Why you shouldn’t invest like the head of the CDC

Brenda Fitzgerald, a medical doctor and former head of the Centers for Disease Control and Prevention (CDC), resigned in January following reports that she had bought stock in a tobacco company after taking office in 2017. Disclosure forms indicated that Fitzgerald’s financial advisor purchased stock in Japan Tobacco, one of the largest tobacco companies in the world; it owns the U.S. brands Winston and Camel. Smoking is the leading cause of preventable death in the United States and globally. Since smoking prevention is a major CDC goal, the stock purchase was clearly a conflict of interest.

Although probably legal, Fitzgerald’s actions while CDC chief strike many as unethical. How can someone put their own financial gain above principles and the well-being of others?

It happens more often than we think. Knowingly or not, millions of Americans are investing in tobacco products through their retirement plans. Retirement plans invest mostly in mutual funds, which invest in a wide assortment of company stocks. It’s not always easy for investors to find out what’s inside the funds they own. According to the advocacy website TobaccoFreeFunds.org, major plan providers like Vanguard and Fidelity invest in tobacco or the promotion of tobacco use to the tune of approximately $60 billion and $18 billion, respectively. If your retirement plan is with one of these firms, that means you’re likely investing in tobacco, too.

An old investing adage tells us to “know what we own and know why we own it.” That advice was meant to make sure investors have a firm grasp on the money-making aspects of a business — things like cash flow, the company balance sheet, and whether a product enjoys a strong competitive advantage. That saying can also apply to knowing if we are invested in businesses that contradict our principles.

Brenda Fitzgerald may not have seen a conflict between her investments and her ethics, but many people might think differently if they realized that they were inadvertently supporting and profiting from Big Tobacco through their retirement accounts. Americans today have approximately $27 trillion invested in retirement accounts, and often have discretion over how that money is invested. Divesting from stocks or funds that profit from tobacco and choosing tobacco-free funds instead is an option in many cases. The first step is to have a conversation about socially responsible investments with your human resources department or financial advisor.

As we go about making sure that our investments align with our values, it’s good to keep asking ourselves that fundamental investing question: Do I really know what I own?

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