Maybe, but it is at least possible to enjoy alcohol without doing damage to yourself and those around you, unlike tobacco.

StepOne (BATS holder)

[Dod101]

I think the trial at the moment of a well known cricketer is a case in point against alcohol. And there are plenty of others. I am not supporting tobacco in preference to alcohol but I think on the whole that with tobacco, users are first and foremost harming themselves (and their pockets of course) whereas alcohol harms societies, see the centre of many of our cities on any Saturday evening.

Dod

[StepOne]

I think the trial at the moment of a well known cricketer is a case in point against alcohol. And there are plenty of others. I am not supporting tobacco in preference to alcohol but I think on the whole that with tobacco, users are first and foremost harming themselves (and their pockets of course) whereas alcohol harms societies, see the centre of many of our cities on any Saturday evening.

Dod

I'm not aware of Ben Stokes being directly linked to 100,000 deaths in the UK each year, unlike smoking.

StepOne

[GrandOiseau]

ONS say In 2016 there were 7,327 alcohol-specific deaths in the UK. And recent studies have suggested that even small quantities are not beneficial. So, it is good candidate for next on the list after Tobacco.

The stockmarket is littered with ethically dubious investments. However, not investing in Tobacco would certainly be a good place to start if you did want to become a more ethical investor. Military hardware and alcohol would follow.

Is there an Ethical investments board on here?

[Dod101]

I think the trial at the moment of a well known cricketer is a case in point against alcohol. And there are plenty of others. I am not supporting tobacco in preference to alcohol but I think on the whole that with tobacco, users are first and foremost harming themselves (and their pockets of course) whereas alcohol harms societies, see the centre of many of our cities on any Saturday evening.

Dod

I'm not aware of Ben Stokes being directly linked to 100,000 deaths in the UK each year, unlike smoking.

StepOne

Let's just leave it at that.

Dod

[idpickering]

Live and let live I say, and each to their own. I respect the op's opinion, but for me, I regard British American Tobacco and Imperial Brands as mainstays in my HYP, and there they'll stay. Together they account for 7% in capital value terms of my 32 share HYP.

Ian.

[TUK020]

ONS say In 2016 there were 7,327 alcohol-specific deaths in the UK. And recent studies have suggested that even small quantities are not beneficial. So, it is good candidate for next on the list after Tobacco.

The stockmarket is littered with ethically dubious investments. However, not investing in Tobacco would certainly be a good place to start if you did want to become a more ethical investor. Military hardware and alcohol would follow.

Is there an Ethical investments board on here?

Betting shops,
Purveyors of trans fats, sugar and salt advertised to children
Finance companies mis-selling products not in their customers interests
Utilities fleecing vulnerable customers on prepay
etc etc
Not much left of the FTSE

[Steveam]

I wrote the original post as a statement about a change to my investment policy and my reason.

It’s now morphed into some sort of pseudo ethical discussion which is not really appropriate for this forum. In so far as the conversation has gone down this route my views are that a) just because there are lots of “difficult” companies around is not a justification for inaction - one can address one evil while not addressing all: this does not invalidate my action, b) just because booze, betting shops, purveyors of trans fats etc are doing something bad does not in anyway reduce the badness of tobacco - it may highlight the difficulty of action or ones personal difficulty in making choices

Related to the above it’s been suggested that things like the Saturday night town centre effect of booze is comparable with the tobacco effect: the tobacco industry imposes an immense cost of society by externalising its health costs.

Best wishes to all,

Steve

[colin]

Had your ancestor written back in the early days of the 19th C that they no longer wished to invest in companies which used slaves I am absolutely sure that some of the above posters would have written the exactly same responses transposed back to that time.

[GrandOiseau]

What you are trying to do is develop an ethical investor strategy. Unfortunately you seem to have fallen at the first hurdle...

I’m going to have a more difficult decision to make regarding tracker ETFs and, to be honest, I’m not sure I’ll make the effort to sort this out.

Despite being an ex-smoker (who still enjoys the occasional cigarette if offered).

So basically you can't even stop using the very product you are rallying against and because it requires a bit of effort you aren't going to fully cleanse your investments.

No wonder you don't want to discuss all the other unethical investments.

You are right, you've made a start, which may be considered better than nothing but unless you are going to continue it's not really a strategy is it?

[Steveam]

Hi GrandOiseau, You assert that I’m trying to “develop an ethical investor strategy” - I’ve never said any such thing. Perhaps, by posting here on Investment Strategies, I’ve brought this on myself but all I was trying to do was describe the second step that I’ve made regarding tobacco companies (the first step being direct investment). I mentioned both ETFs and my occasional puff to show my difficulties and I’m surprised to be castigated for admitting weakness.

I’m very willing to join in a discussion about other unethical investments but the original post was not intendinded to start that discussion and I don’t think this is the right forum for such a discussion.

Best wishes,

Steve

[StepOne]

Interesting topic Steve,

Whenever I think about this I look at what difference it would actually make if I decided not to invest.

Historically I would have been financially worse off without my BATS investment. Going forward I would probably be slightly poorer as I'm not sure I could find a replacement company with as good a dividend stream.

It makes no difference to BATS itself. When I buy or sell the shares, none of the money goes into, or out of the company - they are totally unaffected. Similarly for people who use their products.

Nobody around me know, or cares what my money is invested in. I've got a couple of friends with investments where we occasionally talk about some of our racier choices, but they are not really interested in my boring HYP choices. If someone asked me directly what companies I owned shares in I would tell them, but nobody ever does. In general whenever I drop things like this into the conversation, people just glaze over (but that might just be me!). I guess if I was able to say to someone 'I own no tobacco company shares because I took a decision not to invest in a company whose products are designed to be addictive and harmful', then I might gain a small amount of kudos from the few people who hadn't already glazed over. But let's face it, 99% of the population probably don't own tobacco shares, so I'm not really standing out from anyone else.

So basically I can't see how anyone gains from my decision not to invest, and only one person loses (me - and a small effect on my family). So what's the point?

The best option I came up with was, if you are that strongly anti-smoking, to invest in BATS shares and donate the dividends to ASH.

Cheers,
StepOne

[Lootman]

So basically I can't see how anyone gains from my decision not to invest, and only one person loses (me - and a small effect on my family). So what's the point?

There have been cases where pension funds and the like choose to disinvest in certain companies and sectors, for what I might perhaps somewhat cynically describe as ideological reasons. Often it's more a matter of grandstanding than achieving anything. As you note, there aren't enough investors and funds following "ethical" mandates to affect the companies in question. Moreover there is an argument that you should invest in them so that you can vote proxies and influence policies.

There's another problem too. "So called "sin shares" are often defensive and cash-generative. If you don't invest in tobacco, alcohol, gambling, arms etc. you can end up with an unbalanced portfolio and a higher risk profile. That's the opposite of what, say, a pension fund is trying to achieve and there is a worry that the members of that fund might sue a fund manager who under-performs because of ideological skew and political bias.

My view on such matters is simple and sraighforward. I take no account of morality, which I mostly regard as subjective anyway. But if I feel strongly about an issue I will donate a portion of my investment profits to that cause.

[GrandOiseau]

Hi GrandOiseau, You assert that I’m trying to “develop an ethical investor strategy” - I’ve never said any such thing.

What would you call it?

Perhaps, by posting here on Investment Strategies, I’ve brought this on myself but all I was trying to do was describe the second step that I’ve made regarding tobacco companies (the first step being direct investment).

Yes but to what purpose? Are you imploring others to follow the strategy? Ask what people think of the strategy? Ask if people have ways to help with the strategy? What discussion did you expect to follow on from your OP?

I mentioned both ETFs and my occasional puff to show my difficulties and I’m surprised to be castigated for admitting weakness.

Nothing wrong with admitting weakness. I wasn't castigating you for the weakness. I was castigating for claiming to not "want to own shares in an industry whose sole or main purpose is to addict people to a product which significantly damages their health" whilst still supporting that industry in both purchasing their products and investing in other ways. Never smoke tobacco, don't encourage others to do so and go through the so called difficult decision of ditching the ETF's for funds that don't invest in Tobacco if you really believe that quote from above.