December, 2016:
CalPERS votes to broaden ban on tobacco investments
By Robin Respaut
The California Public Employees’ Retirement System voted on Monday to broaden its restrictions on tobacco investments, opposing a recommendation by the pension fund’s staff to reinvest in the controversial asset.
http://www.reuters.com/article/us-california-calpers-tobacco-idUSKBN1482FE
CalPERS staff had recommended that the board remove its 16-year ban on tobacco investments in light of an increasing demand to improve investment returns and pay benefits.
But the board voted to remain divested and to expand the ban to externally managed portfolios and affiliated funds.
The nation’s largest public pension fund embarked on an extensive review of tobacco earlier this year, after a Wilshire Associates report estimated the exclusion of tobacco had cost the fund about $3 billion between 2001 and 2014. That was a considerably larger portfolio impact than CalPERS’ other divested assets, such as Iran, Sudan and certain firearms-related companies.
California State Controller Betty Yee, who voted in favor of the ban, said on Monday that CalPERS should be mindful of the declining tobacco sales volumes, despite the recent surge in tobacco stocks. Yee also expressed concern about the ongoing threat of tobacco litigation on the industry.
In the 10 years to November 2016, the MSCI World Tobacco Index rose 12.3 percent compared with just 3.8 percent on the MSCI World Index. The tobacco index includes Philip Morris International Inc, Altria Group Inc , British American Tobacco Plc, Japan Tobacco Inc and Imperial Brands Plc.
Board member Dana Hollinger said she was “not a fan of smoking” but did not support the tobacco ban, because “every time we divest, we are chipping away at the diversity of the portfolio.”
“I see the fiduciary here as maximizing and securing benefits to our beneficiaries,” Hollinger said.
CalPERS decision to reconsider its tobacco divestment has caught the attention of health groups, industry shareholders, institutional investors and many of CalPERS’ beneficiaries.
“It is clear that there is abundant, compelling and strong public policy arguments to stay out of tobacco,” said board member Priya Mathur. “The tobacco industry is facing a structural decline in terms of the volume of sales and their ability to gain revenues for a number of reasons.”
State Treasurer John Chiang announced in a statement late Monday that the board had “not only successfully fought back misguided efforts to lift CalPERS’s 16-year-old ban,” but also now prevented outside partners from making such investments.
“Generations of Californians will reap the health, economic and ethical benefits of today’s bold decision,” Chiang said.
(Reporting by Robin Respaut in San Francisco; Editing by Lisa Shumaker)
Tobacco is — still — a bad investment for pension fund
The California Public Employees’ Retirement System’s board of administration took a stand in 2000 when it voted to divest from tobacco companies, which profit from a product so toxic that it kills or disables millions of the people who use it. It was the right decision at the time, and remains so 16 years later.
http://www.latimes.com/opinion/editorials/la-ed-calpers-tobacco-20161216-story.html
It was also a fairly easy decision back then for the nation’s largest public pension fund. Not only was tobacco killing people, it was costing the state dearly in healthcare expenses and lost productivity. The final nail in the coffin, so to speak, was that tobacco didn’t appear to be a great investment in 2000. The value of tobacco investments had plunged in the previous two years, smoking rates were continuing on a long downward trend and potentially pricey litigation against the industry was pending.
In other words, divestment looked like a classic win-win. CalPERS could take a moral position and not jeopardize its primary duty to make money for the 1.8 million people who rely on it for their retirement. And though there’s no evidence CalPERS divestment affected smoking rates (which were already dropping) or blocked tobacco companies’ access to capital, it was part of successful effort, along with strict regulation, high taxes and ubiquitous anti-smoking campaigns, to “denormalize” tobacco use.
Divestment is a difficult call for governmental pension funds. They have a clear fiduciary duty to maximize the returns on their members’ investments.
Turns out, though, that tobacco investments didn’t tank as expected, in part of because of expanded marketing in Third World countries. Investors who retained their tobacco holdings realized significant revenue. Analysts estimate that CalPERS lost out on as much $3.68 billion in earnings over the years — about a quarter of what CalPERS’ investments have earned annually over the last decade.
That’s not great news for a severely underfunded pension fund whose poorer-than-expected performance may lead the board this week to lower its expected earnings from investments — again. If the board votes to do so, it would force the state and local governments and school boards in CalPERS to increase their annual pension contributions by millions of dollars, leading them to cut services or raise taxes.
On Monday, the CalPERS Investment Committee is also considering a proposal by staff to allow the $300 billion fund to reinvest in tobacco companies. It must be tempting to chase the revenue that may have been lost from not investing in Camels or Kools, but if there is a return to be made on tobacco (and that’s not even a sure bet), it wouldn’t be worth the moral cost. The board should reject this proposal.
Divestment is a difficult call for governmental pension funds. They have a clear fiduciary duty to maximize the returns on their members’ investments. But in our view, these public agencies also have a responsibility not to support evil, corrupt or destructive forces whose ill effects far outweigh any good they may do. That can take the form of products, like tobacco and firearms, or regimes. The decision by pension funds and U.S. companies to divest from South Africa in the late 1970s and 1980s, for example, is credited by many with helping to raise awareness about apartheid, which led to its ultimate demise.
Yet such moves also increase pressure to divest from more businesses, products and countries for purposes that aren’t necessarily as morally imperative but are politically popular. For example, a bill introduced this month in the state Legislature would restrict CalPERS’ investments in the construction of the Dakota Access Pipeline. It’s not a stretch to imagine a push to divest from soda companies or industries that use genetically altered organisms for food or farming.
That’s a slope CalPERS can’t afford to slide too far down. (The board’s own policies state that it will not divest unless required by valid state or federal law, which seems disingenuous in light of its history on tobacco.) The more constrained the fund becomes, the harder it will be to generate the big returns it’s relying on. And every dollar it falls short will have to be made up by the state and participating local governments, leaving them less money for public safety, anti-poverty programs, educating children and other priorities.
Admittedly, there’s a solid, if heartless, case to be made for reinvesting in tobacco. It’s a legal product, and users can’t credibly claim they didn’t know about the dangers listed right on the pack. And while ever-dwindling smoking rates may eliminate that habit within the next two decades, tobacco companies have found a new source of profits in the growing market for electronic cigarettes.
But doing the right thing often costs more than the doing what’s easy. That’s true for individuals, for groups and for organizations. It’s true too when it comes to socially responsible investments. Yes, there may be big money to be made investing in this poison product. If individual investors can live with that, fine. But public institutions such as CalPERS shouldn’t.
Tobacco group trashes House sin tax bill
http://www.manilatimes.net/tobacco-group-trashes-house-sin-tax-bill/302238/
The Philippine Tobacco Growers Association (PTGA) reiterated its strong objection to the House-approved bill proposing a huge increase in cigarette excise taxes while keeping the two-tier structure even as its president Saturnino Distor disowned press reports maliciously attributing to him statements supporting the measure.
“We have not changed our position. We strongly oppose House Bill 4144 as this will only bring hardship to the farmers still reeling from the huge tax increase in 2013,” Distor said in a statement.
“I also condemn the unauthorized use of my name and the attribution to me of statements that are contrary to my views. This is the product of malicious minds serving vested interests,” he added.
Distor was quoted in media reports as throwing his support behind HB 4144 in his capacity as the Pangasinan Chapter President of the National Federation of Farmers Association and Cooperatives. (NAFTAC).
He said he has not changed his position, which he publicly stated during the hearing of the House Ways and Means Committee last Dec. 5.
“Our position is stated in Congress and is a matter of public record,” Distor said.
In fact, he said he refused to sign a position paper supporting House Bill 4144 that was offered to him by the National Tobacco Administration (NTA) during the House committee hearing.
“I repeat, the tobacco farmers will bear the brunt of this bill,” Distor said.
Earlier, public health think tank HealthJustice Philippines accused legislators of railroading a bill that would allow cigarettes to remain dirt cheap in the Philippines, contrary to the Philippine health agenda and Duterte’s promise of a Smoke Free Philippines.
May Fernandez-Mendoza, HealthJustice president, said that House Bill 4144 was approved without amendment during second reading on December 5.
It sought a P7 increase in excise taxes to P32 and P36 from the current P25 and P29 with marginal increases of 5 percent per year instead of marginal increases of 4 percent per year based on RA 10351,the current Sin Tax Law which is scheduled to bring taxes to a single rate of P30 in 2017.
Rep. Eugene de Vera of ABS Partylist sponsored the bill which was supported by all those in the super majority.
Another bill filed by Rep. Joey Salceda pushed for P40 with P5 increase per year but this was not passed during the plenary hearing.
“There is an illusion of significant increase in taxes but in reality, this is a ruse to preempt ideal taxes for health that President Duterte, being a strong tobacco control advocate, is capable of calling for,” Mendoza said.
“If this is made in line with the Philippine Health Agenda to reduce harm from tobacco use, taxes on tobacco, should be at least P40, hence significant enough to discourage smoking and bring the Philippines out of the category of those countries having the cheapest cigarettes in the world. It should also call for significant annual increases,” she added.
In 2010, a HealthJustice study projected that, in order to achieve a periodic 10 percent reduction in smoking prevalence or save 200,000 lives annually and reducing 500,000 smokers annually, taxes should have reached a unitary rate of P30 by 2014, to be increased annually based on inflation and income growth.
“However, the deliberation of the Sin Tax bill went through a lot of compromises due to the tobacco industry lobby, and was watered down such that the rate of P30 would take effect only in 2017. To make up for the lost lives, we propose a minimum of P40 excise tax per pack as a starting point in 2017,” Irene Reyes of HealthJustice said.
Mendoza also pointed out that incremental revenues from any tobacco tax increase should go back to the health sector in the form of health promotion, to strengthen communities’ capacity to undertake health initiatives and to have healthy cities.
“Investments must be made to prevent Filipinos from getting sick,” she added.
“The price of cigarettes in Philippines is cheap. If we want to protect the youth, we need to break the P100 per pack price barrier,” said Dexter Galban of One for Nursing Empowerment, a group of nursing students from universities in the Philippines.
Internal tobacco industry documents show that the industry targets the youth as replacement smokers.
According to a survey HealthJustice conducted, the youth will stop smoking if prices of cigarettes are at P5-10 per stick or P100-P200 per pack. Price of a pack of cigarettes averages between P36-65 per pack in the Philippines while it is between P100-450 in countries that are committed to stop smoking, such as Thailand, Singapore, Australia, and USA.
It has also been established that smoking contributes to poverty. A 2008 DOH study shows that the total economic costs for the four smoking-related diseases were estimated at P188 bilion a year. The total collection from tobacco products averages at P120 bilion a year and an average of P 75 billion goes to health.
EDITORIAL: NJ giving up on smokers
Let’s just say New Jersey officials don’t care a whole lot whether kids in this state start smoking, or whether the ones who have ever stop.
http://www.dailyrecord.com/story/opinion/editorials/2016/12/17/nj-spends-zilch-anti-smoking/95538342/
That may sound a little harsh, but there seems little other way to interpret the fact that the state once again ranks dead last in the nation in spending on tobacco prevention.
The amount of money New Jersey devotes to the task? Zero. This is the fifth consecutive year the state has spent absolutely nothing to discourage smoking or encourage active smokers to quit.
New Jersey just seems to have a knack for ranking first or last in all the wrong categories.
For those thinking New Jersey just doesn’t have the money to spend, consider the state will take in more than $900 million in estimated tobacco revenue as part of the national 1998 settlement with Big Tobacco. The Centers for Disease Control and Protection annually recommend an amount that each state should devote to tobacco prevention programs. The recommendation for New Jersey in 2016 was $103 million. But not a dollar of that money has been set aside for tobacco prevention in the 2016 budget. Only Connecticut is similarly apathetic.
It’s also worth noting that Gov. Chris Christie has vetoed a proposal to raise the legal smoking age to 21.
To be fair, we can’t say lawmakers have completely dropped the ball in combating smoking. New Jersey continues to make inroads in curbing public smoking, this year pushing through enhanced restrictions on beaches and state parks. While that legislation didn’t go as far as anti-smoking advocates would have preferred, the new restraints represent another step in the right direction. Federally funded anti-smoking programs are also available in New Jersey.
Through it all, something seems to be working, even if more or less by accident. Smoking rates are declining across the country, and New Jersey is no exception, despite the absence of investment in prevention. Both youth (8.2 percent) and adult (15.1 percent) smoking rates in the state are well below the national average.
But advocates warn that the lowering rates are insufficient reason to ignore continued and aggressive prevention efforts. The Tobacco Free Kids Campaign estimates that nearly 12,000 deaths each year in New Jersey can be directly attributable to smoking — deaths that are essentially being treated as irrelevant from a policy perspective by scrapping all prevention spending.
That said, New Jersey shouldn’t feel obliged to simply pour money into random smoking cessation programs to create the impression of renewed interest in the issue.
Some programs have more value than others, and officials should at the very least identify one or two areas to which some funding can be effectively deployed. While we don’t see a need for the state to suddenly ratchet up its spending to the levels recommended by the CDC, it is more than reasonable to expect some funding to be directed to saving lives.
France votes for plain cigarette packaging from 2016
Cigar ettes will be sold in logo-fr ee packaging fr om May 2016, despite objections from the conser vative opposition and tobacconists
Cigarettes in France will be sold in plain packaging under a law that was finally passed in parliament on Thursday despite objections from the conservative opposition.
Starting in May 2016, the brand name will appear but in a small, uniform typeface and packets will be shorn of logos.
With backing from the ruling Socialists and the Greens, the text finally came into law after mainly conservative senators added amendments to the draft that was first voted in April, which would allow the brand name to appear in small letters.
The senate had initially demanded that the neutral packaging clause be removed from the draft legislation.
Around a quarter of French adults indulge in the hazardous habit, according to the World Health Organisation, and one third of teenagers also smoke.
Nine years ago, France controversially banned smoking in enclosed public spaces, including bars and restaurants.
And only last month, Paris authorities doubled fines for dropping cigarette butts to 68 euros (£50/$75) in a city where some 350 tonnes of them are collected annually.
Last year, health minister Marisol Touraine estimated some 13 million people still light up in France and that smoking accounts for around 78,000 deaths, the leading cause of premature death in the country.
All cigarettes will from May next year have to be sold in neutral packaging of uniform size and colour in a move that is notably similar to legislation adopted in Australia three years ago.
The United Kingdom and Ireland have since followed suit.
Imperial stubs out plans for Supreme Court battle on tobacco packaging rules
Big Tobacco’s battle against the Government’s crackdown on cigarette packaging has taken a blow after a second company stubbed out plans to take its case to the Supreme Court.
http://www.telegraph.co.uk/business/2016/12/17/imperial-stubs-plans-supreme-court-battle-tobacco-packaging/
The decision by Imperial, the maker of Gauloises and Lambert & Butler cigarettes, leaves just two of the big four tobacco companies still considering whether to take the Government to the Supreme Court over the rules, which came into force in May.
Since then, cigarette firms have been required to manufacture products in standardised “plain” khaki packaging sporting prominent health warnings. All tobacco products sold in the UK from next May must comply with the rules.
Imperial joins Philip Morris International in reluctantly accepting the tobacco branding crackdown after a failed court challenge in May lead to an unsuccessful legal appeal last month.
A spokesman for Imperial told the Sunday Telegraph: “We maintain our firmly held view that plain packaging is not an effective tobacco control policy but we have chosen not to seek permission to escalate our legal challenge in the UK to the Supreme Court.”
British American Tobacco and Japan Tobacco International (JTI) will reveal “any day now” whether they will continue to fight the rules which came into effect in April, an industry source said.
But Imperial’s decision to walk away from the fight despite relying on the UK for around 15pc of its total earnings raises questions over the commitment of BAT which earns less than 1pc of its takings from Britain.
JTI also has a 15pc exposure to the market and has been the most outspoken against the legislation which its UK boss Daniel Sciamma has branded “commercial vandalism” which “sets a dangerous precedent for other targeted industries”.
Imperial said it plans to focus on maintaining its market share in the face of rising legislation and will invest more heavily in its specialist brands such e-cigarettes and non-tobacco vaping products.
Hāpai Te Hauora calls for stronger tobacco control in NZ
Smokefree 2025 is the Governments goal to make New Zealand essentially smokefree by 2025. By 2018 the daily smoking will need to fall to 10% and Māori and Pacific adult daily smoking rates to have fallen to 19% and 11% respectively. This means, by 2018 we are aiming for an estimated 58,000 smokers to have quit daily smoking, 27,000 will be Māori and 8,000 Pacific.
http://www.scoop.co.nz/stories/PO1612/S00225/hapai-te-hauora-calls-for-stronger-tobacco-control-in-nz.htm
The NZ Health Survey, annual update of key results report was released today by the Ministry of Health and Hāpai Te Hauora find there is both urgent and wide-ranging tobacco control work to be done.
Hāpai Te Hauora CEO Lance Norman says “the smoking rate is decreasing too slowly.”
Norman raised in an earlier media release the disparities for Māori woman and Māori men and Pacific population groups. Now more than ever we need improved collaboration with Māori providers and communities. Both international and national experience shows that stop smoking services alone will not get all population groups to 2025.
The report repeats the fact that smoking continues as a leading risk factor for poor health that is completely preventable. Sadly, smoking continues as the main cause of lung cancer and chronic obstructive pulmonary disease and a major cause of heart disease, heart attacks, stroke and many other cancers causing early death and disease.
Hāpai encourages consideration of the social and economic complexities of health care for Māori and Pacific when planning for action, and supports regular and ongoing mass media campaigns, e-cigarette availability, coupled with a reduction in tobacco outlet accessibility.
Lance Norman applauds the authors of the report for providing more information on smoking amongst Māori that has long been discussed in communities and now evidenced and reported around systemic racism and interpersonal racism embedded in the historical context of colonization.
The current smoking rate (adults who smoke at least monthly) has fallen from 20% in 2006/07 to 16% in 2015/16, however that is only a reduction of 1% from last year’s prevalence at 17%.
The report shows that current smoking for Māori woman is 40% compared to 15% for European/Other woman. After adjusting for age, Māori woman were 3.5 times as likely to be current smokers compared to non-Māori.
The most substantial reduction in current smoking rates since 2006/2007 was for youth (those aged 15–17 years), for whom the rate has more than halved from 16% in 2006/07 to 6% in 2015/2016 however this is no change from last year when current smoking for this group was also at 6%.
Māori have the highest current smoking rate of 38.6%, Pacific at 25.5% compared to European at 14.5%. Although the Māori current smoking rate has not improved since last year, the average number of cigarettes smoked per day by Māori daily smokers has declined over the period 2006/07 to 2014/15.
Smoking by Māori men is reported at 37.3% an increase from the previous year’s 34.0%. Although we are not yet clear on how significant the upward movement for Māori men is, the change indicates a need for closer monitoring and further investigation. Māori women smoking at 39.7% shows no significant change.
Smoking is strongly linked to socioeconomic deprivation and Hapai Te Hauora like many other health providers understand the need to address the social determinants of health such as education, socio economic status, housing, internet access, access to a vehicle. Adults living in the most deprived areas are 3.1 times as likely to smoke as those living in the least deprived areas, after adjusting for age, sex and ethnic differences.
Hāpai Te Hauora the voice of Tobacco Control Advocacy encourages people to look closely at the recent New Zealand Health survey results to gain a full picture of the health of New Zealanders and explanations for persistent and unacceptable high rates of smoking amongst Māori.
At the very least it is imperative that New Zealanders know and understand that we have a Smokefree 2025 goal.