LONDON (Reuters) - British pensions provider Scottish Widows will no longer invest in tobacco stocks and will cut back further on coal investments as it expands its responsible investment strategy, it said on Monday.
Scottish Widows, part of Lloyds Banking Group (LON:LLOY), said this added a further 1.5 billion pounds ($2 billion) to its exclusions, bringing total divestments from firms deemed to pose a threat to the pension provider's environmental, social and governance (ESG) goals to 3 billion pounds.
The firm said it would not invest in any company deriving more than 10% of its revenue from tobacco, which it said meant excluding all tobacco manufacturers and major distributors.
"Industries such as tobacco are at severe risk of becoming stranded assets, as they face intense pressure from investors, regulators and consumers, and consistently fail to properly address the social impacts of their products and within their supply chain," said Maria Nazarova-Doyle, Scottish Widows head of pension investments and responsible investments.
Scottish Widows, which has 190 billion pounds in assets under administration, also said it would lower the threshold for investing in firms extracting thermal coal and tar sands, the dirtiest of fossil fuels, to 5% of revenue from 10%.
The shift out of tobacco follows similar moves by financial institutions such as Credit Agricole (PA:CAGR) and Aviva (LON:AV).
Insurers and investors such as Swiss Re have also been tightening their policies towards fossil fuels, as firms focus increasingly on environmentally sustainable investments.
($1 = 0.7582 pounds)