Mapping the future

Can there be an ethical tobacco company—and what would it do?
By Clive Bates

Clive Bates is director of Counterfactual Consulting. He is a former senior civil servant and was director of Action on Smoking and Health (U.K.) from 1997 to 2003. He has no competing interests and speaks only for himself.

Many years ago, I was scandalized when a prominent green campaigner joined a giant mining multinational to be its “sustainability champion.” How can a committed environmentalist work for a company that devastates the environment and destroys communities wherever it operates? “That’s the point,” he retorted bluntly. “You have to go to where the dirt is if you want to clean it up.” He was right, I was wrong, and I admire him to this day for making that move and for what he achieved in the role.
The point was not that large-scale mining operations would magically no longer tread with a heavy environmental footprint. Rather, a forward-looking mining company should try to reduce its impact to the greatest extent and at the greatest rate possible, consistent with its business objectives. The businesses with the heaviest footprints offer the greatest scope to reduce their impact and therefore can do the most good when they change.
So does this provide a useful pointer to what constitutes ethical behavior in companies that have high impacts? Should we judge the ethics of a company or an industry by the net harm its operations cause or by what it does to change to reduce harms over time? Can this logic be applied to the tobacco industry?
The existence of a tobacco industry is a fact, a reality that is likely to persist for many years to come. Almost all governments allow a market in tobacco and therefore a tobacco industry to supply the market. To varying degrees, governments regulate it and tax it, and sometimes they own it. They show no sign of abolishing it. There will, therefore, be an industry operating in a legal market selling nicotine products for at least the medium term to the long term. But that does not mean that one to two decades from now the tobacco industry will look anything like it does today.
Over the next two decades, I believe the industry will have to face up to and deal with the health burdens that are integral to its most successful products. But how to do this? Can we draw on advice for another industry facing an existential challenge that is fundamental to its leading products? We can turn for inspiration to a 2015 paper by energy expert Dieter Helm titled“What should oil companies do about climate change?” [http://bit.ly/Helm2015] and draw out six strategies and how they might be applied to the tobacco industry.
First: denial. Go into ostrich-like denial, argue against the science, and fund lobbyists and think tanks to create distraction. There is no need to dwell on this one for the tobacco industry because it has already been tried for several decades, and it does not work.
Second: revolution. Oil companies should go “beyond petroleum,” pull out of the main fossil fuel businesses and become renewables companies. The equivalent for the tobacco industry is to pull out of manufacturing and selling cigarettes. That makes a good slogan, but it is not a viable strategy. This is because the company is owned by shareholders, and the management of the company has an obligation to protect their interests or expect to be fired. Shareholders will replace a management team that destroys their shareholding by eliminating the most profitable product line. Even if this were possible, the company would face a hostile takeover, or, alternatively, its facilities and intellectual property would have to be sold to someone else who would resurrect the business under new ownership, and nothing would be achieved. In fact, exiting the cigarette business is a common demand of health organizations. They have defined pulling out of cigarettes as the benchmark of industry credibility, even though it is impossible to achieve—or perhaps because it is impossible. Companies should even be wary of naming a date far in advance upon which they will pull out of cigarettes—they do not control the main consumer, policy and communication drivers that determine if and when this will become feasible.
Third: Only stick to the law. This attempts an amoral passive approach. The state defines the limits of what can be done by companies, and the companies respect that and operate within these constraints. Obviously, all companies must obey the law, and tobacco companies need to comply with the letter and spirit of the law controlling tobacco and trade. In an office far from corporate headquarters, it can seem that, whatever headquarters says to the contrary, the real drivers are the quarterly numbers and the fact that there is tacit approval for any deniable conduct that makes the financials work. That cannot be acceptable. To address it means companies taking a globally concerted and proactive approach to corporate conduct—with no exceptions and with serious consequences for error. The problem with making this the only strategy is a that there are too many very poor ideas for regulating the tobacco and nicotine markets—some that will increase criminality, waste public money and cause more ill health—for companies to be passive policy-takers. In a situation where regulators are capable of outlawing safer products altogether (e.g., the European Union’s snus ban and Australian or World Health Organization (WHO)-inspired vapor product prohibitions) it is not safe to assume that governments, regulators and activists are rational actors in public health.
Fourth: Drive technology transition. In the case of oil companies this means promoting a switch to a less harmful form of fossil fuel: a transition from coal to gas, which reduces carbon emissions by about half per unit of energy. In the case of tobacco this means running hard at a transition from combustible to noncombustible nicotine technologies (a reduction in harm that is dramatically greater than the switch from coal to natural gas) and building a business model that drives switching and cannibalization, not just a line extension. The aim is to change the market for consumer nicotine both as individual companies and collectively as an industry. But industry initiative can only take this so far: It needs a supportive policy framework.
Fifth: Be the policy champion. In the case of oil companies this means, for example, pressing for a meaningful carbon price, which shifts the market toward low-carbon fuels and investment. For the tobacco companies it means a steep risk-related excise gradient and embracing the full spectrum of “risk-proportionate regulation.” That in turn means acknowledging and accepting a stringent regulatory environment for cigarettes. This would be done by structuring a “grand bargain”—a consensus that allows for tough measures on combustible products in return for a relatively liberal regime on the noncombustible, low-risk alternatives, with a view to migrating smokers from smoking to using vapor or smokeless products. One of the reasons to focus on policy is to address the competitive imperative that drives companies’ pursuit of market share. If tobacco advertising is permitted, companies will fight over market share by advertising, with the side effect of increasing the market. A ban on cigarette advertising takes that option off the table, but allowing the advertising of vapor products would allow competition between vapor products—and at the expense of the incumbent cigarette trade. Each of the main policy measures in the WHO’s Framework Convention on Tobacco Control armory could be assessed in this way.
Sixth: Lead the innovation. This is about the future that companies are modeling when they spend on R&D, deploy staff, and invest in new plants and upgrades. For climate change, this means planning for greatly reduced carbon intensity and new technologies like electric vehicles, heat pumps and smart grids. For tobacco, it means seeing the world heading beyond combustion and moving into a consumer nicotine market based on the pleasure and functional rewards of nicotine use with far less damage to health, possible advantages to health (e.g., in relation to neurodegenerative diseases), and users willing and content to use it without the fear of death.
More than 5 trillion cigarettes are smoked each year by more than 1 billion human beings. That is clearly “where the dirt is.” The opportunity to dramatically reduce the harmful footprint of the tobacco industry is without parallel in any other industry and could be among the greatest public health wins of all time.
Can there be an ethical tobacco company? The competitive pressures to win market share in all segments, including cigarettes, make that a distant prospect. But there are, without doubt, ethical tobacco company behaviors. We should judge an incumbent tobacco company by its demonstrated commitment to change and by how aggressively it embraces the transition to noncombustible products. With millions of lives at stake, it would be unethical for governments, regulators or activists to try to obstruct it. This should be a project that unites public health professionals and the tobacco industry in a common aim, however uncomfortable that feels for veterans of the “tobacco wars.”
“Mapping the Future” is the theme of this year’s Global Tobacco & Nicotine Forum, which will be held Sept. 11–14, 2018 in London.