“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. has recently announced that it sold CA$17.5 million (US$17.66 million) in directly managed stock held by public-sector pension funds and the Alberta Heritage Savings Trust Fund.
The trust fund, unique to the province of Alberta, is the Western province’s main long-term savings fund, producing income that supports government programs such as health care and education.
The government has come under fire for investing in tobacco companies while also supporting efforts to reduce tobacco use and preparing to sue the tobacco companies for industry-related health care costs.
‘Prudent Decision’
Leo de Bever, CEO of the fund, admitted that part of the reason for dumping the shares was that it would “look bad” to hold on to tobacco-related investments while fighting the legal case.
Les Hagen, executive director of Action on Smoking & Health, said tobacco companies are not a sound investment option given the likelihood of litigation.
“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,” Hagen concluded.
Alberta has a relatively small stake in the industry, compared to other provinces. British Columbia, for example, has retained a CA$346 million (US$349 million) investment as of March 2010.
British Columbia, 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, noted 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,” she said. “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 CA$2 billion (US$2 billion) in tobacco industry shares and received more than CA$90 million (US$90.7 million) in dividend payments from the profits of tobacco sales.
About 25 percent of these shareholdings were in direct ownership by the investment firms under government’s 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 paychecks 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 on Tobacco Control, a treaty created by the World Health Organization that recommends for all countries to divest tobacco industry holdings. Norway and New Zealand are the only countries to make good on their commitment thus far.
Last October, when Alberta’s current premier Alison Redford was the province’s justice minister, she said that the province’s lawsuit against big tobacco companies would be filed within a year.
Redford told the Legislature that 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.
