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September 5th, 2016:

Tobacco giant PMI names ex-pharma comms man Liam English as global PR chief

Global tobacco giant Philip Morris International (PMI) has hired former senior pharma industry, Department of Health and Cabinet Office comms figure Liam English as director corporate communications.

English (pictured) will report to Laure Thibaud, vice-president, comms, who joined PMI in March. His appointment is part of a communications restructure under Thibaud that followed the death earlier this year of Julie Soderlund, who was director of regulatory comms.

English’s previous roles include comms director at trade body The European Federation of Pharmaceutical Industries and Associations, and associate comms director for Australia, Canada and Europe at pharma company Eli Lilly and Company.

Prior to that English worked in the public sector as deputy director of comms and head of media relations at the Office of Government Commerce (part of the Cabinet Office) and communications and press officer at the Department of Health. He was also a comms manager at the BBC and comms consultant at the European Commission.

Explaining his decision to move to the tobacco industry, English cited PMI’s focus on promoting “reduce-risk products”, in particular moving away from combustible nicotine items.

English, whose new role is global, said: “Communications and corporate affairs will play a key role in PMI’s mission… and it is a very exciting professional challenge that I have taken on.”

His most recent role was at his eponymous agency Liam English Communications.

US-listed PMI owns Marlboro among other international brands, and is often cited as the second-largest firm in its industry.


Young people exposed to vaping ads less likely to think occasional smoking is bad for health

Exposure to advertisements for e-cigarettes may decrease the perceived health risks of occasional tobacco smoking, suggests new research from the University of Cambridge, prompting concern that this may lead more young people to experiment with smoking.

Estimates suggest that among children who try smoking, between one third and one half are likely to become regular smokers within two to three years. However, young people are now more likely to experiment with e-cigarettes than they are with tobacco cigarettes. For example, a 2014 study found that 22% of children aged 11-15 in England had experimented with e-cigarettes, compared to 18% for tobacco cigarettes.

There is concern that the increasing exposure of children to e-cigarette adverts could be contributing to high rates of experimentation; in the US, adolescents’ exposure to e-cigarette adverts on TV more than trebled between 2011 to 2013. E-cigarette brands often market themselves as helping people quit smoking and as healthier and cheaper alternatives to tobacco cigarettes.

In this study from researchers at the Behaviour and Health Research Unit, University of Cambridge, and the University of North Carolina Gillings School of Global Public Health, and published today in the journal Tobacco Control, more than 400 English children aged 11-16 who had never smoked or ‘vaped’ previously were recruited and randomly allocated to one of three groups. One group was shown ten adverts that depicted e-cigarettes as glamorous, a second group was shown ten adverts that portrayed them as healthy, and a third control group was shown no adverts.

The children were then asked a series of questions aimed at determining their attitudes towards smoking and vaping. Children shown the adverts were no more or less likely than the control group to perceive tobacco smoking as appealing and all three groups understood that smoking more than ten cigarettes a day was harmful. However, both groups of children exposed to the e-cigarette adverts, both healthy and glamorous, were less likely to believe that smoking one or two tobacco cigarettes occasionally was harmful.

Dr Milica Vasiljevic from the Department of Public Health and Primary Care at the University of Cambridge says: “While we can be optimistic that the adverts don’t seem to make tobacco smoking more appealing to young people, they do appear to make occasional smoking seem less harmful. This is worrying, as we know that even occasional tobacco smoking is bad for your health, and young people who smoke occasionally believe they are somehow immune to its effects and do not feel the need to quit.”

The group of children that were shown adverts depicting e-cigarettes as glamorous also believed e-cigarette vaping to be more prevalent than did the other two groups.

Professor Theresa Marteau, Director of the Behaviour and Health Research Unit and a Fellow of Christ’s College, University of Cambridge, adds: “E-cigarette marketing across Europe is regulated under the new EU Tobacco Products Directive, which came into effect on the 20th May this year. The Directive limits the exposure of children to TV and newspaper e-cigarette adverts. However, it does not cover advertising in the form of posters, leaflets, and adverts at point of sale, nor does it cover the content of marketing materials depicting e-cigarettes as glamorous or healthy. The findings from our study suggest these omissions could present a threat to the health of children.”

The study was funded by the Department of Health.

European fund firms largely resist tobacco divestment campaign

Eighteen months after the launch of a global campaign to persuade money managers to black-list tobacco stocks, just one major European investor has answered the rallying cry.

Others are largely sticking with an industry that remains lucrative despite tightening restrictions on smoking and a series of lawsuits in the United States, saying they are duty-bound to seek the best returns for their clients.

Even a United Nations-backed treaty which aims to cut tobacco consumption by almost a third within 10 years is failing to deter many investors in the likes of Philip Morris International (PM.N), British American Tobacco (BATS.L), Japan Tobacco (2914.T) and Imperial Brands (IMB.L).

“We are firmly of the view that profits, cash and dividends from tobacco stocks have many years of strong growth ahead,” said Stephen Lamacraft, fund manager at Woodford Investment Management.

Still, the Global Taskforce for Tobacco Free Portfolios, backed by the Union for International Cancer Control, has scored one big victory since it began campaigning in March 2015 for financial institutions and pension funds to divest an estimated $60 billion from the industry.

In May this year, French insurer and fund manager Axa agreed to ditch its tobacco holdings, becoming the first major European investor to sign up to the campaign, although others had already opted out of tobacco before it was launched.

Axa said its role as a health insurer meant it could no longer justify investing in something that had such a “tragic” impact on public health. At the time it held 200 million euros in tobacco stocks and about 1.6 billion euros ($1.8 billion) in bonds issued by the cigarette makers.

Even then, the process is lengthy. Axa has almost completed selling the shares but will keep the bonds until they mature. Only in 2027 will the bulk – 97 percent – be off its books.

Many other investors appear reluctant to discuss the issue. Reuters contacted 24 large fund managers which hold tobacco stocks, and all but seven declined comment or did not respond.


According to the World Health Organization (WHO), tobacco kills around 6 million people each year, including 600,000 non-smokers exposed to second-hand smoke.

Many of the passive victims are children.

The Taskforce’s global Project Manager, Melbourne-based Bronwyn King, has persuaded more than 30 Australian superannuation funds to ditch tobacco but the campaign faces a tougher challenge in Europe.

The same goes for the United States, where one influential investor, the California Public Employees’ Retirement System is reviewing a 16-year investment ban on tobacco after a study estimated the policy had cost it $2 billion to $3 billion in returns.

Campaigners reject the fiduciary duty argument – that funds must seek the best returns for their clients. They note that about 180 countries have signed up to the WHO’s Framework Convention on Tobacco Control, which aims to cut consumption by 30 percent by 2025 through new regulations and tax increases that will make tobacco less affordable.

Currently just a handful of countries fully comply with the treaty, implying a significant future hit to the value of tobacco stocks when others follow suit.

“Over the longer term, (the treaty) has to decrease the validity of the product – you will have fewer people wanting or being able to buy tobacco and that has to impact the investment appeal of the producers,” said Rachel Melsom, UK director of campaign group Tobacco Free Portfolios.

Philip Morris International, Imperial Brands and BAT declined to comment. Japan Tobacco did not immediately respond to a request for comment.


The tobacco industry sells about 5.6 trillion cigarettes a year to the world’s 1 billion smokers, many of whom live in low and middle-income countries. Here consumption is expected to keep rising due to growing populations and income.

More people are quitting smoking or cutting down in developed countries, but overall revenue and profit margins are consistently buoyed by companies’ ability to raise prices.

International players have also largely shielded themselves from direct exposure to the U.S. market, which has a history of litigation against big tobacco companies. For instance, Philip Morris has been separated from Altria (MO.N), which sells its Marlboro cigarettes in the United States.

In the 10 years to 2015 – a period that included the crisis of 2008-09 – the MSCI World Tobacco Index rose 10.4 percent compared with just 2.64 percent on the MSCI World Index.

All this appeals to many fund managers. For instance, the 9.2 billion pound ($12.3 billion) CF Woodford Equity Income Fund managed by veteran fund manager Neil Woodford holds BAT and Imperial Brands – makers of the Lucky Strike and Gauloises brands respectively – among its top 10 positions.

“(Tobacco’s) dependable dividends are increasingly highly-prized and still represent attractive yields,” said Lamacraft.

The dividend argument doesn’t always hold water. London-listed British American and Imperial reported dividend yields of 3.2 percent and 3.78 percent respectively, compared with an average 4.06 percent across the FTSE 100 index. New-York listed Philip Morris International has a 4.01 percent dividend yield.

Louise Dudley, portfolio manager at Hermes Investment, said she has barred tobacco stocks because she believes returns are unsustainable in the long-term.

“The industry has faced and continues to face increased regulation and consumers are becoming more aware of the health impacts of tobacco. The general trend is towards more healthy lifestyles. Tobacco products don’t tend to fit within that.”


A spokeswoman for Standard Life Investments (SLI) said its decision not to black-list tobacco reflected the needs and views of its clients. But Melsom said ordinary savers didn’t always know where their money was being invested.

“If every individual who has a pension fund could see their level of investment in tobacco and the costs associated with that, I think that would make a difference,” she said.
Client attitudes towards tobacco varied widely, according to Iain Richards, Head of Responsible Investment, EMEA, at Columbia Threadneedle Investments. “We are satisfied that, for our mainstream funds, our approach is measured, works well and serves our clients’ best interests. We therefore don’t intend to adopt a blanket divestment policy on tobacco,” he said.

Amra Balic, Head of BlackRock’s EMEA Investment Stewardship team (BLK.N), said her firm did not make social, ethical or environmental values judgments on behalf of clients, and company engagement was critical in addressing the health and social risks of tobacco.

“I don’t think that we will end up, by divestment, in a world where tobacco won’t exist, therefore engagement by responsible investors is key to holding companies to account on ESG (environmental, social and governance) issues”.

A spokeswoman for M&G, another investor in the sector, said it regularly discussed environmental, social and ethical risks with tobacco company management, and encouraged improvements where it considered performance to be poor.

SLI, BlackRock, M&G, Columbia Threadneedle, Handelsbanken and Aberdeen Asset Management all said clients could bypass tobacco with their socially responsible investment (SRI) funds. Handelsbanken said about 40 percent of the assets that it manages are in funds that exclude tobacco investments.

The performance of SRI funds, which often also avoid industries such as armaments and alcohol, is typically benchmarked against indexes that exclude tobacco firms.

But mainstream funds are benchmarked against indexes that usually include them. Any that chooses to drop tobacco stocks is likely to underperform its benchmark index, putting pressure on managers to stick with the status quo.

“You need to benchmark against other funds that don’t include tobacco and see how you how perform in other investments you have put in its place,” Melsom said.

The following firms declined to comment or didn’t respond to a Reuters request for comment:

JPMorgan Asset Management, Nordea Asset Management, Invesco Perpetual, Morgan Stanley Investment Management, Vanguard, Franklin Mutual, Capital Group, RBC, Legal & General Investment Management, Credit Suisse Private Banking, SEB Investment Management, Andra AP Fonden, Forsta AP Fonden, Oppenheimer Funds, Gabelli Funds, Capital Research and Reinet Investments.

($1 = 0.7482 pounds)
($1 = 0.8965 euros)
(additional reporting by Martinne Geller; editing by David Stamp)