Nest, the Uk’s largest pension scheme by members, announced today that it has completed the removal of tobacco stocks from its portfolios, achieving tobacco-free status a year ahead of schedule.
Nest made the initial announcement that it would divest from tobacco in June 2019, based on the expected future performance of the tobacco industry, and an assessment that it would likely be a poor investment for the pension scheme’s members. Key factors cited included stricter worldwide regulation against tobacco products, increasingly aggressive legal action by governments against the tobacco industry, and falling global smoking rates. Nest originally estimated that it would take up to two years to go tobacco-free.
At the time of the original announcement, Nest CIO Mark Fawcett said:
“We have not taken this decision lightly but we don’t think it makes sense to continue investing in an industry whose business model looks increasingly unsustainable.
“We’ve already spoken with our fund managers and the fraction of a percent of tobacco investments we currently have will be gone within two years.”
Fawcett described the tobacco business as “a struggling industry which is being regulated out of existence.”
Nest’s announcement follows another recent sustainability-related action by the pension scheme. In July, Nest announced that it had launched a new climate change policy that included a target to achieve net zero carbon across its investments by 2050, divesting from companies involved in thermal coal, oil sands and arctic drilling by 2025, and moving £5.5 billion of shares (equity) into climate aware strategies.