ABP, the €410bn Dutch civil service pension giant, has announced today that it no longer invests in tobacco and nuclear weapons manufacturers, after selling off holdings worth approximately €4bn.
Arms makers which have been divested include Lockheed Martin, BAE Systems, Airbus, Honeywell and Israel’s Elbit Systems; while tobacco producers dumped include Phillip Morris, British American Tobacco, Imperial Brands and Altria Group (list).
In an interview with Financial Investigator, ABP board member Geraldine Leegwater said that the central question in determining divestment is “whether we as a society can do without it”.
According to Leegwater, this ruled out divesting conventional weapons which are still used for “public order and security” but not tobacco and nuclear weaponry which “cannot be used in peaceful operations”.
ABP previously stated its intention to exclude both sectors from its portfolio at the start of 2018, and had given itself one year to complete the exercise.
At the time, Erik van Houwelingen, Chairman of the ABP Executive Committee for investment policy, attributed the decision to a “new assessment framework for product exclusions” which had determined that “tobacco and nuclear weapons no longer fit in with our sustainable and responsible investment policy”.Commenting on the news, responsible investment group ShareAction, said: “Yet again we see an exemplary case coming from responsible investors in the Netherlands showing bold, decisive action for the health and wellbeing of global communities.”
“The pension fund is right to have set time-bound divestment of nefarious stocks following failed engagement. We encourage investors closer to home to follow their lead.”
Tobacco Free Portfolios, an influential campaign group which worked with ABP during the divestment exercise, told RI: “The recent drop in share prices of all tobacco companies in light of the ever-increasing global regulation, litigation and social de-normalisation further highlights the benefit of this decision.”
In response to ABP’s decision, a spokesperson for British American Tobacco told RI: “Any shareholder is quite within their rights to invest or divest wherever they see opportunity – and while some funds have moved away from tobacco and other similar holdings, we continue to have regular contact with investors who are considering investing in tobacco stocks.”
Lockheed Martin refused to comment for this story, while BAE Systems and Elbit Systems did not immediately respond to requests for comment.
Late last year, ABP played a prominent role in the design of a government-backed covenant on socially responsible investment signed by 220 pension schemes.