Nest quits tobacco

Nest, the largest UK pension master trust, has confirmed it will be going tobacco-free across all of its investments.

The decision is said to be based purely on the predicted future performance of the tobacco industry, being subject to stricter regulation, aggressive legal action and falling demand. Nest estimates it will take up to two years to go completely tobacco-free as the scheme’s current exposure to tobacco is estimated £40 million, and will take some time to divest.

Mark Fawcett, Nest’s CIO, said: “Tobacco companies are facing legal challenges across the world from governments taking action against an industry causing serious harm to their citizens. The harsher regulatory environment stops tobacco companies from attracting new customers and increasing their market share of existing smokers. We have not taken this decision lightly but we don’t think it makes sense to continue investing in an industry whose business model looks increasingly unsustainable.”

Nest’s fund managers have agreed to make the necessary changes across the portfolio, and commenting on the announcement Sergei Strigo, Amundi’s co-head of EM fixed income, said: “We have seen a significant interest in investments with an Environment, Social and Governance anchor and Nest’s announcement today shows the organisation’s determination to take the lead and set an example in this area.”

Nest already has a tobacco-free policy applied to its ESG Emerging Markets fund and Commodities fund. This announcement will extend the screening out of tobacco across all of NEST’s Retirement Date Funds and other fund choices.

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