The pushback from the West has been enormous, both politically and privately, and the financial world has played a major role in sanctioning Russia. Many investors have announced they have pulled all their investments from the country, or will do so the first chance they get. However, some big players seem to have taken their time to join the chorus. Yesterday, the chairman and CEO of the asset management giant BlackRock, Larry Fink, finally said the firm had suspended the purchase of all Russian securities in its active and index funds after criticism that the firm was not living up to Fink’s own words to “create value for and be valued by” society as well as investors. Fink said BlackRock had also proactively advocated with its index providers to remove Russian securities from broad-based indices. According to him, Russian securities today account for less than 0.01 per cent of the asset manager’s clients’ assets, which are mostly allocated in BlackRock’s index portfolios. As a result, he said, a number of the firm’s major index providers have since announced removal of Russian securities from their indices, which will begin to take effect next week.
Many Nordic institutional investors and companies have gone even further and excluded Russia from their investment universe and sold, or are selling, their Russian assets at the first opportunity. Some have even gone as far as donating to Ukraine on behalf of their members, such as the Finnish Seafarer’s Pension Fund that announced earlier this week it had decided to “aid those suffering from the catastrophe in Ukraine” by donating a total of EUR 27,400 to the Finnish Red Cross and Unicef. The donation sum was based on the number of pension recipients and insured individuals in the fund, which amounted to EUR 2 per person. “This is our way of showing our support for the people of Ukraine,” the fund said in a statement. “More than 76,400 Ukrainian sailors work on ships all around the world. At the moment, some of them are understandably unable to perform their work duties. We wish all seafarers safe journeys amid the storms of the world,” it concluded.
The Nordic businesses have also risen to the occasion with several companies announcing they were shutting down shop in Russia. The Swedish furniture giant IKEA said it will close all its stores and factories in Russia, while donating EUR 20 million to UNHCR through the IKEA Foundation.
Ilkka Paananen, CEO and founder of the Finnish gaming company Supercell also announced yesterday that the company was donating EUR 1 million to the UN Refugee Agency and matching any donations up to EUR 1 million.
With tightening sanctions biting Russia and help flooding into Ukraine many remain hopeful that the conflict could be solved swiftly and without further civilian casualties and damage to the historical places and buildings that the culturally rich country hosts.
Etched in everyone’s minds is the incredible bravery and resilience of the Ukrainian people embodied by president Volodymyr Zelensky. As a Finn growing up in a country with the scars from our own fight for freedom and independence against Russia are still visible, I was moved to tears listening to the speech he gave to the European Parliament. His words, “I speak today now about my citizens, citizens of Ukraine who are defending each other by paying the ultimate price they are defending freedom”, are familiar. They bring to mind a famous speech given by Winston Churchill in January 1940 in midst of WW2. He spoke about the war effort and of Finland that at the time was fighting the overwhelming numbers of Russian forces. Words that could just as well be applied to Ukraine today. Churchill spoke: “We cannot tell what the fate of Finland may be, but no more mournful spectacle could be presented to what is left to civilised mankind than that this splendid Northern race should be at last worn down and reduced to servitude worse than death by the dull brutish force of overwhelming numbers.” The parallels are frightening. Unlike the situation almost a hundred years ago when Europe was fighting an enemy of its own, today it is paramount that Europe and its allies do everything in their power to curb the Kremlin’s ambitions to spread Russia’s borders, and protect the sovereignty of Ukraine and its people.
Now is also the time for investors and businesses to put their money where their mouth is and show that the talk about ESG was more than just a few fancy words on a paper. There is also a lesson to be learned for those whose portfolios still include investments into problematic regimes – the change in public opinion can be swift and the fallout from that can leave little room for manoeuvring.
After all, the very bedrock of European values echoes the greater notion of “S” that without the respect for human rights and dignity, freedom, democracy, equality and the rule of law you can’t effectively create lasting long-term value. This applies to both politics and ESG.
Vladimir Iljitš Lenin once noted: “There are decades where nothing happens; and there are weeks where decades happen.” The past week has been such a week. Many stayed hopeful until the very end that the negotiations between Russia and Ukraine would bear fruit and that the conflict could be avoided. However, they underestimated Putin’s ambition. For those following Russia closely, it has been clear for some time now that Putin wants to re-establish a Russian hegemony. The KGB veteran now famously stated in his state of the nation address to the country’s top politicians and parliament in April 2005 that the breakup of the Soviet Union was the greatest geopolitical tragedy of the 20th century. At the moment, Putin’s desire to create a new Russian Empire is fully on display and many of us can’t help but to think Ukrainian President Volodymyr Zelensky’s warning at a press conference yesterday where he said: “After Ukraine — if we don’t exist, God forbid — then it will be Latvia, Lithuania, Estonia, Moldova, Georgia, Poland. And they will keep going on until the Berlin Wall. They will continue.” From Ukrainian perspective, every day that the war continues a Grozny-style annihilation looks more and more likely as Kremlin doubles down to save face against rising discontent at home as the Western sanctions start to bite.
The pushback from the West has been enormous, both politically and privately, and the financial world has played a major role in sanctioning Russia. Many investors have announced they have pulled all their investments from the country, or will do so the first chance they get. However, some big players seem to have taken their time to join the chorus. Yesterday, the chairman and CEO of the asset management giant BlackRock, Larry Fink, finally said the firm had suspended the purchase of all Russian securities in its active and index funds after criticism that the firm was not living upIf you’re new to Tell Media Group, create an account.
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