Kent under fire for scheme’s £24m tobacco investment

Kent County Council has come under fire from campaign groups for investing £24m of its pension fund portfolio in tobacco companies.
The local authority fund invests about £13.5m in the Altria Group; £3.6m in Philip Morris; £3.5m in Imperial Tobacco; and £3.4m in Japan Tobacco - about 1% of its total equity investments.
But FairPensions, a charity that promotes responsible investment by pension funds and fund managers, said Kent's position reflects a common misinterpretation of investors' legal duties that ethical concerns can be easily dismissed by invoking a presumed duty to maximise profit.
It said pension funds are legally bound to defend their members' interests but this does not equate to a duty to pursue profit at any cost.
FairPensions Christine Berry said: "We all have an interest in getting the best possible pension but that isn't the only interest at play. In this case, relevant considerations could include members' ethical concerns or the cost of smoking to the taxpayer."
Kent County Council runs a pension fund on behalf of 350 public bodies in the county. The fund uses external investment managers to undertake investments and the fund has total investments in stocks and shares of £2.35bn.
A KCC spokesman said: "It is the external investment managers who decide which companies to invest in. The direct investments in tobacco companies currently represent 1% of our total equity investments.
"We have a financial responsibility to obtain the best possible return on investments of the pension fund, to keep down costs of the scheme as far as possible for us as an employer and ultimately for Kent taxpayers.
"To meet this responsibility, we do not impose restrictions on the companies that our external investment managers can or cannot invest in. However, we do monitor the activity undertaken by investment managers and, as with all our investment, we work to the UN Principles of Responsible Investment."
However, Action on Smoking and Health - a public health charity that works to eliminate the harm caused by tobacco - said it understands the fiduciary duty of pension fund trustees and that tobacco shares are currently very high, but declining sales, tougher regulation and litigation mean it is not economically sustainable in the long term.
ASH spokesman Martin Dockrell added: "In the context of currently high priced shares, falling sales, increased litigation and legislation it may well be now is the time to take profits from tobacco investments and invest them in something more sustainable for pension fund holders.