Sponsored by
Anger as council pensions cash in on tobacco
Christine Berry
YORKSHIRE council pension funds are investing hundreds of millions of pounds in tobacco companies and global corporations accused of environmental abuses.
Despite a commitment to “socially responsible investment”, three of the region’s four funds have pumped more than £110m into British American Tobacco (BAT) and more than £500,000 in Japan Tobacco.
The investments have been slammed by health organisations, particularly in light of Government reforms which will see local authorities take on a much more significant role in health management this year.
Environmental and human rights campaigners called for a more ethical approach to investments after it emerged nearly £200m was being invested in global mining firm Rio Tinto, which has faced accusations of environmental damage.
The authorities have said that they are committed to socially responsible investment, providing they can achieve the equivalent returns of their present holdings.
The funds say they are bound by fiduciary duty – a legal obligation to act in the best interest of their members – but campaigners say that is a narrow and simplistic interpretation of financial law.
Christine Berry, policy officer at the charity FairPensions, said: “When it comes to ethical investment, myths and misconceptions continue to abound.
“It’s simply not true that pension funds have a fiduciary duty to maximise returns which prevents them from considering ethical issues. Funds can and should take on board their stakeholders’ ethical concerns as long as it will not significantly harm returns.”
Ms Berry criticised those funds which do not publish voting behaviour – as a major investor each fund can vote at the board meetings of the firms they invest in on issues such as the pay packages and bonuses for top executives.
The South and West Yorkshire funds publish their voting history; however the North and East Yorkshire funds do not.
“We applaud those funds who publicly disclose how they use their shareholder votes,” she said. “This gives the lie to the claims of others that it is not practical for them to disclose.
“Members and council taxpayers have a legitimate interest in what is being done with their money.”
This year will see the biggest overhaul of the NHS in more than 30 years as directors of public health are transferred to local government. Bills currently going through parliament collectively hand councils major responsibilities for community wellbeing.
Martin Dockrell, director of research and policy at Action on Smoking and Health, said: “In just a few months Yorkshire’s councils will take on new responsibilities for protecting public health and you have to ask how that squares with such large investments in Britain’s biggest killer. Council pension fund managers have a duty to invest in the best interest of their pension holders but they also have a duty to the best interests of their local tax payers.”
When asked to justify the holdings in BAT, a spokesman for the East Riding Pension Fund said they do not disclose the reasons for individual investments, and a spokesman for the West Yorkshire Fund said: “The fund has a legal duty to maximise its investment returns, and the tobacco sector has produced very good returns relative to the market in recent years.”
Email to a friend
Print this page- Leeds lose Ward to Palace: Is there anyone they can afford now?
- Sheffield Wednesday leaving it late to hijack Leeds United over Ward
- As Snodgrass dithers over Leeds, Warnock throws a lifeline
- Ball is in Leeds United’s court over contract - Snodgrass
- Police turning blind eye to Asian voter fraud, says MP
Looking for...
Featured advertisers
Jobs
Search for a job
Motors
Search for a car
Property
Search for a house
Weather for Yorkshire
Saturday 26 May 2012
Today
Sunny
Temperature: 8 C to 21 C
Wind Speed: 17 mph
Wind direction: East
Tomorrow
Sunny
Temperature: 9 C to 22 C
Wind Speed: 13 mph
Wind direction: East
Comments
There are 5 comments to this article
Page 1 of 1
Keep Labour Out
Wednesday, January 11, 2012 at 11:43 AMHahaha, CharlesX1 and tug wilson, what a surprise to find you here, not. Its like I said Charles you are on every pro-smoking thread going. Get a life man. This story is an absolute disgrace, public money should never ever be invested into the evil tobacco industry, this should be made illegal. Smoking should never be promoted and encouraged.
beanyboy
Tuesday, January 10, 2012 at 03:09 PMTobacco companies are indeed an excellent investment. Their product is easy and cheap to produce and ship. Their customer base is very loyal, showing great reluctance to stop purchasing, even when prices rise. Even, perhaps especially, low income families purchase the product regularly and the market in the expanding developing world is huge. The slight inconvenience of a large proportion of the customer base dying from side effects of using the product can be ameliorated by careful marketing designed to recruit newer, younger, clients. It's a real pity heroin and crack are illegal - I'm told market returns from this type of merchandise are even better than those from tobacco. However, there are, I'm told, some very promising sweat shop industries in the Far East where councils might get a good rate "relative to the market". Now that we've abandoned morality, the world's our oyster.
CharlesX1
Tuesday, January 10, 2012 at 03:06 PMI agree with tug wilson. Tobacco shares are among the safest investments. Good job the council didn't invest in pubco shares as they are now only worth pennies.
whirlygig
Tuesday, January 10, 2012 at 03:01 PMGo through the list of the companies these pensions invest in and theirs an 'ethical' reason for staying away from all of them. Oil companies - environmental damage Banks - unethical practices lead to the current financial crisis Drug companies - animal testing Drink companies
tug wilson
Tuesday, January 10, 2012 at 10:57 AMI have to say Well Done to the council, as far as Investment is concerned they have shown a very common sense approach, just as most councils around the country have. The fact is Tobacco companies Are a very good investment, it is a very good job that the councils did Not invest in the Pub and Club Industry, in the wake of the Smoking Ban they would have Lost the Lot..
Page 1 of 1
Your view
Please sign in to be able to comment on this story.