WASHINGTON - As the overall fortunes of the tobacco industry continue to worsen, many institutional investors might have no choice but to question whether it is time to abandon tobacco-related investments, said a report issued by the non-profit Social Investment Forum and Co-Op America, both in Washington.
In addition to divestment, the report explores alternative strategies for institutional investors, including reducing tobacco ownership, freezing tobacco holdings at current levels and engaging in shareholder activism.
The report noted that this year three public pension funds - the Maryland State Retirement Systems, the New York State Teachers Retirement System and New York State & Local Retirement Systems, took steps to reduce their exposure to tobacco stock.
Divestment from tobacco stocks is not an onerous task, the report said, because tobacco manufacturers represent only 2.4% of the Standard & Poor's 500 Stock Index's market capitalization.
The report noted 47 tobacco-related shareholder resolutions were proposed in 1996, up from 37 in 1995 and just 15 in 1994.
Legal and legislative threats continue to mount as well, including the Aug. 23 executive order signed by President Clinton permitting the Food and Drug Administration to curb tobacco advertising and promotion to children, on the basis that nicotine should be regulated as a drug. And officials in 16 states have brought lawsuits seeking to recover tobacco-related medical costs.