Axa gets behind tobacco-free portfolios

Axa divested from tobacco in 2016 making it one of the first global insurance companies to do so. It has taken that a step further and now doesn’t insure tobacco companies. Amanda White speaks to the chair of Axa, Denis Duverne, on why this is a natural part of the company’s strategy.

Amanda White: Why is it important for your portfolio to be tobacco free?

Denis Duverne: Tobacco kills 7.5 million people per annum and that is likely to grow with emerging markets getting more affluent. As investors we have a responsibility to invest responsibily and it makes no sense to be a health insurer and invest in tobacco

Has it had an impact on returns?

It is too early to say if it has impacted returns. At the time of the decision there was a big discussion at CalPERS and when they took the decision to divest I also made that decision. And then I started to make calls to other investors to introduce the idea of tobacco free portfolios. (CalPERS did well to snuff out tobacco)

We can only really have an impact if there are more sellers than buyers, so we need this intiative to grow

What is your opinion of divestment versus engagement as a way to influence companies?

This is very different from the energy debate. Our first big divestment was from coal, our initial stance was divestment from coal manufacturers and energy suppliers with more than 50 per cent revenue from coal. We could have an engagement with them because there is an alternative, but with tobacco there is no alternative. Engagement doesn’t make any sense. They are very smart people, and very decisive and we want to avoid them.

The decision has been very well received by employees and by investors. We went way beyond divesting, and have stopped insuring tobacco companies. Most decisions matter, the only way to have an impact

The decision to divest is consistent with your corporate responsibility strategy can you talk a bit more about that?

Our corporate responsibility strategy is part of our strategy, it is not something on the side. It is a three pronged approach.

First is climate – a 3 degrees world would be totally uninsurable so we are fully inline with our strategy so in line to invest with a climate sustainable strategy

The second is health, tobacco is one element of that. We also invest in medical research including prevention activities – health can improve a lot by prevention.

Inequality – the SDGs are good for society and we think we are can have an impact by providing insurance to those that don’t currently have it eg through micro finance

All companies, managers, owners and insurance companies should make sure the strategy is aligned with the SDGs and within that health, inequality and poverty are part of those objectives.

Tobacco kills and that will increase if we do nothing.

If you want to be consistent with your own objectives you should look carefully at tobacco free as part of the solution.