NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, February 7, 2019

Genus Capital Management, Canada’s leader in fossil free and impact investing, today released a report on tobacco divesting, showing that divesting from tobacco stocks would not have negatively affected returns over 20 years. The announcement coincides with Genus removing tobacco from all of its portfolios, and becoming a signatory to the United-Nations supported Tobacco Free Finance Pledge.

“Though individual investors may not realize they’re funding the proliferation of harmful tobacco products, it’s common practice in the asset management industry to use tobacco stocks to diversify,” said Genus’ VP of Sustainable Research, Mike Thiessen. “Our tests show that divesting from tobacco as far back as 1999 would not have negatively affected financial returns for investors. As such, we’re proud to be among the first firms in Canada to go tobacco-free.”

Dr. Bronwyn King, MBBS, FRANZCR, CEO of Tobacco Free Portfolios, added “This new research adds to a growing body of evidence demonstrating that investors do not need to invest in tobacco to achieve excellent returns.”

Here are some of the key takeaways from the research:

• An index portfolio without tobacco didn’t underperform the index with tobacco over the last 20 years
• Portfolios with very strict tobacco exclusions have outperformed the market in Genus’ six-year study
• Tobacco is very harmful to the health of smokers, costs the economy trillions, and disproportionately hurts the most vulnerable
• There are substantial headwinds for the tobacco industry going forward – lower cigarette consumption, global taxes, litigation

Results from six years of testing found that the performance of a tobacco-excluded portfolio does not underperform the index performance even at different levels of exclusion. Moreover, portfolios outperformed the index when tobacco involvement was very low.
For more information and to view the full report, please visit www.genusfossilfree.com

Photo courtesy of Alosh Bennett.