B.C.'s public pension fund is being blasted by its members for investing hundreds of millions of dollars in big tobacco.
Last week, Business in Vancouver reported that BC Investment Management Corp.(bcIMC), which invests in public companies on behalf of the province's health-care workers, firefighters, teachers and others, had more than $260 million invested in major cigarette manufacturers.
According to bcIMC's latest equity holdings report, the organization had approximately:
- $103.4 million invested in British American Tobacco;
- $73.1 million invested in Philip Morris International (the maker of Marlboro, the world's number 1 cigarette brand);
- $35 million invested in Altria Group (the parent company of Philip Morris);
- $34.8 million invested in Imperial Tobacco;
- $13.2 million invested in Japan Tobacco; and
- $6.9 million invested in Reynolds American (the maker of Camel brand cigarettes).
The Hospital Employees' Union (HEU), the largest health-care union in B.C. representing 46,000 workers, said it was disappointed to learn that its members' pension funds are being invested in cigarette manufacturers.
"Clearly, our members deal every day with the outcome of people who smoke their whole lives and it's not pretty," said HEU spokesman Mike Old.
He explained that bcIMC's investments are made at arm's length from the pension holders and unions, and the legislative framework the organization operates within requires it only to consider the best financial interests of pension beneficiaries.
Still, the HEU said it's reasonable to raise questions around the ethics of these types of investments.
"The ethical questions raised by investments by this deserve to be canvassed, and we're going to be asking trustees to review these practices."
Representatives from bcIMC were not immediately available for comment, but in a statement said the organization was not aware of any recent public reaction regarding its investments in tobacco companies.
"We acknowledge that there will always be debate over the merits of investments in certain sectors, and we respect the diversity of opinions on these topics," the organization stated. "bcIMC is committed to working in the best financial interests of our clients and using our influence as a responsible investor to positively influence our portfolio companies to enhance their environmental, social and governance practices."
A large portion of bcIMC's website is devoted to its "responsible investing practices," but none of its annual responsible investing reports for the last five years include anything about tobacco.
The fund's proxy voting records from 2011 do include several references to its investments in tobacco companies, though those references deal largely with corporate governance issues within the tobacco companies it's invested in.
Only once in 2011 was a shareholder proposal put forward in regard to tobacco.
It requested that Reynolds American stop producing flavoured tobacco products due to concerns that those products lead to increases in youth smoking.
The proposal was voted down, with bcIMC noting that it did not meet the guidelines for "shareholder rights or value maximization" and that the issue was being dealt with at a federal level.
Susan Lambert, president of the BC Teachers' Federation, said her union has repeatedly called for bcIMC to divest of its interests in tobacco companies to no avail.
"The problem is that we are invested through bcIMC in pooled funds, and it's very, very difficult to divest because you have to divest of the entire pool," said Lambert.
She added that her union has been trying to establish ethically responsible investment pools and that, for the most part, bcIMC has been a leader in Canada for sustainable and ethical investments.
Still, Lambert said her group would continue to ask bcIMC to dump its tobacco investments.
NDP health critic Mike Farnworth said bcIMC shouldn't be investing in tobacco companies, especially since the provincial government has joined five other provinces in a lawsuit against Canadian tobacco manufacturers.
A spokesman for B.C.'s Ministry of Finance said it has little control over what bcIMC chooses to invest in. But the minister is responsible for appointing three directors to bcIMC's seven-director board.
Farnworth pointed out that Alberta's public pension fund divested its interests in tobacco companies last year in relation to the lawsuit.•
