Who owns tobacco stocks?

Abstract

We compare the ownership characteristics of tobacco stocks with their peers in the same country and industry group. We find lower reported ownership for stocks in the tobacco industry, which suggests that anonymous investors are larger owners of these sin stocks. Compared to peer stocks, U.S. and U.K. asset managers collectively overweight tobacco stocks, while norm-constrained investors such as sovereign wealth funds and pension funds underweight tobacco stocks. Passive managers have large stakes in tobacco stocks that are in line with the weights of these stocks in broad capitalization-weighted indices, indicating that passive replication of ethically screened indices is still a niche. We also identify some prominent active investors who take large positions in tobacco stocks.

Keywords: Divestment, Environmental Social and Governance (ESG), Exclusion, Socially Responsible Investing (SRI), Sustainable Development Goals (SDGs), Sustainable investing, Tobacco

JEL Classification: G11, G12, G14, i18