[The Wrap] The war in Ukraine throws responsible investing on its head

If responsible investing ever had a bigger problem then look no further than what is happening in Ukraine.

Friday, March 4th 2022, 3:10PM

by Philip Macalister

First up I'll go on the record and say I am a big believer in responsible investing and doing good with my investments.

But Russia's war in Ukraine has thrown this very concept on its head.

It would be hard to find an manager that embraces responsible investment that invests in arms manufacture. That's an easy box to tick in good times.

But right now Ukraine is crying out for military support from the West to help it stop the Russian invasion.

Most responsible investors would say yes if they were asked should the West support Ukraine in these times.

Here's the conundrum. As a responsible investor I don't want to put my money into arms manufacturing. But right now I would love to see the West helping Ukraine with more weapons.

What is the right answer?

For me it is even harder as one of my son's partner is a Ukrainian; they are in Berlin, but her parents and family are in Odessa, a port city on the Black Sea Russia is advancing towards.

There is little I can do from New Zealand, but giving them weapons for their defence would be great.

The second issue in my thinking is this.

It was great news this week that KiwiSaver funds and the big Crown-owned entities including NZ Superannuation Fund, ACC, Government Superannuation Fund and National Provident Fund have decided to sell their Russian investments.

Talk about making a decision after the horse has bolted.

Good on them for finally doing something. The trouble is now there are probably no buyers for any of these assets or bonds they want to exit. If there are buyers they are going to pay bugger all.

Yep these will be losses and a drag on their investment performance. But to be fair the sums involved are relatively quite small so the impacts are probably fairly innocuous.

The question in my head is why was this decision not made earlier. In the days, weeks and months Putin was amassing his military - in some reports 75% of Russia's military - on the borders surrounding Ukraine?

If these fund managers had some balls they would have been proactive not reactive. As for active managers there is little excuse why they should not have been proactive in making these decisions to sell.

Acting earlier would have benefited their members and investors as there, in all likelihood were buyers of these assets.


Tags: Opinion

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