Does it matter that the Future Fund has invested over $200 million in tobacco shares?

Cigarette pushers, like it or not, have been strong market performers, with major stocks growing by more than 100% over the last three years in an otherwise dire equities market. The product, of course, remains legal in Australia. Should taxpayers be asked to accept a poorer return on their investment for the sake of avoiding a controversial product? Individual investors can make such decisions for themselves, but governments must make decisions in the national interest.

The extent to which the performance of socially responsible investments, or SRIs, outperform, match or underperform conventional investments is debated. Various studies point to wildly different conclusions, suggesting establishing a link between SRIs and particular kinds of investment outcomes is difficult. That would strengthen the argument that there is no demonstrable price to be paid for adopting a more ethical approach to investment.

The Future Fund is hardly the only Australian fund investing in tobacco or other stocks that would not feature in an SRI list. Most of us, via our superannuation funds, are investors in a wide array of industries and companies that many of us would have a problem with. Ignorance and disengagement conveniently shields from having to make any decisions as to what to do about it.

Perhaps the Future Fund board has run the sums on SRIs and workers would lose. They should say so if that’s the case. There’s no easy answers here, but more transparency in investment guidelines would help.

Peter Fray

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