Putin's Russia claims not to target civilian infrastructure in its invasion of Ukraine.

Emilio Morenatti/AP

Putin’s Russia claims not to target civilian infrastructure in its invasion of Ukraine.

OPINION: The New Zealand Superannuation Fund is the sovereign wealth fund of this country, and it is in business with the Russian government.

It’s an extremely uncomfortable position for the fund, which was set up in 2001 to cover some of the future costs of NZ Super.

The fund holds shares of Sberbank of Russia, Russia’s largest bank, which is now under sanctions from countries like the US and UK following the invasion of Russia. Ukraine by Russia.

Sberbank is an organ of the Russian government, which owns 50% of its shares and has an additional voting right, which gives it absolute control over it.

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Sberbank responds to Putin. The NZ Super Fund responds to Finance Minister Grant Robertson, the second most powerful minister from a free and democratic country who condemned Russia’s invasion of Ukraine.

Above the Tasman, the New South Wales government announces that it will deposit 75 million Australian dollars (80 million New Zealand dollars) of Russian assets in one of its public investment funds.

The NZ Super fund is a large fund, holding investments worth around $57 billion.

Major banking programs KiwiSaver have investments in Russian government bonds and Putin-controlled Sberbank.

The fund’s shares in Sberbank were worth about $9.3 million before the invasion. Since the invasion, Sberbank shares have lost just under 70%.

This is both because of the impact of the sanctions on the bank, and also because there are many more sellers than buyers. What Western pension fund wants to do business with Putin?

Sberbank of Russia is 50% owned by the Russian government, which also has majority voting rights over it, giving it control.  Slide from the annual report of Sberbank.

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Sberbank of Russia is 50% owned by the Russian government, which also has majority voting rights over it, giving it control. Slide from the annual report of Sberbank.

The position of the NZ Super Fund is that it is considering what to do next. He has processes to follow.

It’s pretty obvious what he has to do. BP has just shown the way by announcing its exit from its stake in the Russian oil company Rosneft.

Yes, Sberbank is more than Putin’s bank. Half of all Russian citizens have accounts with her. Many will not support the invasion of Ukraine.

But no responsible investor representing the New Zealand government can be in business with Putin at this time.

The NZ Super Fund’s position on excluding companies from its fund is largely based on the fact that they are not doing things the New Zealand government opposes, such as supplying tobacco or being involved in gross violations. human rights.

The NZ Super fund is a signatory to the United Nations Global Compact, which obliges it to do business only with companies that respect human rights and oppose corruption.

Russian President Vladimir Putin pictured in 2020.

Mikhail Klimentiev/AP

Russian President Vladimir Putin pictured in 2020.

Excluding a company like Sberbank is a last resort for the fund. He only does this after trying to engage with the company to change it.

He says it as follows: “We may also decide to exclude individual companies for serious violations of our responsible investment standards, such as the United Nations Global Compact, where we consider the commitment unlikely to be be effective due to the context of business operations or a lack of business responsiveness to the problem. When we exclude a business in this way, we make the exclusion and our reason public.

I think we can all agree that Putin’s Russia engagement didn’t work on Ukraine, which puts the fund in a tight spot.

He needs to withdraw his money from Sberbank. There is no alternative.

Women walk past the building on Lobanovsky Avenue in Kiev which was hit by a Russian missile on February 26.

Anastasia Vlasova/Getty Images

Women walk past the building on Lobanovsky Avenue in Kiev which was hit by a Russian missile on February 26.

The case is even more pressing than for KiwiSaver programs like ASB and Westpac to get rid of Sberbank, in which they also have stakes.

The ANZ, ASB and Westpac KiwiSaver programs also hold a small amount of Russian government bonds, helping to fund the war machine that crushes the free will of the Ukrainian people.

Remarkably, the latest disclosure of the ASB KiwiSaver program’s portfolio holdings appears to show that it even owns bonds issued by Russian state-owned Russian Railways, which international media say have been used to move Russian troops and supplies to facilitate the invasion of Ukraine.

The sale of Sberbank shares should be rather difficult at the moment.

This lack of willing buyers can pose a challenge for the NZ Super Fund.

Either way, expect to hear soon that the fund has decided your future NZ Super payments shouldn’t be partly funded by a warmonger-owned and controlled bank.