Some weighty issues to consider this week. Top of the list. ' Is it ethical to invest in Big Tobacco?'
Writing for Vice magazine, Martin Robbins told the tale of how he entrusted some inheritance money to a company whose business it is to invest in stocks and shares on your behalf. Having got tired of sitting around waiting to get rich, he decided to check out exactly where his money had gone. “The results were a bit of a shock. In my top ten were BP, Shell Oil, British American Tobacco, Imperial Tobacco, GlaxoSmithKline and AstraZeneca. That's Big Oil, Big Tobacco and Big Pharma. All I needed to round out my evil capitalist portfolio were a couple of arms companies and a stake in News International”. His biggest surprise was Big Tobacco, “Tobacco is more of a surprise: it's not just a good investment, it's one of the best. Ten years after Britain's public smoking ban, The Motley Fool recently declared 2017 "the year to invest in Tobacco stocks".
“Why? It's true that smoking rates are falling, but more than a billion people still smoke. They're served by a small group of companies who have no new competition to worry about – nobody's starting a tobacco firm any time soon. They can forget about recessions, too, since addicts will keep smoking however the economy's doing. With smoking rates level in the US and growing in Africa, 2017 looks set to be a pretty good year for Big Tobacco”
Robbins decided to disinvest which is probably what most people would do if they found they were inadvertently investing in tobacco. But as somebody with a deep and abiding interest and knowledge of the industry and passionate about advocating for change through THR products, Clive Bates thinks differently. He gave his reasons as follows:
You can make a difference with investment if you invest in businesses with a heavy impact - energy, mining, infrastructure, tobacco, alcohol, forestry, arms etc
The moral case for investing in these stocks is to use the shareholder influence to extract as much beneficial change as possible consistent with maintaining shareholder value over the long term. The moral case is based on improvement rather than on absolute impact of the business / sector. You could instead find 'ethical' businesses to invest in, but they don't have much footprint and there isn't much for the activist investor to achieve.
If you take this approach to ethical investment it also begs the question: what is the most ethical/beneficial path that you could expect a company to follow? In the case of the tobacco industry, many people would instinctively say: "stop selling cigarettes". But that is the wrong answer in my view, because it: (a) wipes out shareholder value so the CEO who tried it would be replaced by the board or the company would be taken over, and (b) it wouldn't accomplish anything anyway, because other companies would sell the cigarettes and buy the brands. The answers might lie in harm reduction.
Clive says he would be pushing the company to:
· Do what the company can within its commercial remit (the consumer nicotine market) - promote the most aggressive commercialization of low-risk products that it can as both an ethical and competitive strategy
· Invest heavily in R&D for novel low-risk products to accelerate change in future
· Use its corporate affairs and technical resources to press for a policy framework that encourages the market to shift from high-risk to low-risk (eg. differential taxation)
· Comply with the spirit and letter of the law and drop opposition to effective policies to reduce smoking.
David Sweanor agrees:
“The market for shares in these companies is very ‘deep’. There are hundreds of millions of dollars worth of shares traded in an average day in a big cigarette company. Anyone selling even a large number of shares is unlikely to move the market. Anything that was sufficient to do so would just raise the interest of purchasers looking for a bargain, and the market comes back to equilibrium.
1. These companies do not need to raise capital (cigarette companies spin off mountains of cash), so even if there was some temporary fall in share price by massive disinvestment, it does not impact the functioning of the company.
2. If by some miracle we got enormous interest in disinvestment such that there was a longer term decline in market value due to an ongoing imbalance between buyers and sellers, the lower value of the company would be an invitation for others to take the company private. Which would deprive us of the great flow of information we get from publicly listed companies.
The reality is not just that cigarette companies have been an extraordinarily great investment, but that actions by anti-tobacco groups have helped greatly in allowing that to happen.
Instead of encouraging disinvestment, the enemies of cigarette companies would do well by engaging in policies that convince the market that these are poor investments. Or doing things that change the market so that such companies are rewarded by the market for selling far less hazardous products.”
These are all valid points, but while it would take substantial disinvestment to undermine the tobacco companies, it would also take massive and extremely well-organised shareholder power to deflect Big Tobacco away from policies they were going to follow anyway.
Nor am I hugely convinced by some online commentary suggesting that the underlying motive of the small vaping businesses is not profit and that many would be happy to see their customers simply using e-cigarettes as a bridge to quitting. Really?
Another hot button issue revolves around the credibility of much of the peer-reviewed anti-vaping science. The latest surge of outrage was sparked by this paper https://www.ncbi.nlm.nih.gov/pubmed/28483810 which concluded that “opponents of regulation were more likely to rely on sources that were not peer reviewed and that were affected by conﬂicts of interest. In light of these ﬁndings, the FDA and the research community should develop processes to carefully and critically analyze public comments submitted to the FDA on issues of tobacco regulation”.
This paper was subjected to a double-blind peer review process – so above reproach. Yes? Well actually no – read more to find out https://antithrlies.com/?s=what+is+peer+review+really
Lots of smoke and vapour around Washington's first E-Cig summit held on 8 th May. Here is a link to the agenda http://www.e-cigarette-summit.us.com/files/2017/04/Final-Programme-for-The-E-Cigarette-Summit-USA-2017-v4.pdf and a useful summary of the challenge of THR (as opposed to other forms of drug harm reduction) being so closely tied to the source of all the harm which can be summed up as drug cartels don't produce methadone. ttps://www.statnews.com/2017/05/08/ecigarettes-harm-reduction-big-tobacco/
Check out this thoughtful blog on the E-summit from Oliver Kershaw founder of the E-Cigarette Forum. https://vaping.com/blog/comment/e-cigarette-summit-usa-where-was-vape/
He makes some strong points about how public health and tobacco control have no real understanding about the role of the vaping industry in stimulating the peer-to-peer networks which underpin harm reduction as an intervention. He has views on the issues of standards and regulations and takes the anti-lobby for task for latching onto the flavours issue like a drowning man grasping for the lifebelt (my analogy, not his).
The prison system in England is gearing itself up for all kinds of mayhem and chaos when a smoking ban is introduced. Given the wretched state of the system plagued by riots and drugs with not enough staff and significant overcrowding, you would think the authorities would be focussing on those issues rather than worrying about smoking. Of course, we all know what could alleviate many of the anticipated problems – and it isn't access to nicotine patches.
Two stories linking caffeine and tobacco. We are all familiar with the Starbucks phenomenon where like the original seventeenth century London coffee houses, the modern coffee house is more than just a place to drink coffee. Starbucks, Costa Coffee and the others are selling a lifestyle where people meet and socialise, hold business meetings or work alone on their laptops. Eventually the original coffee houses became private clubs. Well this is the idea of Altria who have bought up New York's Nat Sherman luxury brand and plan to create private clubs where smokers can enjoy the smoking' experience'.
From 21st May, the cheapest packet of cigarettes in England will be £9 and all must be sold in plain packaging liberally plastered with health warnings. Inan apparent bid product diversification, Imperial Tobacco has been testing caffeine products in the UK under the Reon brand, and is selling packs of pomegranate-flavoured stimulant powder priced at £3 for four doses. Each shot contains about as much caffeine as a double espresso.
Being something of a historian, I find these synergies between addictive products fascinating. Between 1500-1900, the whole basis of imperial colonial power involving Britain, Spain, Portugal, Holland and France and the genesis of globalisation came from the production and sale of habit forming substances; tobacco, coffee, sugar, tea, opium, rum and whiskey. The early capitalists and their government treasury masters grew extremely rich exploiting a basic human need to change the way we feel, to take the edge off the life philosopher Thomas Hobbes described as 'nasty brutish and short'. My favourite recent example is the decision by British Sugar to turn over some its growing capacity in Norfolk to the cultivation of cannabis on behalf of GW Pharmaceuticals researching medicinal use of cannabis.