Australian Future Fund’s tobacco exit welcomed as an example to other investors

Giant state fund dumps BAT and Philip Morris

The decision by the Australian government’s A$82.39bn (€64.5bn) Future Fund to exit 14 tobacco producers – including British American Tobacco and Philip Morris – has been welcomed as an example for other investors.

“The Future Fund Board of Guardians today announced the decision to exclude primary tobacco producers from its investment portfolio,” the Melbourne-based investor said in a statement. The fund’s holdings of the companies (listed below) amounted to $222m, or 0.3% of total fund assets.

The decision was greeted by the Australian Green party, whose health spokesperson Richard Di Natale said: “I welcome the leadership shown by Mr David Gonski, the new chair of the Future Fund, in commissioning the review that led to today’s decision.

“This is a win for public health and I hope that it is an inspiring example to all other investment funds.”

The divestment decision follows a review of the investments by the Board’s Governance Committee which was announced in October 2012.
The Future Fund looked at tobacco’s damaging health effects, addictive properties and the fact there’s no safe level of consumption.“In doing so the board also considered its investment policies and approach to environmental, social and governance issues,” said Gonski.

“A win for public health and an example to other investment funds”

The independently managed Future Fund invests the government’s budget surplus to pay pensions for retired civil servants.

Meanwhile, fund manager Australian Ethical has announced a 71% increase in profit, with funds under management up 12% at A$669m. But headcount has fallen from 46 to 34.

Excluded companies:

Altria Group, British American Tobacco, British American Tobacco (Malaysia), Gudang Garam Tbk, Imperial Tobacco Group, ITC, Japan Tobacco, KT&G Corporation, Lorillard, Philip Morris CZ, Philip Morris International, Reynolds American, Souza Cruz and Swedish Match.