Axa is known to be one of the largest insurers in the world. This company has recently taken a decision to Stop Investments In The Tobacco Industry. It has about 1.7 bn in Euros in this sector, which it plans to sell. It stated that it did not make sense to invest in such a sector where death tolls are near to six million due to smoking. The move was done by Axa in order to support government initiatives which are targeted to help people reduce smoking habits. Tobacco companies had put up a challenge in the High Court last week where it sought to sell cigarettes in plain packaged covers. They lost in the court case.
Axa’s shares in tobacco companies
It might be or not a coincidence that Axa asserted that they will stop investing in tobacco companies whose products are deemed to be harmful for public health as it contradicts their corporate image and policy that is more about preventing than cure. The assembly of World Heath that came about in Geneva was recently held where the member nations met to discuss about the public health policies. Axa group is known to manage assets that amount to 1.36 trillion in Euros. It will be selling off shares that it owns in tobacco companies which amount to 184 million in Euros. Its bond holdings in tobacco industry amount to about 1.6 bn in Euros.
As of now, this amount is about 0.6 percent of the total bond holdings of the company. The decision that the company has taken might not be easy as it would cost money. However, savings would be generated as there would be fewer claims for diseases related to tobacco. Hence, it is apt that the company has been releasing ads with captions like investing in tobacco does not make business sense. The chief executive of the company was hopeful that the decision of the company will encourage other institutional investors to follow suit.
An emerging market trend
This is a trend that has emerged of late. For more investing advice like Why Investment Diversification Is A Must, Go Here. Investment funds that follow ethical business practices are shunning their shares in the tobacco industry. US pension Fund Company Calpers has decided that it would not invest in shares that belonged to tobacco companies. This is not a decision that is new but was taken a decade back. Axa is, however, an institutional investment fund with a major presence in the European market that is pulling out of this sector. Many critics feel that the bonds and shares of the company would be a significant amount that will also coincide at a time when the share prices of the tobacco companies has risen. However, for Axa it is simply not a matter of buying or selling of shares, but the significance of the move. As a health insurer, they feel that it does not make sense for the company to stay invested in tobacco companies.