The Dutch asset management company Robeco has decided to stop investing in the tobacco industry. This concerns all of the companies listed on the stock exchange whose principal business is based on the production or sale of cigarettes. A complete stop to financing companies connected to tobacco is expected to take effect this year, in the third quarter.
Today, major financial groups want to conduct better business practices and benefit from a better image amongst the general public. This phenomenon has been accentuated by Kofi Annan’s creation of the United Nations Global Compact in the year 2000. This treaty brings together companies and organizations that are committed to respecting ten fundamental principles, including the fight against pollution and other industries dangerous to public health.
In 2016, Axa, the world’s leading insurance brand, ceased all investments in tobacco-related assets. At the end of 2017, the French banking groups BNP Paribas and then Natixis announced their commitment to stop funding companies involved in tobacco products. Robeco was one of the last major asset management companies to invest in the tobacco industry.
The withdrawal of major financial groups and the future of tobacco
Each year, Robeco pledges 393 million Euros to tobacco companies. A large portion of which goes to British American Tobacco and Philip Morris International. This sum only represents 0.2% of the funds managed by Robeco. Nevertheless, the decision could have a major effect on the tobacco economy.
In 2012, the profits of the French tobacco industry were 15.5 billion Euros, according to INPES. Not surprisingly, the few hundred million Euros invested by Robeco are considered a drop in the buck. But tobacco companies are afraid of a domino effect. BNP Paribas and Natixis are preparing to sell the equivalent of billions of Euros of shares by the end of 2018. The prices of tobacco companies on the financial markets could then collapse.