French insurer AXA (AXAF.PA) plans to stop investing in the tobacco industry, citing the impact of smoking on public health, and said it plans to sell its 1.8 billion euros ($2.02 billion) of assets in the sector.
AXA said it would divest its 200 million euros of equity holdings in tobacco companies immediately. It plans to stop all new investments in tobacco industry corporate bonds and to run off its existing holdings worth about 1.6 billion euros.
“With this divestment from tobacco, we are doing our share to support the efforts of governments around the world,” incoming AXA Chief Executive Thomas Buberl said in a statement on Monday.
It is the latest in a string of setbacks for Big Tobacco, whose profit margins provide strong returns despite Western countries’ ongoing decline in smoking rates.
“This decision has a cost for us, but the case for divestment is clear: the human cost of tobacco is tragic; its economic cost is huge,” Buberl said.
AXA said that tobacco kills six million people a year and that the figure is expected to rise to eight million by 2030, mostly in developing countries. The cost to society is greater than that of alcohol or obesity, the company said.
The move comes as countries around the world are cracking down. Last week, new tobacco packaging laws went into effect in the European Union, while the United States banned the sale of cigars to minors.
AXA is not the first investor to ditch tobacco, though a spokeswoman said she believed it was the first global insurer to do so.
The decision reflects a shift in the role of health insurers toward preventing health conditions, AXA said, including increased use of technology.
The head of the Union for International Cancer Control (UICC) said it would continue to encourage other companies to follow AXA’s lead.
“We need companies like AXA to signal that investing in an industry that kills its customers is simply the wrong thing to do,” UICC Chief Executive Cary Adams said.
“This announcement to divest 1.8 billion euros is a milestone step in the right direction.”
The AXA spokeswoman declined to say which tobacco companies’ stocks and bonds it owned, but said the holdings were longstanding and a small part of its general accounts.
AXA shares were up 0.5 percent by 0853 GMT, broadly in line with the European sector .SXIP.
Shares of British American Tobacco (BATS.L) and Imperial Brands (IMB.L), two of the largest tobacco companies, were flat.
(Additional reporting by Gwenaelle Barzic; editing by David Goodman and Jason Neely