I have never followed the tobacco industry: the sum total of my knowledge is:
- that it features as a no-no on various "ethical" investment lists
- it's accused of pushing fags to third-world kids
- they smoke a lot in the Far East
- Kenneth Clarke has, or had, some sort of non-exec involvement
Just recently I read that tobacco consumption has hit an all time high!
So what do we make of this hypocritical charade? I'm guessing that by dint of the first bullet above, the industry has to get along with a slightly higher cost of capital than might otherwise be the case (or maybe it's done with cheap Chinese money). Well, provided all tobacco companies face the same situation, no competitive disadvantage follows.
Secondly, all the action is presumably out of sight to western eyes, so probably nobody much cares any more: the shareholder activists have won that particular battle and have all moved on to something else.
Summing up: there must be several companies - some of them 'western' - quietly making a great deal of money from this all-time record tobacco consumption. Meanwhile, the woke caravan has moved on - it seems everyone's happy.
Given the rash of "adverse" headlines in the traditional oil sector, I think we may anticipate oil going the way of tobacco.
- the activist shareholder lobby is all over it: indeed, it's where that self-same woke caravan has fetched up
- there is no way on earth that global demand for oil will slump any time soon (though it's cyclical, like anything else) - the chances of EV production meeting overall motor demand in the next decade are nil: but even Greta would presumably like to get an ambulance ride if she should need one. etc etc
- unlike coal, oil is essentially a western-dominated industry, with a vast amount of capital deployed that will not go down without a determined fight
In my day job I don't do a lot of oil stuff: it's too easy a commodity to deal with commercially (compared to gas and electricity) to need much specialist consultancy. But I can tell you that in gas and electricity, the stuff that greens don't like (e.g. coal-fired and gas-fired power stations) has for several years now been quietly passing into the hands of private equity, asset by asset, SPV by SPV**. The traditional players are hoping to run their businesses as green-approved specialists in future - made all the easier by the 2018-19 decisions that enshrine "climate-change adaptation" & "resilience" etc as Green.
RWE is a superb and quite extreme case study (because they've got perhaps the biggest coal-&-lignite challenge), but Statoil (Equinor), Shell, BP, Total and several others are almost as striking - and are well on the way. Ørsted (formerly DONG++) has pretty much worked the oracle already. Most of them stumble a bit, because they ain't so hot on the ultra-high-tech that's often involved (I've watched Shell making an arse of itself at close hand) - but they are big and capable and determined, and many of them will probably learn the new ropes. (They made a much worse hash of it in the 1990s when they all piled into the electricity sector, stupidly thinking it couldn't be much different from gas.)
So watch out for the oil industry going the same way, headed for thick-skinned ownership that will seek to profit from strong, unending global demand while the woke-west averts its eyes (and still takes holidays abroad, uses mobile phones, plays online games etc etc etc). If this doesn't work (and I think it will), well, China will clean up. We offshore the world's manufacturing CO2 emissions to them, and maybe we'll outsource that nasty oil production as well. (Russia stands a decent chance of muscling in on this one, too.)
As noted here before, Exxon is the standout progress-resister, desperately wondering if it can carve out a viable "last remaining dinosaur" niche. It ain't gonna get away with that unnoticed. But I'm not sure it knows anything else. The elephant never did learn how to dance. And the Darwinian race is to the adaptable.
** Incidentally, some of them are royally ballsing it up. But there's so much $$$ out there!
++ How we miss dealing with a company called DONG !