(Bloomberg) -- Fund managers touting environmental, social and governance standards held at least $8.3 billion in Russian assets right before President Vladimir Putin launched a war on Ukraine.
The figure is based on an analysis by Bloomberg of roughly 4,800 ESG funds representing more than $2.3 trillion in total assets. Of those, about 300 were directly exposed to Russia, though the figure may be higher.
After almost two weeks of war, those assets are likely to be close to worthless. Investment managers who stayed out of Russia say ESG funds should never have been in the country in the first place. Philippe Zaouati, chief executive of Mirova, the $30 billion sustainable-investing unit affiliated with Natixis Investment Managers, said ESG fund managers need to stick to democracies, and avoid autocracies.
“There is no responsible investment if there is no democracy,” he said.
“We have always thought that ESG was a question of having a sincere intention to use finance for something good; if it’s not this then it’s a management technique or investing style,” he said in an interview last week. “With the Ukraine crisis, we see very clearly that some ESG funds and managers have sincere intentions, and others just apply a technique.”
The Bloomberg analysis also found that at least 13 of the ESG funds holding Russian assets were classified as so-called Article 9, which is a category within Europe’s Sustainable Finance Disclosure Regulation that denotes the very highest level of sustainability. A further 137 funds were labeled Article 8, which indicates to investors that they “promote” ESG characteristics.
“Given Russia’s war of aggression in Ukraine, it is deeply inappropriate for these funds to contain Russian sovereign bonds or state-owned energy companies, which are directly funding the war,” Maria van der Heide, head of EU Policy at nonprofit ShareAction, said on LinkedIn.
Big Finance
With sustainable investing now a $40 trillion industry that’s been embraced by the world’s biggest financial firms, it’s being applied to virtually all markets and investment products. Banks deal in ESG derivatives, while asset managers track a vast array of indexes from providers like MSCI Inc. that offer varying degrees of ESG alignment.
MSCI, which said last week it’s ditching Russian equities from its emerging-markets gauge, has more than $16 trillion in assets benchmarked to its products overall. It said the move followed feedback from market participants who said Russia’s equity market was “currently uninvestable.”
Many of the ESG funds that say they’re now trapped in Putin’s Russia tracked such indexes, in large part because the supply of genuinely green or social assets hasn’t been able to keep up with the breathless surge in investment demand.
Bard Bringedal, chief investment officer of Storebrand Asset Management, said the war in Ukraine has left ESG funds facing “one of the most extreme outlying examples” of an “extraordinary” event.
Storebrand, which oversees more than $110 billion in assets from Norway, is exposed to Russia through the MSCI indexes it tracks, though Bringedal said his firm can deviate from those benchmarks if internal analyses show it makes sense to do so.
The “nature of emerging markets is that there is a higher risk of extraordinary events occurring, post-investment,” Bringedal said. “This risk is partly inherent in the potential returns.”
Mirova’s Zaouati said Russia’s war on Ukraine shows that ESG funds can no longer afford to ignore the political backdrop against which they’re investing. He and others also argue that the same logic should apply to assets from China, which Mirova has blacklisted.
“Autocratic regimes, democracy, human rights -- these are topics that are nowhere today in ESG analysis,” he said. “If you look at what ESG managers do on human rights, they usually try to avoid any political statement.”
ESG investors who bought Russian assets are now being urged to take a stand. “This is the time to sever ties and to wait for a regime change,” according to Johan Frijns, executive director at nonprofit BankTrack. “Everyone should do whatever they can, including bankers and investors.”
--With assistance from Amine Haddaoui and Alex Dagg.
This means, you take one article, and you use the article distribution system. It will generate thousands of unique versions of your article, and publish those unique articles to hundreds of websites that are related to your niche.
Take a look at our comprehensive guide to the best and most popular information ebooks and products available today on Detoxing, Colon Cleansing, Weight Loss and Dating and Romance. They are all in one spot, easy to find and compere to make a quick selection for the product that best fits your needs or wants.
So browse through a category and make your preferred selection and come back here to read more choice articles and get a few more helpful tips on ways to help your enhancement.
As an Amazon Associate I earn from qualifying purchases. “saubiosaubiosuccess.com is a participant in third party affiliate and advertising programs; The Amazon Services LLC Associates Program, Awin network, and other affiliate advertising programs are designed to provide a means for sites to earn advertising fees and commissions by advertising and linking to products on other sites and on Amazon.com. Amazon and the Amazon logo are trademarks of Amazon.com, Inc, or its affiliates.”
We use anonymous cookies and various 3rd-party services to optimise and to offer you a better, more personalised, browsing experience with advanced accessibility enhancements.
Dismiss
Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
