Cbus is to divest holdings in companies that manufacture tobacco products after its board decided it was in the interest of members and their long-term investment returns.

The decision was made on the basis that there is no safe level of use of tobacco products and that the current targeting by tobacco companies of young people in developing countries is an unsustainable business model and will open Cbus to investment and reputation risk.

Louise Davidson, environmental, social and governance investment manager at Cbus, announced the decision at the Australian Institute of Superannuation Trustees’ investment conference in the Gold Coast.

She said the decision was taken after a long period of contemplation.

“It is unusual for Cbus to divest its holdings in a particular sector. Our preference is to work to influence companies through meetings and proxy voting. However, we took the view that this approach would not work in this case as we would be arguing that tobacco companies cease conducting their primary business.

“Cbus is confident that its membership would support the fund taking this step in the interest of members”.

Davidson added that the health impact of tobacco products on Cbus members – 6.6 per cent of claims for life insurance from Cbus over recent years are as a result of lung cancer – was another factor in its decision.

Anti-smoking campaigner, Dr Bronwyn King, a radiation oncologist at the Peter MacCallum Cancer Centre and Epworth Healthcare, claims that analysis carried out by some of the 10 large superannuation funds that have already divested from tobacco show there was little or no fiduciary conflict for trustees, largely as it had a negligible impact on returns.

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