Queensland University of Technology Law Review

FAQs

How is the tobacco industry different from other undesirable industries?

No Safe Use: There is no safe level of tobacco consumption. When used as intended, tobacco will have contributed to the early death of two out of three smokers. (Source)
UN Treaty: Due to the profound scale of the negative impact of tobacco – an estimated eight million deaths per year (Source) – tobacco is the focus of the world’s only global health treaty – the United Nations’ Tobacco Control Treaty – which has been ratified by 183 Member States covering almost 90% of the world’s population.
Engagement is futile: The World Health Organisation has declared, “The tobacco industry is not and cannot be a partner in effective tobacco control” (Source) and “Engagement with the tobacco industry is contrary to the United Nations’ systems, objectives, fundamental principles and values.” (Source) Positive influence of the industry through professional engagement is futile, as the only acceptable outcome would be for tobacco companies to cease their primary business.

Can’t we just offer an ESG or SRI option?

Socially Responsible Investments (SRIs) and sustainable investment options are subject to broad and varied interpretations across the industry. They do not represent a defined or enforceable standard and may include tobacco unless an exclusion policy is clearly specified. In addition, many investors, particularly members of pension funds, are not engaged with their investments and tend to be in default or mainstream options. Many investors, especially members of compulsory pension funds, are not adequately financially literate to make informed decisions.

Why do tobacco companies perform well on ESG ratings?

Many ESG and ‘sustainable’ ratings are not tools to screen out particular industries or companies, rather a ‘best of sector’ approach is taken, which sees tobacco companies being rated only against each other. Many rating agencies use a system that awards top marks for at least one company in each sector, which sees tobacco companies with the least negative scores being given A’s or five-star ratings. In addition, the core purpose and impact of the business is not necessarily considered amongst the ESG or sustainability factors. Tobacco Free Portfolios is working with global data providers and ratings agencies to revise such methodology.

Will going ‘tobacco-free’ open the flood gates to other requests?

The case for excluding investment in tobacco can be made upon implementation of a clear and pragmatic decision-making framework. Exclusions are generally only applied in exceptional circumstances – one of them being tobacco. Issues concerning other companies or industries may be amenable to different strategies, such as engagement, best of sector investment or impact investing.

Do countries really want to see the decline of tobacco when Governments collect so much from tobacco through tax?

The health treatment costs of smoking far outweigh government revenues from tobacco taxes. In other words, the tobacco industry is a net cost to society. The additional healthcare costs as a result of smoking outweigh income from tobacco taxes with the total global economic impact from smoking estimated at €2 Trillion per year, the same as the cost of armed violence, war and terrorism and more than obesity, alcoholism or climate change. Source