Council's health credentials up in smoke? (From Wandsworth Guardian)

Do Wandsworth Council's £7m in tobacco company shares send health credentials up in smoke?

9:50am Thursday 13th August 2009 in News

Wandsworth Council's health credentials up in smoke?

Wandsworth Council holds £7m worth of shares in tobacco companies in its pension portfolio, despite trumpeting its role in reducing smoking levels in the borough.

Critics said it showed ethics came second to profit, and there were alternative investment alternatives.

But the council claimed its Local Government Pension Scheme was “divorced” from council matters and it was simply maximising returns for members.

A Freedom of Information request revealed the council had £4.7m invested in British American Tobacco and £2.3m in Imperial Tobacco, as part of its pension fund portfolio covering employees’ and councillors’ allowances.

It had a further £1.4m in betting company shares and another £0.5m with BAE Systems, a company with military links.

Councillor Tony Belton, opposition leader in the council, said the policy needed reviewing.

He said: “The fund holdings are wildly inconsistent with the council’s corporate objective to reduce smoking and personally I think most Wandsworth pensioners would be happy not to invest in arms manufacturing.”

Council leader Edward Lister said the fund was duty-bound to get maximum returns.

He said: “The fund has to get the best possible return for members. We do not take into account whether a company is the right company to get involved in. We keep it divorced from other council matters.”

Reducing smoking, which cost the NHS in Wandsworth £3.7m a year in 2001, is a health priority for the borough, and the council has set out its obligations to help reduce rates in its Sustainable Community Strategy and other documents.

Figures for 2004 show that 42 per cent of Wandsworth schoolchildren claimed to have tried smoking, and in 2001 about 35 per cent of deaths in Wandsworth were thought to be attributable to smokers aged over 35 – the national average was 30 per cent.

A spokeswoman for Ash, an anti-smoking charity, said: “There are more ethical investments now and less excuse to invest in tobacco . . . councils are investing in companies who sell to addicts and prey on their weaknesses.”

A move in Scotland by Highland Council to ban investing in tobacco was defeated after legal advice, but a 2001 research paper by the Association of Chartered Certified Accountants concluded: “Ethical funds seem to offer a viable alternative to ordinary funds for those investors who do not want to divorce their values from their investments.”

The terms and conditions of Wandsworth’s pension fund states the council has a “paramount fiduciary duty to obtain the best possible financial return”.

But, it adds: “It also considers a company’s good practice in terms of social, environmental and ethical issues is generally likely to have a favourable effect on the long-term financial performance of the company and improve investment returns to its shareholders.”

In total the pension fund has £546m in various investments.

• What do you think? Let us know by email here, phone the newsdesk on 020 8330 9555 or leave a comment below.