Despite their commitments, some French banks continued to finance cigarette manufacturers

A report by the investigative body Profundo, commissioned by the Alliance Against Tobacco, shows how French banks and financial institutions are financing tobacco companies, despite their ethical commitments. In total, $5.3 billion in loans were granted to tobacco multinationals between 2018 and 2023, and €723 million are still invested in financial assets.

Because it causes eight million deaths per year worldwide and decimates half of its customers, the tobacco industry is not an ordinary industry. It is from this observation that the Tobacco-Free Finance Pledge (TFFP) initiative proposes that banks and financial institutions exclude all financing and collaboration with the tobacco industry. Initiated by the Australian organization Tobacco Free Portfolios, the TFPP was developed in collaboration with the Finance branch of the United Nations Environment Programme (UNEP).[1].

French banks and financial institutions involved in the TFFP have nevertheless continued to finance tobacco multinationals, as shown by a report commissioned by the Alliance Against Tobacco (ACT)[2].

Bank loans reduced but investments continued

Based on an investigation by the investigative body Profundo, the ACT has identified numerous breaches of the TFFP. These can be divided into two groups: loans granted to tobacco manufacturers and financial investments in the tobacco sector.

Over the period 2018-2023, loans to tobacco multinationals reached at least 5.3 billion US dollars (or 4.8 billion euros). They were mainly granted until 2020 and have significantly reduced since then ($300 million since 2021, 9 million in 2023). These loans benefited British American Tobacco (BAT)(2 billion dollars), Philip Morris International (PMI)(1.4 billion), Imperial Brands ($1.2 billion) and Japan Tobacco International (JTI)(720 million). They were issued by only two banks, Société Générale ($4.3 billion) and Crédit Agricole ($957 million).

For their part, investments in the tobacco industry would represent 723 million US dollars (or 658 million euros) in November 2023, and have been decreasing since 2018. They benefited PMI (307 million dollars), BAT (255 million) and Imperial Brands (78 million). These investments are mainly divided between the BPCE group (282 million dollars), Crédit Agricole (160 million), BNP Paribas (96 million), Axa (75 million) and Crédit Mutuel (35 million). The financial institution Groupama stands out by having relaunched its investments between 2021 (around 2 million dollars) and 2023 (nearly 13 million).

Practices in contradiction with ethical commitments

While bank loans were granted during the period studied, they have declined sharply and were mostly stopped after the signing of the TFFP. Some banking and financial institutions (Crédit Agricole, BNP Paribas, Axa) have slowed down their investments in the tobacco industry, but have continued them despite their ethical commitment.

BNP Paribas and Axa were among the first partners of the TFFP and signed it in 2018, Crédit Agricole in May 2020 and Crédit Mutuel in September 2023. The BPCE group has not signed this charter, but its subsidiary Natixis did so in 2017. For its part, the group General Society signed the TFFP charter in September 2023 and adopted a Tobacco sector policy which applies to the entire group[3].

Bringing these institutions into line with their ethical commitments appears more necessary than ever, otherwise they themselves will lose their credibility. The ACT report highlights, for example, that among the investments, $1.33 million are in Environmental, Social and Good Governance (ESG) funds, which tobacco manufacturers should in principle to be excluded, but they still claim it. The influence of ESG criteria in obtaining the socially responsible investment (SRI) label and the lack of requirements of this label had led in France to its revision by the public authorities. At the request of the ACT and the National Committee against Smoking (CNCT), the ISR label today excludes the tobacco industry sector.

Keywords: banks, financial institutions, financial investments, bank loans, ESG criteria, SRI label

©Tobacco Free Generation

M.F.

[1] Tobacco-Free Finance Pledge (TFFP), Novethic, consulted on March 8, 2024.

[2] Alliance against tobacco, Financing the tobacco industry in France, ACT syntheses, March 2024, 21 p.

[3] General Society, Tobacco sector policy, September 2023, 6 p.