You may be accidentally investing in cigarette companies Bronwyn King
In 2001, I was a brand new, shiny doctor,
planning to save the world.
My first job was working for three months
on a lung cancer unit.
Nearly all of my patients
were smokers or ex-smokers,
and most of them had started
smoking when they were children
or in their early teens.
And despite living
in a beautiful, wealthy country,
with access to the most
sophisticated medicines,
nearly every single one
of my patients died.
Everyone knows tobacco is bad,
but when you see the impact
firsthand, day-by-day,
it leaves a very deep impression.
Ten years later,
I’m a radiation oncologist,
fully aware of the suffering
caused by tobacco.
I’m sitting at the hospital cafeteria,
having my first ever meeting
with a representative
from my superannuation fund.
It was thrilling,
I’m sure you can imagine.
(Laughter)
He tells me I’m in the default option.
And I said, “Option? Does that mean
there are other options?”
He looked at me,
rolled his eyes, and said,
“Well, there is this one greenie option
for people who have a problem with
investing in mining, alcohol or tobacco.”
I said, “Did you just say tobacco?”
He said, “Yes.”
I said, “So, are you telling me
I’m currently investing in tobacco?”
And he said, “Oh, yes, everyone is.”
When you invest in a company,
you own part of that company.
You want that company to grow
and succeed and thrive.
You want that company
to attract new customers,
you want that company
to sell more of its products.
And when it comes to tobacco,
I couldn’t think of anything
that I wanted less.
Now, I know you can only see
one person standing here
on this big red dot,
on this enormous stage.
But instead, I would like you to imagine
that you’re looking
at seven million people
crammed up here beside me today.
Seven million people across the world
have died as a result of tobacco
in the past year alone.
Just imagine, if a brand new industry
were launched today,
and by the end of next June,
that industry’s products
had killed seven million people.
Would any of us invest
in that new, deadly industry?
Tobacco is one of the most
pressing global issues of our time,
and most of us are far more complicit
in the problem than we may realize.
So, the super fund representative
explained to me
that tobacco companies would be found
in the international shares portion
of my portfolio.
So I asked him, “Well,
which international shares do I have?”
He got back to me
two weeks later with this list:
my number one holding
in international shares
was British American Tobacco.
Number two, Imperial Tobacco.
Number four, Philip Morris.
And number five,
the Swedish Match company.
Four of the top five companies
were tobacco companies,
my investments, an oncologist.
And then I realized it wasn’t just me.
It was all members of my super fund.
And then I realized it wasn’t just
my super fund, it was all of them.
And then I realized,
it wasn’t just superannuation funds,
it was banks, insurers and fund managers.
And then I realized
it wasn’t just Australia.
It was the entire global finance sector,
completely tangled up
with the tobacco industry.
The industry that makes products
that kill seven million people every year.
So I started discussing the issue
with my superannuation fund,
and I’ve been discussing it ever since.
Finance leaders have many challenging
issues to deal with, these days.
So I suggest they adopt a framework
that clearly articulates
why it is reasonable
to take a strong position on tobacco.
I suggest finance leaders
ask a suite of three questions
of any company in which
they might invest our money.
Question one:
Can the product made
by the company be used safely?
“No” is the answer for tobacco companies.
Zero is the only safe number
of cigarettes for a human being.
It could not be more black and white.
Question two:
Is the problem caused by the company
so significant on a global level
that it is subject
to a UN treaty or convention?
“Yes” is the answer for tobacco.
Indeed there is a UN tobacco treaty
that has been ratified by 180 countries.
The treaty was created
because of the catastrophic
global impact of tobacco.
The current forecast
is that the world is on track
for one billion tobacco-related
deaths this century.
One billion deaths.
There’s only seven billion of us.
Question three relates
to the concept of engagement.
Many financial organizations genuinely
want to be good corporate citizens.
They want to use their shareholder power
to sit down with companies,
engage with them,
and encourage them to do better things.
So the question is:
Can engagement with the company
be an effective lever for change?
“No” is the answer for tobacco companies.
Engagement with
the tobacco industry is futile.
The only acceptable outcome would be
if tobacco companies ceased
their primary business.
In fact, engagement
with the tobacco industry
has never led to less human death.
When we consider that framework,
three simple questions,
we can see that is reasonable
and defensible
to take a strong position and exclude
investment in the tobacco industry.
In addition to the UN tobacco treaty,
there is, in fact, another global treaty
that demands that we act on tobacco.
In 2015, the UN adopted
the Sustainable Development Goals.
Now, we’re talking about tobacco,
and I know you’re going to jump
straight to number three:
good health and well-being.
And indeed, ramping up
tobacco control regulation
is essential if we’re going
to achieve that goal.
However, look a bit more deeply,
and you will find that 13
of the 17 goals cannot be achieved
unless there is a major shake-up
of the tobacco industry.
Personally, my favorite goal is number 17:
partnerships for the goals.
At present, we have the entire global
health sector doing everything it can
to help the tidal wave of patients
suffering as a result of tobacco.
But that said, in the past year alone,
seven million people have died,
so clearly, that is not enough.
We also have governments
aligned on tobacco, 180 of them,
busily trying to implement
the provisions of the UN tobacco treaty.
But that, too, is not enough.
If the global finance sector continues
to lend money to tobacco companies,
to invest in tobacco companies,
and to strive to profit
from tobacco companies,
we are working against each other.
Now, if we are going to disrupt
what doctors call
“the global tobacco epidemic,”
we need every sector of society
to stand side by side
and be part of the solution.
So I call on finance leaders
to implement a framework
to deal with sensitive issues.
And I call on them to uphold
global conventions.
But in addition, there are business risks.
Pure financial risks, associated with
being invested in the tobacco industry
over the long term,
and I ask finance leaders
to consider them.
The first risk is that fewer
and fewer people will smoke,
as a result of increasing
tobacco regulation.
When these warnings were put
on cigarette packets in Canada,
[Tobacco can make you impotent]
the first response of smokers was
to give them right back to the salespeople
and say, “Could you please just give me
the ones that say they’ll kill me?”
(Laughter)
Regulation gets noticed,
regulation reduces consumption,
and we have 180 countries
committed to more regulation.
Let’s talk about litigation
and the risk that presents.
At present, it’s the business model
of the tobacco industry
that is being challenged.
Currently, the tobacco industry
externalizes all of the health costs
associated with tobacco.
Governments pay,
communities pay, you pay, I pay.
The tobacco industry
externalizes all those costs,
with an estimated one trillion
US dollars per year.
Yet they internalize
and privatize the profits.
In 2015, in Quebec province,
the courts determined
that the tobacco industry
was indeed responsible
for those health costs,
and ordered them to pay
15 billion US dollars.
That case is under appeal.
But it begs the question,
why should any of us, in any country,
be paying for the costs
of the tobacco industry?
Let’s move on to supply chain
and the risk there.
It is not well known
that the tobacco industry
significantly relies on child labor.
In March 2017, the International
Labour Organization
issued a report which stated:
“In tobacco-growing communities,
child labor is rampant.”
The US Department of Labor
currently lists 16 countries
that use children to produce tobacco leaf.
Scrutiny of supply chains is intensifying,
and that cannot continue
to escape public attention.
Finally, there is also
reputation risk to consider
for individuals and organizations
that continue to maintain an affiliation
with the tobacco industry.
In countless surveys,
the tobacco industry ranks
as the world’s least reputable industry.
Let’s just look at the impact on children.
Globally, every single day,
it is estimated that
100,000 children start smoking.
That’s enough children to fit
inside the Melbourne Cricket Ground.
And most of those children
are from the poorest communities on earth.
Here in Australia, the average age
that people start smoking
is 16 years and two months.
They look pretty young to me,
but the worst thing here
is that while we don’t have
data from every country on earth,
we believe that is the oldest age.
Everywhere else is younger.
Now for the good news.
Things are changing.
The finance sector is coming to the party.
After around 2,000 meetings
with finance leaders,
primarily in the cafés
of Melbourne and Sydney
and London and Paris and New York
and all across the globe,
momentum, moving away from investment
in the tobacco industry,
is starting to snowball.
Finance leaders are alarmed
when they’re presented with the facts,
and overwhelmingly,
they want to be part of the solution.
Here, in Australia, we now have
10,636,101 superannuation accounts
that are tobacco-free.
That one is mine, by the way.
(Applause)
There is still a lot of work to be done,
but I’ve watched the conversation go
from “Should we go tobacco-free?”
to “Why haven’t we done it yet?”
In the past year alone,
major tobacco-free moves have been made
by leading financial organizations
in eight different countries.
In Australia, New Zealand,
the Netherlands, Sweden,
Denmark, France, Ireland and the USA.
By sovereign wealth funds,
fund managers, pension funds,
banks, insurers and reinsurers.
Since tobacco-free portfolios began,
more than six billion dollars
has been redirected
away from investment
in the tobacco industry.
The case study is well and truly proven.
When making the tobacco-free
announcement in March this year,
the CEO of AMP Capital said,
“We are not prepared to deliver
investment returns
at any cost to society.”
And that is the question
we need to ask ourselves.
Is there no baseline standard
below which we will not sink
to make profit?
Along the way, I’ve had a lot of help
and incredible support.
Now, if you’re trying to do something,
I highly recommend that you have
a princess on your team.
Her Royal Highness, Princess Dina Mired,
is the global ambassador for this work.
We also have a lord,
a knight, a former premier,
a former federal minister
and a stack of CEOs.
But the capacity to change things
does not rest exclusively
with these highly influential people.
The power to do that is with all of us.
Everyone here can be part of the solution.
In fact, everyone here must be
part of the solution.
Most people in this room own companies
via their superannuation funds,
their banks and their insurers.
And it is time for us to ask them:
Are they investing our money
in companies that make products
that kill seven million people every year?
It’s your money.
It’s my money, it’s our money.
And that is a very reasonable question.
Pretty cramped up here,
with seven million people beside me today.
But if we don’t act now, and act together,
we’ll need to make way
for one billion people
before the end of this century.
And this is a very big stage.
But there is no more room.
Thank you.
(Applause)