Fund managers will be asked if Tayside council staff’s pension contributions can be invested as profitably in sectors other than tobacco.
The Dundee pension investment committee made the unanimous decision behind closed doors on Monday.
Pension fund managers have to invest contributions as profitably as possible but this has raised ethical questions when it comes to tobacco companies.
Dundee City Council is the administering authority for the Tayside Pension Fund, covering employees of the three Tayside councils, the police and fire services and 40 other bodies.
The sub-committee deferred a debate about its position on tobacco investment from last November for more legal advice. SNP Councillor Jimmy Black moved that the Scottish Government, the NHS and the council all wish to discourage smoking.
Tobacco investment contradicted that aim and may only be justified on financial grounds.
He proposed that the sub-committee resolve to consult fund managers, seeking their views on whether a decision not to invest in the tobacco sector would still leave other sectors to provide returns which are not seriously diluted.
If this is the case, employers should be asked their views on whether the fund should continue to invest in the tobacco sector.