Axa to ditch tobacco investments worth $2 billion because they ‘make no sense’

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Axa, France’s largest insurer, said it will stop investing in tobacco and divest all of its €1.8 billion ($2 billion) of assets in the industry.

The Paris-based company will sell €200 million of stock in tobacco companies and run off its bond holdings in the industry, valued at about €1.6 billion, the company said in a statement on its website Monday.

It didn’t say which tobacco company stocks it holds.

“We strongly believe in the positive role insurance can play in society, and that insurers are part of the solution when it comes to health prevention to protect our clients,” Deputy Chief Executive Officer Thomas Buberl said in the statement.

“Hence, it makes no sense for us to continue our investments within the tobacco industry.”

Organizations such as the Tobacco Free Portfolios Initiative are pushing for corporate divestment in the industry. The board of the $293 billion California Public Employees’ Retirement System has asked its staff to review the pros and cons of its decision to abstain from tobacco investment.

In 2010, Norway’s sovereign wealth fund, the world’s largest, excluded 17 tobacco companies, including British American Tobacco Plc and Philip Morris International Inc., from its portfolio based on ethical guidelines.

The decision will come at a cost for Axa, Buberl said, without being more specific. The move is a “milestone step in the right direction” by Axa, Cary Adams, CEO of the Union for International Cancer Control, said in the statement.

Axa’s asset-management operations had net inflows of about 10 billion euros in the first quarter, down from 19 billion euros a year earlier, the company said this month.

The insurer sold its Elevate business in the UK to Standard Life and is in talks to sell its SunLife unit and its traditional investment and pension business there.

Updates with executives’ comments in third paragraph.

© 2016 Bloomberg L.P