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Missing in Action? Investor Responses to the War in Ukraine

Published online by Cambridge University Press:  27 October 2022

Rebecca DeWinter-Schmitt Open the ORCID record for Rebecca DeWinter-Schmitt [Opens in a new window] ,
Samuel Jones  and
Richard Stazinski
Rebecca DeWinter-Schmitt*
Affiliation:
Investor Alliance for Human Rights, USA (an initiative of the Interfaith Center on Corporate Responsibility)
Samuel Jones
Affiliation:
Heartland Initiative, USA
Richard Stazinski
Affiliation:
Heartland Initiative, USA
*
*Corresponding author. Email: [email protected]
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Extract

Following the Russian annexation of Crimea in 2014, many investors responded by unloading their Russian sovereign debt holdings. However, data from Bloomberg show that at the time of the 24 February Russian invasion of Ukraine, ESG funds – investment funds pursuing environmental, social and governance goals – still held at least $8.3 billion in Russian assets;1 and while more than a thousand companies have curtailed their Russian operations and over 500 are holding off on new investments in the wake of Russia’s invasion,2 investors have been accused of being ‘missing in action’.3

Keywords

Human rightsinvestorsRussiaUkraine
Type
Developments in the Field
Information
Business and Human Rights Journal , Volume 7 , Issue 3: Special Issue: Business and Human Rights in Latin America , October 2022 , pp. 487 - 493
Copyright
© The Author(s), 2022. Published by Cambridge University Press

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References

1 Harriet Agnew, Adrienne Klasa and Simon Mundy, ‘How ESG Investing Came to a Reckoning’, Financial Times (6 June 2022), https://www.ft.com/content/5ec1dfcf-eea3-42af-aea2-19d739ef8a55 (accessed 15 June 2022).

2 The Kyiv School of Economics Institute maintains a database ‘Self Sanctions/Leave Russia’, updated on a weekly basis, of foreign companies operating in the Russian market and limiting or terminating their activities; https://kse.ua/selfsanctions-kse-institute/ (accessed 8 September 2022).

3 Andrew Edgecliffe-Johnson, ‘Investors’ Voices are Missing in Corporate flight from Russia’, Financial Times (15 April 2022), https://www.ft.com/content/c890322f-5391-458a-9cc1-f8fff6c39ca5 (accessed 15 June 2022).

4 Gill Wadsworth, ‘From Russia with Haste’, ESG Investor (6 April 2022), https://www.esginvestor.net/from-russia-in-haste/ (accessed 13 June 2022).

5 British Petroleum, ‘BP to Exit Rosneft Shareholding’ (27 February 2022), https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bp-to-exit-rosneft-shareholding.html (accessed 17 June 2022).

6 Matt Egan, ‘Koch Industries: Here’s Why We’re Staying in Russia’, CNN (17 March 2022), https://www.cnn.com/2022/03/17/investing/koch-russia/index.html (accessed 17 June 2022).

7 Hubert Joly, ‘Companies Should be Guided by their Purpose and Values when Deciding whether or not to Exit Russia’, Fortune (12 May 2022), https://fortune.com/2022/05/12/companies-purpose-values-business-exit-russia-ukraine-invasion-international-leadership-trade-sanctions-hubert-joly/ (accessed 13 June 2022).

8 Richard L Kilpatrick, ‘Self-Sanctioning Russia’, Blog of the European Journal of International Law (11 May 2022), https://www.ejiltalk.org/self-sanctioning-russia/?utm_source=mailpoet&utm_medium=email&utm_campaign=ejil-talk-newsletter-post-title_2 (accessed 13 June 2022).

9 Daniel Flatley, Nick Wadhams and Saleha Mohsin, ‘Corporate “Self-Sanctioning” of Russia has U.S. Fearing Economic Blowback’, Bloomberg (14 June 2022), https://www.bloomberg.com/news/articles/2022-06-14/corporate-self-sanctioning-of-russia-has-us-fearing-economic-blowback (accessed 17 June 2022).

10 Ciara Linnane, ‘Companies that are “Digging in” in Russia are being Published by Markets, According to a New Yale University Report’, Market Watch (8 June 2022), https://www.marketwatch.com/story/companies-that-exited-russia-after-its-invasion-of-ukraine-are-being-rewarded-with-outsize-stock-market-returns-and-those-that-stayed-are-not-11654258241 (accessed 17 June 2022).

11 Phil Bloomer and Ella Sybenko, ‘Ukraine: Responsible Business Conduct in a War of Aggression’, Business and Human Rights Resource Centre Blog (18 March 2022), https://www.business-humanrights.org/en/blog/ukraine-responsible-business-conduct-in-a-war-of-aggression/ (accessed 13 June 2022).

12 Joly, note 7.

13 Heartland Initiative (5 June 2022), ‘Investor Statement on the Crisis in Ukraine’, https://www.heartland-initiative.org/investor-statement-on-the-crisis-in-ukraine/ (accessed 13 June 2022).

14 Human Rights Council, ‘Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework’, A/HRC/17/31 (21 March 2011).

15 Ibid, Guiding Principle 7.

16 UN Working Group on the issue of human rights and transnational corporations and other business enterprises, ‘Business, Human Rights and Conflict-Affected Regions: Towards Heightened Action’, A/75/212 (21 July 2020).

17 United Nations Development Programme, ‘Heightened Human Rights Due Diligence for Business in Conflict-Affected Contexts: A Guide’, New York (16 June 2022).

18 Ibid.

19 Ibid.

20 Ibid.

21 Ibid.

22 Ibid.

23 The 2 March 2022 UN General Assembly resolution on Ukraine ‘deplores in the strong terms the aggression by the Russian Federation against Ukraine’. General Assembly, ‘Aggression against Ukraine,’ ES-11/1 (2 March 2022).

24 Ibid.

25 Human Rights Council, note 14, Commentary to Principle 23.

26 UN Working Group, note 16.

27 Human Rights Council, note 14.

28 United Nations Development Programme, note 17.

29 Investor Alliance for Human Rights (May 2020), ‘Investor Toolkit on Human Rights’, https://investorsforhumanrights.org/investor-toolkit-human-rights (accessed 13 June 2022).

30 Business & Human Rights Resource Centre (June 2021), ‘Advancing Business Respect for Human Rights in Conflict-Affected Areas Through the UNGPs’, https://www.business-humanrights.org/en/blog/advancing-business-respect-for-human-rights-in-conflict-affected-areas-through-the-ungps/ (accessed 21 June 2022).

31 Investor Alliance for Human Rights (March 2022), ‘Investor Alert: Human Rights Risks Related to the Russian Invasion of Ukraine’, https://investorsforhumanrights.org/news/investor-alert-human-rights-risks-related-russian-invasion-ukraine (accessed 17 June 2022).

32 Heartland Initiative, note 13.

33 B4Ukraine (July 2022), Declaration, About Us, https://businessforukraine.info/about (accessed 15 September 2022).

34 BMO Global Asset Management (March 2022), ‘Russia’s War on Ukraine: Active Ownership in Times of Conflict’, https://www.bmogam.com/uploads/2022/03/3281742c5422541489778b0ce907d1f3/russias-war-on-ukraine.pdf (accessed 13 June 2022).

35 State Street Global Advisors (April 2022), ‘Our Stewardship Approach to Russia/Ukraine’, https://www.ssga.com/library-content/pdfs/global/our-stewardship-approach-for-ukraine.pdf (accessed 13 June 2022).

36 U.S. Securities and Exchange Commission (May 2022), ‘Sample Letter to Companies Regarding Disclosures Pertaining to Russia’s Invasion of Ukraine and Related Supply Chain Issues’, https://www.sec.gov/corpfin/sample-letter-companies-pertaining-to-ukraine (accessed 13 June 2022).

37 Mercy Investment Services, ‘Caterpillar Inc.’, https://www.mercyinvestmentservices.org/shareholder-resolutions-detail.aspx?bid=400753 (accessed 13 June 2022).

38 U.S. Securities and Exchange Commission (9 February 2022), ‘Gibson Dunn Communication to the SEC’, https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2021/domesticchevron021221-14a8.pdf (accessed 13 June 2022).

39 Gordon Tveito-Duncan, ‘Divesting from Russian Investments’, ESG Investor (20 May 2022), https://www.esginvestor.net/divesting-from-russian-investments/ (accessed 13 June 2022).

40 Gill Wadsworth, ‘From Russia with Haste’, ESG Investor (6 April 2022), https://www.esginvestor.net/from-russia-in-haste/ (accessed 13 June 2022).

41 Daniel Aguirre and Irene Pietropaoli, ‘Responsible Exit from Russia’, British Institute of International and Comparative Law (6 April 2022), https://www.biicl.org/blog/36/part-2-responsible-exit-from-russia-business-and-human-rights-in-a-global-governance-gap (accessed 13 June 2022). Investor guidance published by SHARE Canada raises additional issues to consider in decisions around sanctions and exiting, such as the views of stakeholders working for peace, implications for other potentially affected countries, and impacts on civilians in both states.

SHARE, ‘Briefing Note: Investors and the Russian Invasion of Ukraine’, https://share.ca/wp-content/uploads/2022/05/SHARE_investorbrief_UKRAINE.pdf (accessed 13 June 2022).

42 Business and Human Rights Resource Centre (29 August 2022), ‘Russian Invasion of Ukraine: What Companies Have to Say About their Human Rights Due Diligence’, https://www.business-humanrights.org/en/latest-news/russian-invasion-of-ukraine-what-companies-have-to-say-about-their-human-rights-due-diligence/ (accessed 9 September 2022).

43 Domini Impact Investments, Heartland Initiative, Investor Alliance for Human Rights, and Storebrand Asset Management (16 July 2021), ‘Investor Statement on Human Rights and Business Activities in Myanmar’, https://investorsforhumanrights.org/sites/default/files/attachments/2021-07/Investor%20Statement%20on%20Human%20Rights%20in%20Myanmar%2016%20July%202021.pdf (accessed 24 June 2022).