Insurance and asset management giant AXA is to exit its entire tobacco holdings worth a total of €1.7bn, comprising €184m in equities and just under €1.6bn in corporate bonds in a move that’s believed to be the first instance of a global insurer divesting tobacco.
“As a responsible health insurer and investor, the AXA Group has decided to divest its tobacco industry assets,” the France-based company, the third largest health insurer outside the US, said.
AXA cited the role tobacco has in long-term non-communicable diseases such as cancer, heart disease and respiratory illnesses. The World Health Organisation estimates that 1bn people will die from smoking related causes this century while McKinsey Global Institute has estimated that the total impact from smoking is $2.1trn a year.
AXA will stop all new investments in tobacco industry corporate bonds and “run off” its existing industry holdings. It will sell its equity holdings in tobacco immediately.
“We strongly believe in the positive role that insurance can play in society, and that insurers are part of the solution when it comes to health prevention to protect clients,” said incoming CEO Thomas Buberl.
“Hence it makes no sense for us to continue our investments within the tobacco industry.” He said AXA was doing its share to support governments around the world.“This decision has a cost for us, but the case for divestment is clear: the human cost is tragic; its economic cost is huge. As a major investor and leading health insurer, the AXA Group wants to be part of the solution.” He hoped the rest of the industry would do the same.
The move was welcomed by the Union for International Cancer Control (UICC), the Geneva-based campaign group, whose CEO Cary Adams said: “We need companies like AXA to signal that investing in an industry which kills its customers is simply the wrong thing to do.”
It comes as the debate about institutional investors’ links with tobacco has been refreshed by reports that the California Public Employees’ Retirement System (CalPERS) could potentially return to tobacco after consulting firm Wilshire Associates found it had cost the influential fund up to $3bn since an initial divestment back in 2000.
Phil Angelides, the former California State Treasurer who was a member of the board of CalPERS at the time, said it would be a “recidivist move” to invest in companies that are “unworthy of public investment”.
The 43-year-old Buberl, currently Deputy CEO, takes over the top job at AXA on September 1. He was set to speak at the World Health Assembly, the decision-making body of the WHO, in Geneva over the weekend.