Smoking concerns may prompt ban on SIC investment in tobacco firms
Concern about the number of Shetlanders still smoking themselves to death may prompt Shetland Islands Council to stop investing funds in tobacco companies. The move could cost around £390,000 a year in lost income but some councillors believe it is a price worth paying.
An attempt to boycott Imperial Tobacco and British Allied Tobacco was made at yesterday’s meeting of the executive committee, led by Betty Fullerton, the former NHS Shetland chairwoman. But the committee was told that the decision was one which only the whole council can make.
However, the chance to act will arise in the next few weeks when the council sits down to review its investment policies. It will not be an easy decision to make, given that spending plans have already been agreed for using the £390,000 tobacco gains and any political decision to wilfully cut council income during financial hard times may anger many in the community.
Councillor Jonathan Wills was concerned about how much the “tobacco epidemic” was costing the council in lost working time. And, with one Shetlander a week dying from tobacco-related illness, according to his figures, he wondered how making money from tobacco sat with the council’s corporate policy on a healthier and fairer Shetland.
He said if the local authority continues profiting from what is essentially the sale of drugs it should perhaps also turn the empty Craigielea home into a brothel because that would be a money-spinner too.
Mrs Fullerton said there was no safe level of tobacco consumption and it bore a cost for the council in sickness and time for employees to smoke.
A loss of £390,000 would be acceptable, she said, because it would help save the country money and the council. Alternative ways of investing council funds might even perform as well as tobacco shares, she said.
She won support from councillor Caroline Miller who said the effect of tobacco use on families was “absolutely horrendous”.
But councillor Alastair Cooper felt he had to point out that disinvesting itself of tobacco shares did not mean people in Shetland would smoke any less. “We’re kidding ourselves if we’re saying that,” he told the meeting. It would be more effective to put some of the profits into persuading council staff to give up.
Councillor Gary Robinson had his doubts too, predicting that in a few years’ time there will be a pronouncement that people should stop drinking alcohol too. What would the council invest in, he asked, if everyone got to ban their pet dislikes?
Councillor Robert Henderson said ceasing tobacco investments was “not going to make the slightest difference in Shetland whatsoever”.
The issue of ethical investment of funds for profit has cropped up many times over the years, usually at meetings of Shetland Charitable Trust. Despite hours of passionate debate absolutely nothing has changed.
Yesterday’s debate was prompted by a report into three different scenarios which would help the council avoid its funds being used for dodgy purposes, such as the manufacture of arms and torture implements, nuclear weapons and exploitative mining.
The first scenario looked at the example set in Norway where the £370 billion government pension fund – one of the biggest retirement funds in the world – ensures that funds are not invested in 54 excluded companies. Interestingly one of them, Serco, is a bidder to take over the NorthLink shipping contract for Shetland and Orkney.
Only six of the companies feature on the UK Stock Market and boycotting them over the past 10 years would have cost the council around £1.4 million a year in lost income, according to council treasury accountant Colin Bain.
The second scenario involved boycotting the two UK Stock Market-listed tobacco companies, resulting in around £390,000 a year less to the council. Shares in tobacco often do better than general shares in the Stock Market, despite the decline of smoking in the West.
The third scenario featured the FTSE for Good index, which measures the performance of UK companies which have globally recognised high standards of corporate responsibility. It excludes tobacco, nuclear power and the arms industries.
If the council had been adhering to that investment system it could have cost it around £1.28 million a year in lost income.
Acting head of finance Hazel Sutherland warned that the council had set a budget based on achieving a 4.5 per cent return on its investments so any changes to the policy could result in a shortfall and therefore a budgeting problem for the local authority.