British pensions provider Scottish Widows will no longer invest in tobacco stocks and will cut back further on coal investments as it expands its responsible investment strategy.
Scottish Widows, part of Lloyds Banking Group, said this added a further £1.5 billion to its exclusions so far, bringing total divestments from firms deemed to pose a threat to the pension provider’s environmental, social and governance (ESG) goals to some £3 billion.
The company also said it would not invest in any company deriving more than 10% of its revenue from tobacco, which it said meant excluding all tobacco manufacturers and major distributors.
“Industries such as tobacco are at severe risk of becoming stranded assets, as they face intense pressure from investors, regulators and consumers, and consistently fail to properly address the social impacts of their products and within their supply chain,” said Maria Nazarova-Doyle, Scottish Widows head of pension investments and responsible investments.
“Taking the long view, industries such as tobacco are at severe risk of becoming stranded assets, as they face intense pressure from investors, regulators, and consumers, and consistently fail to properly address the social impacts of their products and within their supply chain.”
“We stand by our belief that carbon-intensive sources of energy such as thermal coal and tar sands will ultimately be replaced by greener renewable sources such as wind or solar. As such, exiting these highly damaging areas and redirecting capital to more climate-aware investments makes perfect investment sense.”
Scottish Widows, which has £190 billion in assets under administration, also said it would lower the threshold for investing in firms extracting thermal coal and tar sands, the dirtiest of fossil fuels, to 5% of revenue from 10%.
The shift out of tobacco follows similar moves by financial institutions such as Credit Agricole and Aviva.
The move is also part of a wider market shift as others in the market, including Swiss Re and Axa, have also been tightening their policies towards fossil fuels, as firms focus increasingly on environmentally sustainable investments.