NETHERLANDS – The €135bn healthcare pension fund PFZW has decided to exclude tobacco growers and cigarette makers from its portfolio after attempts to engage with the sector yielded poor results.

The pension fund said it "tried in vain" to encourage tobacco companies to get to grips with a number of issues, including child labour and generally poor working conditions.

Diana Abrahams, spokeswoman at the scheme, said: "Because we don't reject all child labour, as children can be important for a family income in poor countries, we have urged the sector not to deploy children in hard menial jobs, and to offer them an education."

The healthcare scheme said it also called on companies to stop selling tobacco products to youngsters.

Peter Borgdorff, director at PFZW, said: "Although smoking is a personal choice, we have always acknowledged its problems. Therefore, the only conclusion left was that this type of investment does not suit us."

PFZW endorsed the World Health Organisation's Framework Convention on tobacco control in a position paper published last October.

At the time, it said: "The ongoing violation of human rights on tobacco plantations, or deliberate adding of extra addictive substances to products, is a reason for engagement or even exclusion."

In the opinion of the pension fund, plantations in particular carry considerable environmental and social risks.

According to Abrahams, the decision to withdraw from the sector had already been taken at the start of the year but not made public, in order to not upset markets.

She said PFZW's stake in the tobacco industry at year-end 2012 had been approximately €611m.

Since then, the scheme has been divesting and re-investing the proceeds across the breadth of its portfolio.

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