Alberta has become the first province in Canada to dump its investments in the tobacco industry, drawing praise from anti-smoking groups, which say the move is long overdue.
“I am very saddened that it has taken so long for even one province to cut some of its ties with tobacco companies,” said Cynthia Callard, executive director of Physicians for a Smoke-Free Canada (PSC).
“We hope that the Alberta government’s decision will prompt a review in other jurisdictions, including provincial and federal investments.”
The Alberta Investment Management Corp. announced recently it has sold $17.5 million in directly managed stock held by public-sector pension funds and the Alberta Heritage Trust Fund.
The government has come under fire for investing in tobacco companies while supporting efforts to reduce tobacco use, and preparing to sue the tobacco companies for healthcare costs resulting from the industry.
Leo de Bever, CEO of the Alberta Heritage Trust Fund, admitted part of the reason for dumping the shares is that it would “look bad” while fighting the case.
Les Hagen, executive director of Action on Smoking & Health (ASH), says tobacco companies are not a sound investment option given the likelihood of litigation.
“We should not be betting Alberta’s future on an unsustainable industry that has contributed to a global epidemic of disease, disability, and premature death,” he says.
“Even from a purely financial perspective, tobacco companies are not a sound long-term investment considering the industry’s tremendous exposure to litigation from governments and tobacco victims. The decision to dump tobacco industry stocks is a prudent decision from both financial and public health perspectives.”
Alberta has a relatively small stake in the industry compared to other provinces, such as British Columbia, which retains a $346 million investment as of March 2010.
B.C., Ontario, Newfoundland, and New Brunswick have already filed lawsuits against multiple tobacco companies, and every province and territory except the Yukon and Prince Edward Island have passed legislation that would enable them to file suits.
However, many of these regions continue to hold stock in the industry, which sends a contradictory message, says Callard.
“I think there is a policy incoherence for governments to say that tobacco companies have behaved so wrongfully that special measures have to be established to sue them, but then continue to be part-owners of tobacco companies.
“Of the many cases where government actions compete or conflict with each other, I find this one of the most disturbing examples.”
Canadians Own Shares
A PSC review of institutional ownership of tobacco stocks last year found that Canadians owned more than $2 billion in tobacco industry shares, and received more than $90 million in dividend payments from the profits of tobacco sales.
About 25 percent of these shareholdings were direct ownership by investment firms under government control.
Callard says many Canadians would be surprised to discover that they are indirectly funding tobacco companies through government bodies such as the Canada Pension Plan Investment Board.
“I think most Canadians are not aware that the money that is taken from their paycheque in Canadian Pension Plan contributions is invested in tobacco companies, and thus used to help tobacco companies expand their markets in other countries.”
In 2003, Canada joined the international Framework Convention for Tobacco Control, a treaty created by the World Health Organization that recommended all countries divest tobacco industry holdings.
Apart from Alberta, Norway and New Zealand are the only countries to make good on their commitment thus far.
When Alberta premier Alison Redford was the province’s justice minister, she said last October that the province’s lawsuit against big tobacco would be filed within a year.
Redford told the legislature that the tobacco industry must share the high costs of treating smoking-related illnesses such as cancer and heart disease.
Tobacco use kills an estimated 3,000 Albertans annually—representing almost one in every five deaths. Across Canada, smoking contributes to more than 37,000 deaths per year, and is the number one preventable cause of death in the country.
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