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November 16th, 2016:

Kiwi managed funds flock to discuss going tobacco free, campaigner says

Bronwyn King, the Australian doctor leading a global push to encourage fund managers to exclude tobacco stocks, said she’s had approaches from six major funds in New Zealand interested in making the shift.

The move follows investor uproar earlier this year after media investigations found New Zealanders had unknowingly invested $152 million in arms manufacturers and big tobacco companies through their KiwiSaver funds, she said.

King is chief executive of Tobacco Free Portfolios and a practising radiation oncologist in Melbourne. She has already persuaded 35 Australian superannuation funds controlling nearly half of the total funds under management in that country to shun tobacco, and doesn’t know the numbers of funds that exclude tobacco in New Zealand though ANZ is a recent convert and the New Zealand Superannuation Fund was the first sovereign wealth fund in the world to do so.

King’s own epiphany came in 2010 when she and her Kiwi husband wanted to buy a house and she went to discuss her savings in the superannuation fund Health Super with a consultant. As she left, she asked whether she was meant to specify how she wanted her money invested in Health Super. The consultant replied she didn’t need to worry because she was in the default option where the decisions were made for her.

King then asked what the options were and was told there was a “greenie option” involving no investment in mining, alcohol, or tobacco.

“It was a big shock knowing I was investing in tobacco companies that were making products that killed my patients,” she told a Responsible Investment Conference in Auckland yesterday.

It turned out Health Super’s default option included investing in four of the big tobacco companies, and King shared that news with other staff members at Peter Mac, a dedicated cancer hospital. She also raised it with the chief executive and then with the super fund which had merged with Sydney-based First State Super. After a lot of discussion, it became the first Australian superannuation fund to renounce tobacco investments in 2012.

One of the biggest successes in King’s campaign came this year when AXA, the world’s second-biggest insurer, said it would sell 200 million euro of tobacco stocks and run down 1.6 billion euro of tobacco corporate bonds. King says she’s currently working with more than 100 financial institutions with four more likely to announce a similar move soon.

The tide has turned in public sentiment on the issue and fund managers who manage investors’ money are slowly waking up to that fact, she said.

The pitch that has worked best has been highlighting the tobacco industry’s exploitation of young people with an estimated 100,000 children starting smoking each day.

Not many people are aware that according to the International Labour Organisation up to 60 percent of the workforce in tobacco farming are aged under 16, she said. The average age at which Australian smokers take up the habit is 15 years and nine months – the oldest in the world. The average in the UK is just 11 years.

The percentage of boys that smoke between 13 and 16 years old is 3.7 percent in New Zealand but is much higher in emerging countries such as Indonesia where the figure is 41 percent and 52.1 percent in Papua New Guinea.

“This is not about adults making an informed choice but about children who start smoking when they’re too young to be aware of the risks,” she said.

One conference attendee said one of the problems with divestment was that tobacco stocks had done so well for investors over the years. King said that was the most difficult thing though there were signs those profits could change in the next 10 years.

“The industry has done well in the past 10 years because it has gone into the developing world before these regulations were crafted. It’s made the most of these very poor populations with large user bases and very poor levels of awareness and very poor regulatory frameworks, an industry that continues to get away with 60 percent of its workforce being child labour, externalising costs and internalising profits and not being held to account for all of these deaths is extraordinary.”

King said there’s three strong reasons behind going tobacco free: tobacco is a unique product in that it can’t be used safely with two out of three smokers dying from its use; the UN Tobacco Treaty signed by 180 countries including New Zealand requires governments and related bodies not to invest in the industry and take other measures such as plain packaging; and engagement with the industry to change its behaviour is futile.

There’s a regulatory risk for fund managers with three countries having introduced plain packaging legislation and another 20 will have by next year, King said. New Zealand has signed off on it but not yet set a date for implementation.

There’s also a litigation risk with the Quebec state government succeeding last year in a landmark class action suit against three big tobacco companies where the judge awarded C$15.6 billion in compensation to one million smokers for the health effects of the products. It is being appealed by the tobacco companies.

King said the case was one the rest of the world should watch with interest.

“If that precedent is set I can’t believe the people of New Zealand would be happy to continue to pick up the costs of the tobacco industry, it doesn’t make any sense. The truth is if we all sued at the same time the tobacco industry couldn’t even pay its own costs for one year.”

Tobacco stocks up in smoke as govt mulls FDI ban

Shares of cigarette companies plummeted up to 20 per cent on Wednesday amid reports that the Union Cabinet is likely to consider a proposal to completely ban foreign direct investment (FDI) in the tobacco sector.

Reacting on the news, shares of Godfrey PhillipsBSE 6.81 % hit the lower circuit and closed 20 per cent down at Rs 918.80 on Wednesday. Shares of other tobacco companies such as ITCBSE 0.72 % and NTC IndustriesBSE -5.14 % slipped 4 per cent and 0.65 per cent, respectively. The benchmark BSE Sensex closed almost flat at 26,298.

The Commerce and Industry Ministry has forwarded the final note on this issue to the Union Cabinet for consideration, sources told PTI.

At present, FDI is permitted in technology collaboration in any form, including licensing for franchise, trademark, brand name and management contracts in the tobacco sector. However, it is prohibited in manufacturing of cigars, cigarettes of tobacco and tobacco substitutes.

The proposal, if approved, may be a setback for domestic cigarette manufacturers, according to the report.

The ban would also eliminate the possibility of indirect flow of overseas funds to the sector. FDI into the country grew by 29 per cent to $40 billion in 2015-16.

On a year-to-date basis, most of cigarette-related companies have been outperforming the benchmark equity indices. Stocks such as Golden TobaccoBSE 1.58 % and VST IndustriesBSE 4.29 % have risen 33.36 per cent and 33.32 per cent to Rs 65.55 and Rs 2268.25 till November 15 from Rs 49.15 and Rs 1701.30, respectively, on January 1.


Smoking electronic cigarettes kills large number of mouth cells

Summary: A large number of mouth cells exposed to e-cigarette vapor in the laboratory die within a few days, according to a new study.

A large number of mouth cells exposed to e-cigarette vapor in the laboratory die within a few days, according to a study conducted by Université Laval researchers and published in the latest issue of Journal of Cellular Physiology.

Dr. Mahmoud Rouabhia and his team at Université Laval’s Faculty of Dental Medicine came to this conclusion after exposing gingival epithelial cells to e-cigarette vapor.

“Mouth epithelium is the body’s first line of defense against microbial infection,” Professor Rouabhia explains. “This epithelium protects us against several microorganisms living in our mouths.”

To simulate what happens in a person’s mouth while vaping, researchers placed epithelial cells in a small chamber containing a saliva-like liquid. Electronic cigarette vapor was pumped into the chamber at a rate of two five-second “inhalations” per minute for 15 minutes a day.

Observations under the microscope showed that the percentage of dead or dying cells, which is about 2% in unexposed cell cultures, rose to 18%, 40%, and 53% after 1, 2, and 3 days of exposure to e-cigarette vapor, respectively.

“Contrary to what one might think, e-cigarette vapor isn’t just water,” explains Dr. Rouabhia. “Although it doesn’t contain tar compounds like regular cigarette smoke, it exposes mouth tissues and the respiratory tract to compounds produced by heating the vegetable glycerin, propylene glycol, and nicotine aromas in e-cigarette liquid.”

The cumulative effects of this cell damage have not yet been documented, but they are worrying, according to Dr. Rouabhia, who is also a member of the Oral Ecology Research Group (GREB) at Université Laval: “Damage to the defensive barrier in the mouth can increase the risk of infection, inflammation, and gum disease. Over the longer term, it may also increase the risk of cancer. This is what we will be investigating in the future.”

AHA: secondhand tobacco smoke ups atherosclerosis risk

In asymptomatic never smokers, the extent of secondhand tobacco smoke (SHTS) exposure is associated with the presence and extent of atherosclerosis, according to a study published online Nov. 13 in JACC: Cardiovascular Imaging. The research was published to coincide with the annual meeting of the American Heart Association, held from Nov. 12 to 16 in New Orleans.

David F. Yankelevitz, M.D., from the Icahn School of Medicine at Mount Sinai in New York City, and colleagues administered a questionnaire to 268 never smokers, ages 40 to 80 years, assessing risk factors and extent of lifetime SHTS exposure. The participants also underwent low-dose non-gated computed tomographic scans, followed by computed tomographic angiography.

The researchers found that 48 percent of participants had coronary atherosclerosis, and it was more frequent with low-to-moderate and high versus minimal SHTS exposure (48 and 69 versus 25 percent; P < 0.0001). For any atherosclerosis, the adjusted odds ratios were 2.1 (P = 0.05) and 3.5 (P = 0.01) for low-to-moderate and high, respectively, versus minimal SHTS exposure. With increasing SHTS exposure there was an increase in the percentage of major vessels with any plaque or stenosis (P = 0.0013) and in the number with five or more involved segments (P = 0.0001).

“The presence and extent of atherosclerosis were associated with the extent of SHTS exposure even when adjusted for other risk factors, further demonstrating the causal relationship of SHTS exposure and coronary disease,” the authors write.

Several authors disclosed patents relating to the research subject matter.