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Petroleum Fund: Developing Countries up in Smoke

The Petroleum Fund is increasingly investing in tobacco. Norwatch’s examination of the Pension Fund’s new portfolio shows that 1.29 billion euro is invested in an industry that obstructs an active health policy in developing countries and that obtains constantly more of its profits from the poor part of the world. In 1 year the tobacco investments have increased by 44.2%.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
The Petroleum Fund is increasingly investing in tobacco. Norwatch’s examination of the Pension Fund’s new portfolio shows that 1.29 billion euro is invested in an industry that obstructs an active health policy in developing countries and that obtains constantly more of its profits from the poor part of the world. In 1 year the tobacco investments have increased by 44.2%.

(First published in Norwegian 26 Feb 2007)

By Pia Gaarder
Norwatch’s examination of the portfolio of the Norwegian Government Pension Fund – Global for 2006, which was recently made public February 26th, shows that the Pension Fund owns shares and bonds in the tobacco industry for a total of 1.29 billion euro.

The Pension Fund has invested more than 1 billion euro in shares in the largest tobacco producers – Altadis, Altria Group, British American Tobacco, Japan Tobacco, Imperial Tobacco, Fortune Brands, Gallaher Group, KT&G Corp, Loew’s Corp, Souza Cruz, and Swedish Match.     

The share investment in tobacco has thereby increased by 28.3% as compared with 31 December 2005, when the investments were 787 million euros.

With regard to bonds, the investment in tobacco companies has increased even more. In 1 year the Pension Fund has bought tobacco bonds for 287 million euros, as compared with 112 million the previous year.

Thereby altogether 1,29 billion euros have been invested in the tobacco industry. That is a total increase of 44.2% in 1 year.

Tobacco is clearly big business. Whereas tobacco smoking is on the decrease in the rich part of the world, the tobacco giants are going after the markets in developing countries to ensure continuing expansion and large profits. In on this – and with direct support to the companies’ policy – are thereby investors like the Pension Fund.

Developing-Country Problem
The World Health Organization (WHO) has ascertained that smoking is in the process of becoming a huge problem for developing countries. Today more than 80% of the world’s 1.3 billion smokers are already to be found in developing countries, and this is also where most new smokers are to be found. On a global basis, 47.5% of the men and 12% of the women smoke. Whereas 22% of the women in Western countries smoke, the figure for developing countries is only 10%.

A British study revealed in 2005 that the tobacco companies have for a long time examined sex-based differences in smoking habits in order to increase nicotine dependence among women in the West and in developing countries. Why women smoke, smoking patterns, and choice of products have been surveyed in detail and form the basis for marketing campaigns, which in developing countries largely do not meet opposition. Even children’s clothing is furnished with the cigarette brands’ logos.

The effect has not been long in coming: Africa is now the continent where the recruiting of new smokers is greatest and where relatively most women start smoking.

The same development is also seen in countries like Cambodia, Malaysia, and Bangladesh. If the present development continues, double as many women will be smoking in 2030.

Tobacco use is increasing most in developing countries with a certain economic development. Nevertheless, studies show that even the poorest families in low-income countries can use up to 10% of their income on tobacco. The cigarettes are bought one at a time, and control of money usage disappears. There is therefore less money left for food, education, and health.

Problems Transferred
According to the WHO, the negative consequences of tobacco will gradually be shifted onto developing countries. During the next thirty years the number of tobacco-related diseases in developing countries will increase by 700%.

In 2000, 2 million people died of tobacco use in the rich part of the world, and the same number in developing countries. In 2030 the situation will have changed radically, with 3 million deaths annually in Western countries and a total of 7 million in developing countries. According to the Norwegian Cancer Organisation, already now more people are dying of cancer than of AIDS in poor countries, and a third of all the cancer deaths are due to smoking.

Human lives and resources that these countries badly need for development will therefore disappear in smoke – literally.

Obstructs Health Policy
The tobacco industry does not sell raw materials but produces a highly industrial product composed to create nicotine dependence. To increase sales, the industry is heavily engaged in health policy all over the world. Tobacco giants with a turnover that is often greater than a developing country’s domestic product carry out extensive corruption of politicians, bureaucrats, and journalists. They pay TV channels and radio stations for favourable publicity and carry out open and covert operations to prevent developing countries from developing an effective tobacco control.

A report from Corporate Accountability International shows various strategies to undermine health policy. British American Tobacco (BAT) has 75% of the cigarette market in densely populated Nigeria and is known to bribe important bureaucrats, government employees, and media people in the country.

In Guatemala, on the other hand, the industry speaks positively about tobacco control, whereas it in practice undermines legislation. Both Phillip Morris/Altria and BAT are supposed to have used large resources to prepare alternative health policy documents that in practice make the tobacco legislation weak. Simultaneously the companies make this look like part of their social responsibility and their contribution to the development of tobacco-controlling measures.

In Thailand the situation is different. The country instituted a prohibition against tobacco advertising in 1992. Even though several breaches of the law have occurred, the number of smokers has decreased by 20% in 10 years.

Tobacco Control
The WHO supports the convention on tobacco control, The Framework Convention on Tobacco Control (FCTC). The treaty not only smoothes the path for measures such as advertising bans and non-smoking areas. In addition, the convention prepares the way for an active protection of the countries’ health policy against the tobacco industry’s open or covert interference.

The tobacco industry’s main strategies to increase the demand for tobacco products – advertising, marketing, and political interference – are thereby attacked frontally. It is therefore not coincidental that the tobacco industry is in the process of mobilizing all forces in order to water down the convention as much as possible.

The convention was passed in May 2003 and came into force on 27 February 2005. As of today 137 countries have endorsed the convention, but only a few countries – Norway included – have incorporated the whole convention in their legislation.
Whereas Norway is a pioneer country with regard to smoking in the context of the WHO, the Norwegian Government Pension Fund – Global has actually increased its investment in tobacco strongly.

Norwatch has for several years studied the development of the Pension Fund’s share investment in the biggest tobacco companies. In addition there are the bonds.







Altria Group

2 960.9

2 604.7

British American Tobacco

1 380.3


Japan Tobacco

1 423.9


Imperial Tobacco



Fortune Brands



Gallaher Group



KT&G Corp



Loew’s Corp



Souza Cruz



Swedish Match




8 073.5

6 292.3

*) The figures are all in millions of Norwegian kroner (one euro equals 8,4 kroner). They are from the Annual Report for the Government Pension Fund – Global for 2005 and 2006 and show investments as of 31 December 2006 and 31 December 2005. The portfolio for 2006 was made public on 27 February 2007.