The Ethical Implications of Investing in the Tobacco Industry: Examining the Moral Dilemma

Investing in the tobacco industry presents a significant moral dilemma for investors. This article explores the ethical implications of such investments, considering the health, environmental, and social costs associated with the tobacco sector. It also examines why many investors choose to avoid this industry despite its historical profitability.

Health Impacts

The primary ethical concern surrounding the tobacco industry is its substantial negative impact on public health. Tobacco use is the leading cause of preventable disease and death globally (NIH). In Australia alone, tobacco-related illnesses are responsible for approximately 20,500 deaths each year, with these deaths resulting from conditions such as lung cancer, cardiovascular diseases, and respiratory illnesses​ (Tobacco in Australia)​. The Australian Burden of Disease Study 2018, found that tobacco smoking was responsible for 8.6% of the total burden of disease and injury. Estimates of the burden of disease attributable to tobacco use showed that cancers accounted for 44% of this burden.

Economic Cost

The immense health burden caused by smoking places significant strain on healthcare systems and results in substantial economic costs; In 2015-16, tobacco smoking was estimated to cost Australian society $137 billion, comprising $19.2 billion in tangible costs (such as health care, reduced workplace productivity and caring for someone with a smoking-related disease), and $118 billion in intangible costs (such as pain and suffering caused by ill health attributed to smoking) (AIHW).

Environmental Impact

The environmental damage caused by the tobacco industry is another critical ethical consideration. Tobacco farming leads to deforestation, soil degradation, and extensive use of harmful pesticides. The manufacturing process contributes significantly to greenhouse gas emissions.

For instance, a 2018 analysis using life cycle assessment reported that 32.4 megatonnes (Mt) [1 Mt = 1 million tonnes] of tobacco leaf was used to produce 6.48 Mt of dry tobacco that was used in the global manufacture of six trillion cigarettes in 2014. This process contributed some 84 Mt CO2e emissions to climate change, or 0.2% of the global total, as well as contributing to ecotoxicology levels, and water and fossil fuel depletion (Tobacco in Australia). Additionally, cigarette butts, the most common form of litter, contaminate water bodies and soil, posing risks to wildlife and ecosystems.

Social Costs

The social implications of tobacco use extend beyond health and environmental impacts. Smoking contributes to socio-economic inequalities, as lower-income populations often experience higher rates of tobacco use and related health issues (AIHW)​​ (Tobacco in Australia)​.

Conclusion

Investing in the tobacco industry presents a clear ethical dilemma, given the substantial harm it causes to health, the environment, and society. As awareness of these impacts grows, more investors are choosing to exclude tobacco from their portfolios in favour of more responsible and sustainable investments. This shift reflects a broader trend towards ethical investing, prioritising not just financial returns but also the well-being of people and the planet.