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Axa stubs out €1.7bn tobacco industry investment | Axa stubs out €1.7bn tobacco industry investment |
(about 13 hours later) | |
Axa, one of the world's biggest insurers, will stop investing in the tobacco industry and sell investments worth more than €1.7bn (£1.3bn). | |
It said investing in the sector made no sense given that smoking killed some six million people a year. | It said investing in the sector made no sense given that smoking killed some six million people a year. |
The move by Axa is an attempt to support government efforts to reduce the number of people who smoke. | The move by Axa is an attempt to support government efforts to reduce the number of people who smoke. |
Tobacco companies last week lost a High Court challenge to plain packaging for cigarettes sold in the UK. | Tobacco companies last week lost a High Court challenge to plain packaging for cigarettes sold in the UK. |
A major health insurer, Axa said its role was increasingly about prevention rather than cure. | A major health insurer, Axa said its role was increasingly about prevention rather than cure. |
Its announcement coincides with the annual World Health Assembly in Geneva, where World Health Organization member nations meet to discuss global public health policy. | Its announcement coincides with the annual World Health Assembly in Geneva, where World Health Organization member nations meet to discuss global public health policy. |
The Axa Group, which manages assets worth €1.36 trillion, will sell its €184m of shares in tobacco companies, and tobacco industry bond holdings that are valued at almost €1.6bn. | The Axa Group, which manages assets worth €1.36 trillion, will sell its €184m of shares in tobacco companies, and tobacco industry bond holdings that are valued at almost €1.6bn. |
However, that accounts for just 0.6% of its corporate bond holdings. | However, that accounts for just 0.6% of its corporate bond holdings. |
Analysis: Hugh Pym, health editor | Analysis: Hugh Pym, health editor |
Some ethical investment funds have shunned tobacco shares for some time now. The big US pension fund Calpers decided more than a decade ago not to buy shares in tobacco companies, but Axa seems to be the first major European institutional investment fund to pull out of the sector. | Some ethical investment funds have shunned tobacco shares for some time now. The big US pension fund Calpers decided more than a decade ago not to buy shares in tobacco companies, but Axa seems to be the first major European institutional investment fund to pull out of the sector. |
Selling €1.7bn of shares and bonds will be a significant disposal. Cynics might say it is a good time to sell following a sustained rise for tobacco shares. Yet Axa is clear that, as a health insurer, holding tobacco investments is no longer justifiable. | Selling €1.7bn of shares and bonds will be a significant disposal. Cynics might say it is a good time to sell following a sustained rise for tobacco shares. Yet Axa is clear that, as a health insurer, holding tobacco investments is no longer justifiable. |
With two tobacco companies - British American Tobacco and Imperial Brands - in the FTSE 100, many private investors will be indirect holders through tracker funds. The question now is whether other shareholders, large or small, will follow Axa's lead. | With two tobacco companies - British American Tobacco and Imperial Brands - in the FTSE 100, many private investors will be indirect holders through tracker funds. The question now is whether other shareholders, large or small, will follow Axa's lead. |
Incoming chief executive Thomas Buberl said that although the decision would cost Axa money, it would generate savings by resulting in fewer claims for tobacco-related diseases. | |
"The business case is positive," he said. "It makes no sense for us to continue our investments within the tobacco industry. The human cost of tobacco is tragic - its economic cost is huge." | |
Mr Buberl said Axa wanted to send a signal to other institutional investors and encourage others to follow suit. | |
The WHO estimated that eight million people a year will die of smoking-related diseases by 2030, mostly in developing countries. | The WHO estimated that eight million people a year will die of smoking-related diseases by 2030, mostly in developing countries. |
Cary Adams, chief executive of the Union for International Cancer Control, said: "We need companies like Axa to signal that investing in an industry which kills its customers is simply the wrong thing to do, and this announcement ... is a milestone step in the right direction." | Cary Adams, chief executive of the Union for International Cancer Control, said: "We need companies like Axa to signal that investing in an industry which kills its customers is simply the wrong thing to do, and this announcement ... is a milestone step in the right direction." |
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