September-October 1997
Tackling Tobacco
Socially responsible investors challenge the tobacco industry.
by James M. Wall
Ever wonder why the tobacco industry has not used its considerable political clout to get Congress to soften or remove the warning labels required on all cigarette advertisements and packages?
The answer is simple: that warning about the hazards of smoking protects the tobacco industry from legal action. If you start smoking at age 12 and end up dying of lung cancer at 45, and you decide you want to sue the company that hooked you, the industry has an easy comeback: "We warned you that smoking carried health risks."
Public education about the addictive nature of cigarettes and about the health dangers of smoking has slowly reduced the number of smokers in the U.S. But teenagers, who are both impressionable and rebellious, remain easy targets for an industry whose advertising continues to present smoking as glamorous and fun.
Representative Martin Mehan (D., Mass.) is one member of Congress who wants to toughen the language on the warning labels by adding the reminder that addiction is one of the hazards of smoking. He also wants Congress to mandate that warning labels be written in both English and Spanish.
The tobacco industry has little to fear, however, from Congress. Not only do many members of Congress want to protect their own state's products from government regulation, but the practice of "bundling" campaign contributions makes many members from nontobacco states eager to support the tobacco lobby.
"Bundling" refers to the legal loophole that permits a wealthy tobacco supporter who is limited by campaign finance laws to a gift of $1,000 to his own candidate to give $9,000 to nine other candidates who are friends or allies of that candidate.
The tobacco industry fights regulation by denying the obvious: that tobacco is not only addictive but deadly. The industry also argues that its product is an important economic base in tobacco-growing states, primarily in the Southeast. But recently The Atlanta Journal-Constitution published a study that attacks this contention, arguing that "the crucial value of the tobacco industry in the Southeast economy is a myth."
Comparing the tobacco industry's own economic figures to tobacco-related medical costs calculated by the Centers for Disease Control in Atlanta, Susannah Vesey Rauscher reported: "For every 100 Southerners who grow, manufacture, distribute and sell tobacco products, 41 Southerners die each year of smoking-related diseases"; in the 11 states studied, "smoking-related medical costs exceed all taxes paid by the tobacco industry, tobacco employees and consumers buying tobacco products combined."
In seven of the 11 states examined, "more money is spent on the treatment of smoking-related diseases than is directly generated by the tobacco industry."
A closer look at the tobacco industry's figures indicates that the size of the industry is inflated by counting people who relate to tobacco only tangentially, such as "wholesalers, grocery clerks and gas station cashiers who sell cigarettes to the public."
Rauscher says the actual number of tobacco-related personnel in Georgia, for example, in 1994 was 9,339 -- 355 fewer than the 9,694 Georgians who died of smoking-related diseases in 1990, the last year for which figures were available. To put it another way: in Georgia, the tobacco industry kills as many people each year as it employs.
The study also found that while the direct economic impact of tobacco in Georgia is $651 million, "the direct medical costs attributed to smoking total $880 million.
For every dollar the tobacco industry directly generates in Georgia, $1.35 is spent on smoking-related medical expenses" -- meaning a net loss for the state. The economic argument for tobacco as an important crop collapses when these costs are counted.
Since the corporations that profit from the industry hide behind their congressional defenders and refuse to admit their culpability, another strategy is needed. A "socially responsible" mutual fund company in Bethesda, Maryland, has proposed that shareholders launch the same sort of campaign against tobacco that helped undermine the apartheid government of South Africa.
The Washington Post reports that the Calvert Group, which controls 36 mutual funds with $5.1 billion in assets, recently released a survey of 800 randomly selected mutual fund shareholders that found that 66 percent did not know if their funds contained tobacco stocks.
The survey, conducted by Yankelovich Partners, found that 59 percent of the shareholders would be "at least somewhat more likely to invest in a fund they knew was tobacco-free" and "35 percent said they might switch out of funds with tobacco investments." Calvert is working with such health organizations as the American Medical Association, the American Lung Association and the American Heart Association to persuade companies to "include tobacco-free mutual funds in their 401(k) retirement programs."
Calvert has established a World Wide Web site (http://www. Calvertgroup.com) which provides information on the size of tobacco holdings in specific mutual funds.
If you are not yet on line, write or call one of the health organizations that have worked with Calvert to see what information they will provide. As long as Congress refuses to take further action against this exploitative industry, mobilizing shareholder power is a logical next step.
© 1996 Christian Century Foundation. Reprinted by permission from the December 11, 1996, issue of The Christian Century.