Alberta is being lauded by anti-smoking and social investment groups for being the first province to dump its investments in the tobacco industry.
The Alberta Investment Management Corp. has sold $17.5 million in directly managed stock held by public sector pension funds and the Alberta Heritage Savings Trust Fund.
Leo de Bever, CEO of the Crown corporation, said the province is making the move as it prepares to file a lawsuit against big tobacco to recover health-care costs for smoking-related illnesses.
Holding such shares while fighting the case would look bad, he said.
"We have divested all of the actively managed tobacco stocks. This was across the spectrum and it is because the government is suing the tobacco companies over health care," de Bever said. "We could be seen as directly holding tobacco stocks."
He says the corporation still has some "small" tobacco holdings within indexed investment funds that it does not directly manage.
Groups such as the Social Investment Organization and Physicians for a Smoke-Free Canada said Alberta's move to divest itself of tobacco shares is a first for a Canadian government.
B.C. owns $346M in tobacco shares
Most provinces have tobacco industry investments, but only a few release detailed information about them, said Cynthia Callard, executive director of Physicians for a Smoke-Free Canada.
The British Columbia Investment Corp. had $346 million in tobacco industry investments as of March 31, 2010, she said. Quebec's Caisse de Dépôt et Placement also has multimillion-dollar tobacco holdings.
The Canada Pension Plan Investment Board had $218 million worth of stock in multinational tobacco companies during the same period. Efforts to have the board divest itself of those investments have not been successful.
Callard said Alberta's tobacco holdings were more modest, but hopes other governments will follow the province's example.
"They are the first to do it. This is a very significant step forward," she said from Ottawa.
Les Hagen of the group Action on Smoking and Health also praised the Crown corporation's decision to sell off tobacco industry holdings.
Hagen says it would be completely contradictory for the Alberta government to sue tobacco companies while investing in tobacco stocks.
"This is a momentous decision that will have a ripple effect on other pension-fund managers and institutional investors across the country."
Lawsuit still not filed
Alberta passed a bill in 2009 to pave the way for its tobacco lawsuit, but the legislation has not yet been proclaimed and a statement of claim has not been filed.
Last October, then justice minister Alison Redford said Alberta's lawsuit against big tobacco would be filed within one year.
Redford, who is now premier, told the legislature last year that the tobacco industry must share the burden of paying to treat costly smoking-related illnesses such as cancer and heart disease.
Justice Department spokesman David Dear would not comment on the tobacco share divestiture, what is delaying proclamation of the lawsuit legislation or when the statement of claim will be filed. He would only say the lawsuit is complex, timing is important and Alberta wants to see how similar cases unfold in other provinces.
Ontario, New Brunswick, British Columbia and Newfoundland have already filed lawsuits against the tobacco industry.