Norway Excludes 17 Tobacco Companies From Oil Fund

Jan. 19 (Bloomberg) -- Norway excluded 17 tobacco companies, including British American Tobacco Plc and Philip Morris International Inc., from its sovereign wealth fund based on ethical guidelines.

Altria Group Inc., Japan Tobacco Inc., Reynolds American Inc., Swedish Match AB and Imperial Tobacco Group Plc also were excluded and the shares have been sold, the Finance Ministry said today. The 2.6 trillion krone ($456 billion) fund bases its investment on ethical rules encompassing human rights, weapons manufacturing and the environment. The tobacco exclusion was proposed in April as part of an overhaul of the guidelines.

“It’s timely to exclude tobacco,” Finance Minister Sigbjoern Johnsen said in a statement. “It’s important that the ethical guidelines reflect at all times what can be considered to be commonly held values of the owners of the fund.”

The fund held 14 billion kroner in tobacco stocks at the end of last year, including a 4.8 billion kroner stake in British American. The fund owned 3.4 billion kroner in Philip Morris shares, according to the fund’s Council of Ethics.

“They had a holding but they no longer do,” Kate Matrunola, a spokeswoman at BAT, said by phone. “We don’t comment on individual shareholders if they have an investment below 3 percent.”



Investigating Others



“I don’t think it is for me or Imperial to comment on others investment decisions,” said Alex Parsons, a spokesman for Imperial Tobacco. Monica Montero, a spokesman for Philip Morris International in Switzerland, declined to comment, as did David Sylvia, an Altria spokesman in Richmond, Virginia, and David Howard, a spokesman for Winston-Salem, North Carolina- based Reynolds.

Philip Morris advanced 47 cents to $50.09 at 4:15 p.m. in New York Stock Exchange composite trading. Altria shares dipped 4 cents to $20.38.

The council said it will look into whether there are more companies in the fund that produce tobacco. “The council may submit additional recommendations based on its findings.”

“There are a number of funds out there that don’t invest in tobacco for ethical reasons,” said Chas Manso, an analyst at Evolution Securities Ltd. “The real issue is whether that’s a trend, whether an increasing number of investment funds pull out of tobacco investing. I don’t know the data on that.”

Cultivation of tobacco takes place mainly in the U.S., India, Brazil and China as well as in several African countries, the council said. The “extent of health hazardous child labor in tobacco cultivation in some countries can be large.” The Bill and Melinda Gates foundation also doesn’t invest in tobacco companies because they engage in “egregious” activities.



Smoking-Related Diseases



Tobacco use is responsible for almost 20 percent of deaths in the U.S., according to the American Cancer Society. Smoking accounts for 9 out of 10 lung-cancer deaths and about 30 percent of all cancer deaths, the society said on its Web site. It can also cause heart disease, aneurysms, bronchitis, emphysema and strokes, the society said.

Before today, the fund had excluded 29 companies, including Wal-Mart Stores Inc. The ministry is responsible for deciding whether to exclude any of the about 8,500 companies the fund invests in, based on recommendations from the Ethics Council. The finance ministry, which sets the fund’s guidelines, announces exclusions after the holdings have already been sold.

Souza Cruz SA, South Korea’s KT&G Corp., Universal Corp. VA, Vector Group Ltd., Lorillard Inc. and Alliance One International Inc. were also excluded.

Source:businessweek.com/