ADVISER INVESTMENTS MATTERS

Russia ’ s war in Ukraine has raised complex sustainability and ethical issues for companies and investors alike . Jenn-Hui Tan , Fidelity ’ s Global Head of Stewardship and Sustainable Investing , examines some of these issues and looks at how organisations are trying to navigate them . There are no easy answers .

Withdrawal from Russian assets The most prominent issue has been the withdrawal of corporate and trading activity from Russia . While western governments have sanctioned Russian individuals and institutions , many western companies have been self-sanctioning , often on moral grounds . This may mark a moment of recalibration of sovereign environmental , social and governance ( ESG ) risk globally , and the increasing materiality of values-based business risk , which companies and investors will now have to consider . In many cases , action over Ukraine was decisive . A swathe of well-known brands like McDonald ’ s and Apple wasted little time before halting their Russian businesses . Coca-Cola , which first sold drinks in Russia towards the end of the Cold War for profit and as a form of diplomacy , has also pulled out . According to the Yale School of Management ¹ , more than 450 companies have announced their withdrawal from Russia ’ s economy since Putin launched the war in February , despite in some cases the significant commercial impact this will have . Other companies have found it less straightforward to weigh the different strands of E , S and G alongside ethical considerations . Uniqlo-owner Fast Retailing , for example , originally planned to continue operations in Russia , arguing that “ clothing is a necessity of life ”, before bowing to public pressure and temporarily closing its stores . Its rival Inditex has also temporarily closed outlets . Likewise , consumer goods giant Reckitt Benckiser , which has continued operations in the country in the face of public outcry , cited a “ duty of care ” to its 1,300 staff in Russia , and consumers ’ need for hygiene and health products . Both cases demonstrate companies trying to balance the social and ethical challenges they face . Others have come under fire for not acting . Renault was among the companies singled out for reproach by Ukraine ’ s president for continuing operations in Russia , and only recently announced a halt to them . Nestlé faced a Twitter storm of criticism and later pulled chocolate and coffee brands from the country but continues to offer essentials such as infant food .

Fidelity ’ s approach At Fidelity International , we have prohibited new and additional purchases of Russian and Belarusian securities for the foreseeable future . And we will seek to reduce or divest from the rest where and when that is possible , in a way which protects the interests of our clients and mitigates unintended consequences . We will monitor events closely and continue to review our decision in the event of a significant change in circumstances .

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