As the council unveiled its tobacco control strategy for the next three years, shadow cabinet member for health, Councillor Maggie Mansell, has accused the council of “trading in death” by investing £5.66m in British American Tobacco.
Coun Mansell said: “We, as a council, are still investing in the tobacco industry, which as far as I am concerned, is trading in death.
“We should respect the advice from the director of public health and we should adopt policy that supports a reduction in smoking.”
Investing in tobacco firms was previously banned but Councillor Dudley Mead, chairman of the pensions committee, took the decision to allow investment in 2006 after claiming it would “impact on the fund’s performance”.
Speaking at last Monday night’s cabinet meeting, he said: “Our job is to maximise value of funds.
“It would be foolhardy to make this kind of grand gesture when all funds are for the good of our long-serving officers.”
The council’s pension deficit is currently about £200m and Coun Mead said it would have an impact of about £35m if it withdrew its tobacco investment.
He dismissed claims it was hypocritical to be investing money to try and reduce smoking while having shares in tobacco firms.
Tobacco is not the only controversial investment the council has in its pension portfolio.
It holds almost £10.5m in mining company Rio Tinto, which the Norwegian government accused in September 2008 of “grossly unethical conduct” relating to environmental damage and withdrawing £500m of investment.
The council has £7.95m in mining company Anglo American plc, which Human Rights Watch claimed in 2005 had links to murderous armed groups committing human rights atrocities in the Democratic Republic of Congo.
There is also £6.6m worth of investment in BHP Billiton, which GES Investment Services, an ethical investment specialist based in Stockholm, wanted its members to boycott in 2004 over accusations of poor labour practices.
And it has £3.3m in arms company BAE Systems, which came under fire from Amnesty International over the sale of 48 Tornado bombers, 24 Tornado fighters, 30 Hawk trainer-fighters, and a large number of Rapier missiles to Saudi Arabia in the 1980s.