Scottish Widows, the life insurance and pensions company, announced to divest from firms posing environmental risks, introduced an exclusions policy to include tobacco companies and tightened divestment rules on organisations earning profits from fossil fuels.

The £1.5 billion worth of divestment to its exclusions policy entails a flagship commitment to divest from tobacco firms.

Scottish Widows dealing in around £190bn of savings and investments for its customers in the UK, decides not to invest in businesses earning over 10 per cent of their revenue from tobacco. It means most tobacco manufacturers and distributors are ruled out. The divestment plan does not affect supermarkets and companies from other industries that receive a small amount of profit from tobacco.

The firm said that the tobacco industry is incompatible with its strategy as a responsible investor and pension provider.

Scottish Widows also said they would exclude companies breaching UN Global Compact principles. Tobacco holdings are not allowed to sign up to these principles due to their implications on households, economies, and taxpayers.

The company has drafted an exclusionary stance towards carbon-intensive industries as well.

These additional divestments add to the £1.4 billion in earlier exclusions imposed on Scottish Widows' assets, increasing the total amount of the provider's exclusions to over £3 billion, making it one of the most comprehensive screening procedures enacted by a UK pensions provider to date.

The new indexes will cover more than £20 billion in assets under management, and their introduction is being commemorated recently at the London Stock Exchange with a market opening ceremony.