Financial services provider Scottish Widows is to sell shares and bonds worth £1billion in cigarette companies.
The Edinburgh-based business is screening out any investment in firms where tobacco accounts for more than 10% of sales, so it will divest itself of companies including British American Tobacco, Imperial Brands, Philip Morris and Japan Tobacco.
Scottish Widows, which is owned by Lloyds Banking Group and manages £190billion of savings and investments on behalf of six million people, said the new rules would apply to about half its total investments which are indirectly held by at least a million people.
The Times reports that Scottish Widows is joining many other institutional investors boycotting in part or completely the tobacco industry.
About £9trillion in investment portfolios worldwide screen out cigarette investment, according to Maria Nazarova-Doyle, head of pension investments at Scottish Widows.
It set the 10% threshold so that it does not have to sell its holdings in supermarkets and other distributors where tobacco accounts for only a small part of their sales.
It is also tightening its rules around investing in the thermal coal industry and tar sands. Any company in which those activities accounted for more than 5% of sales is now being screened out. Previously the threshold was 10%.
Ms Nazarova-Doyle told the Times that it was imperative to divest from "practices that threaten the long-term health of people and our planet".
As a result, Scottish Widows will sell £1.5billion of investments held by active and passive funds, mostly over the next three months.
Scottish Widows is the latest investment company to shun cigarette companies. Axa, BNP Paribas, ING and Société Générale are among the firms that are signatories to the Tobacco-Free Finance Pledge, a UN-supported initiative led by the Tobacco Free Portfolios pressure group.
The tobacco sector has responded to tighter regulation by diversifying into products such as e-cigarettes. Philip Morris, the owner of Marlboro cigarettes, has said its future is in "smoke-free" products and it has been buying into the medicines industry - including via the £1billion acquisition of Vectura, a respiratory drugs company.
FTSE 100
The UK's top share index, the FTSE 100, was up 21 points at 7,504 shortly after opening this morning, after gaining 15 points on Friday.
Brent crude futures were down by 3.38% at $116.62 a barrel after China started to implement a city-wide lockdown in Shanghai - an important financial and manufacturing hub. There are concerns the move could lead to a fall in demand for oil.
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