French €30bn Civil Service Pension Fund Completes Tobacco Exit

ERAFP, France’s pension fund for civil servants, no longer holds investments in the tobacco industry, it announced today.

With the divestment process complete, the €29.6bn pension fund has added its signature to the Tobacco-Free Finance Pledge, an initiative of not-for-profit organisation Tobacco Free Portfolios.

Laurent Galzy, chief executive of ERAFP since November last year, told IPE the pension fund had already stopped making new investments in tobacco some time ago and had been selling existing holdings gradually since then. 

“To be very transparent, for the very last step there was one holding left in the portfolio and I decided to divest it to be completely in line with our principles, but all this was started earlier,” he said.

“In the context of our best-in-class approach we have eliminated all tobacco assets and therefore we are happy to sign this pledge, taking the opportunity of the first anniversary of the initiative.”

In a press release, Galzy added that ERAFP’s portfolios were tobacco-free because of the “rigorous implementation” of two criteria the pension fund applied to assess the societal consequences of tobacco production and the cost for public health. These were “value added of the product or service” and “protection and respect of the customer’s or consumer’s rights”.

Bronwyn King, Australian radiation oncologist and CEO of Tobacco Free Portfolios, said: “Global public health improves dramatically with the participation by the finance sector in the withdrawal of credit and investment from tobacco companies.

“As governments continue to roll out the UN Tobacco Control Treaty, the finance sector’s participation is accelerating achievement of the Sustainable Development Goals to reduce the death toll from tobacco related illness, which has increased to 8m deaths a year.”

Other tobacco divestment or exclusion-related moves or announcements this year include those by Denmark’s DKK115bn (€15.4bn) AP Pension and NEST, one of the UK’s largest auto-enrolment providers.

One of the reasons AP Pension gave for its decision to cut tobacco producers from its portfolio was that tobacco stocks had shown signs of price decline, partly because of pension companies’ exclusions. At the same time, it said, implementation of the UN’s Sustainable Development Goals was expected to lead to increased tobacco regulation and fewer smokers worldwide.