A Call to Consider
A decade ago the American Medical Assn. purged its investment portfolio of tobacco industry stocks. Now, in the latest issue of its journal, it calls on “all physicians, health professionals, hospitals and all people interested in the health and welfare of our children” to get out of tobacco investments. Tobacco, in the words of Dr. Randolph Smoak Jr., the AMA’s secretary-treasurer, “is a ruinous and enslaving product that has brought misery, disease, anguish and death” to many millions of people. Tobacco is also a major profit earner of a number of diversified companies that often are favorites of both individual investors and mutual and pension funds.
The mutual fund industry has for some years been selling what it calls socially conscious funds, which shun shares in companies that contribute to pollution or otherwise threaten public health. The response has been barely tepid, with only about one-sixth of 1% of the money invested in stock funds going into the socially conscious offerings. Many people have strong feelings about what products and activities are bad for society, but it appears that most investors are inclined to keep a partition between their social consciences and where they invest their money. For its part, Wall Street doesn’t like controversy, for it knows that negative publicity can cut down on the purchasing of related stocks. That was amply demonstrated when many investors turned away from companies that did business in or with South Africa.
The AMA has identified 13 tobacco-related stocks and nearly 1,500 mutual funds that hold them and has urged the funds and individual investors to sell their shares. Some giant investors, like the $98-billion California Public Employees Retirement System, are mandated by law to make their investment decisions solely on the basis of where the best returns can be expected. But other investors who up to now have paid scant attention to the stocks that their mutual funds buy might be alerted by the AMA’s call and choose to shift their investments elsewhere.
Tobacco-related deaths and illnesses remain the nation’s foremost public health problem, and getting people to quit smoking--or, better, never to start at all--remains the most practical and effective method of prevention. But will the AMA’s divestiture proposal really do anything to further that goal? Certainly the AMA has performed a public service by again reminding people that tobacco is a merciless killer and by encouraging investors to take a close look at what shares they and their mutual funds hold.
