A Breakthrough – The Non SRI Market starts to take note with regards to tobacco stocks16 January 2014
Over recent months I have seen a number articles from SRI fund managers querying the financial future of tobacco stocks indicating, perhaps, the start of the real decline in these unwanted commercial giants.
However I still sense there is a whiff of scepticism amongst the wider investing public that somehow whatever is thrown at the industry it will survive as a good old defensive stock that will always hold up when economies get sticky.
Perhaps however the tide is finally turning. Below is an article from Stephen Bailey, analyst with the fund group Liontrust. Liontrust have no bias towards SRI, and as far as I know have never been mentioned as being remotely interested in this area.
Yet the article clearly explains why holdings in British American Tobacco and Imperial Tobacco were sold in November 2012. Simply put, hard qualitative analysis showed that political, social and economic factors are now major challenges for these organisations. In particular these are challenges being set in the very emerging markets where these organisations have set out their stall. There is also a recognition that the market has not fully valued in these potential long term problems.
These kind of articles are great endorsements for the SRI industry and show that many SRI analysts have been ahead of the curve on this.
Richard Essex, writing in a personal capacity.