Ethical Investment and Russia

By Ed Moisson

Forward by Chelsea Traver at Evergreen Advice

The recent invasion in Ukraine has brought up a range of issues for responsible investors and investment managers. It has resulted in investment managers having to sell, en masse, their holdings in Russian companies and Russian government bonds, and having to justify why they held these investments in the first place.

There has been condemnation of responsible investment funds for holding Russian securities at all, citing it as a failure of responsible fund managers given the evidence from the 2014 annexation of Crimea.

Sasja Beslik, a sustainable finance expert said “ESG data firms need to look at [the war in Ukraine] and ask themselves what they have missed,” he said. Beslik cited MSCI’s decision to downgrade its ESG rating of the Russian government from B to CCC on March 8, saying: “This came eight years too late.” Sustainalytics said it was reviewing its ESG risk ratings and country risk ratings “in light of the conflict in Ukraine” relating to both individual companies and the firm’s methodologies.

At Evergreen, a number of our portfolios featured a small amount of exposure to Russia through funds that invest in emerging markets. These holdings have either been sold down or are in the process of being sold down. For all investors, including ourselves, there are lessons to be learned from this event as we look to invest people’s savings in a responsible way.