Axa is to stop investing in the tobacco industry and sell its current holdings in the sector of €1.7 billion.
The world's largest insurer said investing in the sector made no sense given that smoking kills some six million people a year.
The decision comes as California Public Employees' Retirement System (CalPERS) just brought forward the decision to reinvest in the industry. The decision to reconsider its divestment from tobacco came after a 2015 report revealed that US pension scheme lost $3 billion following its exit from the sector.
The €1.36 trillion Axa Group will sell its €184 million of shares in tobacco companies as well as its tobacco industry bond holdings.
The latter are valued at almost €1 billion and account for 0.6% of its credit exposure.
Incoming chief executive Thomas Buberl said that although the decision would cost Axa money, it would generate savings by resulting in fewer claims for tobacco-related diseases.
‘The business case is positive. It makes no sense for us to continue our investments within the tobacco industry. The human cost of tobacco is tragic - its economic cost is huge,’ he said.
Buberl added that Axa wanted to send a signal to other institutional investors and encourage others to follow suit.
As major health insurer, Axa’s move is also an attempt to support government efforts to reduce the number of people who smoke.
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