Beyond the international sanctions already imposed on the Putin regime, can investing in Russia be considered a responsible investment?
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According to the website of the Autorité des marchés financiers, responsible investment means the fact that in addition to taking into account the usual financial criteria, environmental, social and governance factors (ESG criteria) are integrated into investment decisions. .
Important global economic actors, but also individuals, have already begun to make their financial relationship more responsible with regard to Russian interests.
Mass divestment
Many multinationals like Netflix, Coca-Cola, Starbucks and McDonald’s have withdrawn from the Russian market.
Visa, Mastercard and American Express also suspended operations in Russia a few days ago.
Energy players have also followed suit, such as the British BP, which sold its 20% stake in Rosneft, a Russian state oil company.
Finally, banking investments were also affected. JPMorgan, for example, excluded Russian bonds from these ESG indexes, thus reducing their visibility in the investment market.
How does the application of ESG criteria in connection with the war in Ukraine weigh in on these decisions?
The environmental criterion corresponds to disinvestments and the reduction of dependence mainly by Europe, but more generally by the West, on Russian energy in favor of other sources.
The social criterion is affected by the humanitarian crisis caused by the Russian army in Ukraine. Investors do not want to be associated with the atrocities and potential war crimes committed by Russia.
AFP
A man walks between houses destroyed in an airstrike in Bila Tserkva, Ukraine, March 8, 2022.
The pariah image perceived by the international community also serves as a criterion of governance. The security of the investment is therefore no longer guaranteed.
“We know who the attacker is, we know who the attacker is,” explained Frédéric Vuillot, French specialist in the social and solidarity economy, on the BFM Business channel. “In terms of G, governance, we know where we should not invest.”
The answer, however, can be seen in a much simpler way.
“Companies use ESG criteria to justify decisions that are binding on them, because their subsidiaries in Russia are no longer supplied, financial sanctions limit the possibilities of payment for these subsidiaries and there is pressure from society civil society in Western countries so that companies leave Russia,” says Julien Martin, professor in the economics department at UQAM.
Above all, these companies would have too much to lose, both economically and in terms of image and public opinion, by remaining close to Russian interests.
Such questions for companies will remain as long as Vladimir Putin, his relatives or anyone associated with this conflict is in power in Russia, and this, well after the end of the war, adds the professor.
What weight can be given to retail investors?
“Most individuals don’t have a lot of clout and mostly have little exposure to Russian assets,” says Martin. On the other hand, individuals could put pressure on the big financial players (banks, investment funds) to modify their portfolio.
We must then see this weight in all the existing pressures on these large companies and these foreign interests to disinvest in Russia.
These pressures are stronger every day, even in Quebec.
Loto-Québec, the Caisse de depot et placement du Québec, the SAQ and Bombardier, to name a few, have cut ties with Russia since the beginning of the conflict.