Investment ethics

Kent County Council's recent investments in tobacco have upset Action on Smoking and Health. They have also upset an outfit called 'Fairpensions', an organisation campaigning for ethical investment that seeks to challenge the presumption that the primary responsibility of pension fund managers is to maximise financial returns.

Action on Smoking and Health and Fairpensions have issued a joint statement suggesting that a more thorough understanding of fiduciary duty would take into account ethical considerations affecting investment choices such as working conditions, overall cost to society. Fairpensions have also produced a discussion paper on the issue entitled Protecting our best interests: rediscovering fiduciary duty. A counter-argument can be found here.

What's rather funny about this is Martin Dockrell's contribution ...

“For public sector pensions the question of ethical investment is very fraught. We would argue put aside the issues of child labour, of killing half your customers, they’re selling an addictive and lethal product – put all that aside, it just doesn’t make long-term investment sense to wrap up your portfolio with a sector that is in terminal decline.”

It's not surprising seeing Dockrell issuing ethical guidance to pension fund buyers, but he also asserts his superior wisdom in assessing the long-term financial viability of tobacco funds. Not quite his line of expertise, you might think. He adds, "In 20 years the tobacco industry will be down the pan."


Had the habit of smoking been allowed to decline naturally Dockrell's insights into the future of tobacco might be more reliable. Tobacco control over the last several years, however, has been aggressive: not content with keeping the lid on illegal supplies and keeping tobacco out of the hands of children, it has severely restricted the social opportunities available to smokers and sought to discourage them by all available means. Its reach is global.

Tobacco control seeks to destroy the tobacco industry in the naive hope that this will somehow improve the human condition. It seems to forget that millions of people through history have resorted to drugs of all kinds to help them cope with extreme adversity, or to mask it. Getting rid of tobacco companies would not change this. It would remove a legal supplier of a mild drug, but wouldn't deal with the underlying demand for drugs, or improve the general human condition. Denied tobacco, people will turn to smoking other, perhaps even more dangerous concoctions, as found since the Isle of Man prison regime banned smoking:

Inspectors found that inmates were boiling up nicotine patches, soaking fruit peel or other substances in it and then rolling cigarettes from the resulting ‘tobacco’ in pages from dictionaries and Bibles held together with toothpaste.

This kind of thing takes us back in history to a time when unregulated and illegal suppliers were preferred to legal suppliers and standards of safety. Some people just can't seem to accept that demand for drugs and narcotics is a given.

Dockrell tells us that the tobacco industry will be down the pan in twenty years because that is the outcome his movement is looking to achieve. But who can say if the industry will go down quietly? He would be well advised to leave off commenting about future tobacco share values – he is far from being a disinterested party and there are people out there more qualified to read the signs objectively.