Matt Crossman, engagement manager at Rathbone Greenbank Investments, comments:

“Ethical investors have long avoided the tobacco sector because of its clear links to premature death and disease. Tobacco companies have consistently demonstrated poor levels of corporate responsibility, often undermining public health bodies through their advertising and messaging. Although tobacco use is a matter of personal choice, and its usage still legal, the arena in which we exercise our choice is not neutral: the messaging and promotional activity of the industry has created a situation where smoking has fallen in countries like the UK, America and Australia, but risen in the developing world and in Eastern Europe. This trend is confirmed by WHO reports that cite ‘aggressive’ marketing in these regions.

“It’s no exaggeration to say that the industry has only ever moved in more responsible directions when it has been forced to do so by regulation; at the same time, the industry has become more and more adept at shifting its growth efforts to areas where regulation is weaker. It has also actively fought the restriction of advertising. Having broadly lost those battles on advertising, it has now considerably upped its investment into the ‘vaping’ trend. Although public health bodies are still split on the long-term health benefits of e-cigarettes – with some seeing the technology as a useful tool in giving up smoking – commentators have been quick to point out that the tobacco industry’s increasingly large-scale investment in the technology might be an attempt to ‘normalise’ smoking and retain their market position, rather than a genuine effort to mitigate the harmful effects of tobacco.

“Put simply, smoking remains a leading cause of preventable harm in the world. Treating its effects on populations is a huge drain on healthcare systems. As more countries take up the WHO recommendations and begin to implement stricter control, we expect growth opportunities to stall for the industry. Responsible investment is about investing in companies making useful goods and services which benefit society, pursued in a responsible manner. Tobacco does not pass this test.”