Sonia Kowal
President

At the onset of Russia’s war in Ukraine, I shared my perspective on the investment community’s role in enabling the crisis and offered solutions on how investors could best support Ukraine moving forward.

FAILING TO CLEAR THE BAR

More than seven months later I continue to be disappointed by investors’ response to the Russian invasion. In light of Russia’s human rights atrocities in Ukraine and mounting evidence of war crimes, including sexual violence, many investors still hold companies with deep exposure to Russia. We are facing one of the largest humanitarian crises in modern history with strong corporate involvement, yet investors are still shrugging off the issue.

Investors appear content with doing the bare minimum, if that. I was hopeful that the investor statement on the crisis from the Heartland Initiative would serve to bolster the investor response, at least from the responsible investment community. Unfortunately, the statement had to be watered down for the sake of generating signatories and, even then, it barely gathered half the support of a similar investor statement on Myanmar.

Given how most responsible investors feel about war, the business case for action should be a no brainer.

COMPLICITY IN WAR CRIMES

I strongly believe investors have a responsibility to engage with companies supporting the Russian state. Such companies include, but are certainly not limited to: Texas Instruments, powering Russian weapon systems with its semiconductor chips, the oil field service company Schlumberger, helping Russian oil and gas companies despite sanctions, and Nokia, Cisco, and Erikson, helping build the Russian surveillance state. Complying with sanctions does not go nearly far enough — investors should be looking at company proximity to human rights abuses, such as geographical, operational, and relational proximity.

The urgency of investor action on this crisis has become even more stark since the recent news that Russian men are being drafted to fight in Ukraine. Now, all businesses operating in Russia are being called on to directly support the war effort. Investors need to pay attention to this development, as they likely own a number of the 1,600 multinational companies still operating in Russia, as detailed in the Kyiv School of Economics list. This announcement has escalated the risk for investors considerably as corporate staff, materials, funds, and services are now at the Russian military’s disposal. For example, such companies will now have to deliver military draft papers to their staff. This constitutes very close proximity to human rights abuse risk. Investors cannot ignore this, nor can companies. Any company that helps a sanctioned organization, the Russian military included, will be out of sanctions compliance. Foreign companies that fail to cut ties with Russia will be complicit in war crimes.

NOW WHAT?

I urge investors to recommit themselves to advancing human rights and take action through heightened human rights due diligence and engagement with the exposed companies in their portfolios. These are learnings that are sure to stand with investors in good stead as large-scale conflicts continue to erupt and intensify around the world. Genocide, torture, and prison camps are the same the world over. The countries may be different, but exposure and outcomes are the same. No country should be able to impose its will on another sovereign democracy. No country should be able to blackmail the world community with nuclear threats.

Remember, behind every statistic of this war the lives of millions of people are disrupted and ruined. People all over the world are suffering from cold and hunger as Russia weaponizes its energy supply and drives food prices sky high. The more that can be done to isolate the Russian economy and financial system now, the more we can avoid military action in the future and the destruction and casualties that come with it. Ukraine needs action, not just compassion.