Throughout it’s 185 year history Healthy Investment has pursued an ethical investment strategy for its members and whilst it’s clear that since it’s formation in 1835 we have never invested in alcohol industries like breweries, distributors and pub chains, its historical relationship with tobacco stocks is less clear.

Peter Green, Chief Executive of the Society explained ‘We are absolutely clear that when members now choose to invest in our Ethical With-profits Fund their money will not be invested in tobacco industries, however when this exclusion was added to our ethical position is not clear. We believe it was at some point in the 1980s but we can’t say definitively.’

When it was formed in 1835 you could only invest with the Society if you promised to abstain from alcohol however there was no such prohibition of tobacco and archive photographs of Annual General Meetings from the early 1900s seem to suggest that smoking was acceptable at Rechabite meetings, in fact we’ve even discovered small books of matches that were given as souvenirs or competition prizes.

Historically investing in tobacco industries was seen by many With-profits and pension providers as good long-term investments that generated consistent dividend income.

As investing ethically becomes more important to individual and institutional investors and the number of smokers worldwide declines by around 2% per annum they have become less popular.

There is still a strong argument from an investment perspective in investing in tobacco industries. Whilst demand is falling, cigarette prices are rising and, probably due to the addictive nature of tobacco, an increase in price isn’t matched by a fall in demand.

The large tobacco companies have successfully converted lower sales growth into higher dividends by encouraging consumers to switch to premium brands, manufacturing efficiencies, diversification into vaping products and successfully growing sales in many less developed countries.

Smoking in China is much more acceptable than in the UK and whilst production is currently state controlled any relaxation of this monopoly would present a huge opportunity for UK manufactures.

Whilst there is a strong argument from an investment perspective for investing in tobacco industries there are also risks, especially if the UKs advertising ban is extended to other countries.

Peter Green concluded "We have listened carefully to all of our investment experts and analysts and whilst we acknowledge that tobacco industries present an opportunity for generating income we believe that alternative investments present similar opportunities for income and growth without doing harm. Why invest in something that does harm when you can invest in industries that are committed to doing good. There are lots of investment opportunities in sustainable industries and pharmaceutical development that will not just benefit investors in the Healthy Investment Ethical With-profits Fund but will benefit everyone.  Just as Healthy Investments approach to ethical investing developed over time to exclude tobacco industries as the harm tobacco does became apparent then I am sure it will develop again as our understanding of the world develops."