Tobacco divestment complementary to achieving net zero – Tobacco Free Portfolios

Divesting from tobacco is complementary to achieving net zero, according to Tobacco Free Portfolios director, Dr Bronwyn King.

Speaking at a webinar hosted by Tobacco Free Portfolios on Thursday, 28 October, ahead of the COP26 meeting next week, King said there are three key statistics that warrant tobacco a place in the conversation about the path to net zero.

The first is that cigarette filters are the number one ocean plastic. “Most people think it’s plastic straws, bottles or bags, but in fact it is cigarette filters and they don’t break down, they just dissipate and turn into microplastics and enter the food chain,” King explained.

Secondly, it is estimated that around 5 per cent of global deforestation is due to tobacco production, which King described as an “extraordinary figure” for a single product. In addition, big tobacco, which includes a very small number of tobacco companies, has the same carbon footprint as some countries, such as Israel or Peru.

“Many people are finding it really helpful to look at tobacco through the lens of net zero and how their financial institution can work its way to net zero. In our view they are very complementary… and while net zero will take a very long time for organisations to get their heads around - it will take a lot of resources and ongoing refinement over a long time, one really great thing about tobacco-free is that it is one decision that you can make today. It is relatively straight forward and it’s a really meaningful commitment and really meaningful symbol of a financial institution’s commitment to net zero.”

Speaking during the webinar, Carmignac managing director UK, Maxime Carmignac, believes there is “no compromise” when it comes to tobacco investing. The company’s approach to excluding tobacco covers producers, the value-chain, wholesale distributors and any company that generates more than 5 per cent of its revenues from tobacco.

“If other asset managers say no, there will be less funding for tobacco industries, hence they will be less powerful and this will contribute to saving lives, health and the environment.”

Tobacco Free Portfolios UK/EU director, Gail Hurley, noted that many tobacco companies receive “high scores on different environmental, social and governance (ESG) metrics [and] quite high scores on climate disclosure”. She asked Carmignac whether a tobacco company can be a global environmental leader?

Carmignac responded: “I think that some of them are doing some cosmetics in order to attract ESG flows but I think these ESG scores are wrong because if you are a tobacco company you are having a very negative impact both on smokers and non-smokers, so the whole of society is suffering from tobacco.”

Skandia head of sustainability, Helena Hagberg, who also spoke during the webinar, said the Paris Agreement made in 2015 was an “important starting point” for all of us”.

“Since then, there has been a very clear focus on climate change and trying to be a really active part of the transition that we all need to do… we are trying to shorten this long-term target because it is really hard to work with 2050, 2045, which is our main target. We have set shorter targets in order for us to be moving here and now.”

On the subject of working together as an industry, Halberg said: “If we exclude it is a signal, but when you join with others then it becomes more of a movement and a momentum”. She added that trying to influence other financial industries is a very important part of excluding tobacco and reducing the impact of that industry.

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