NZ Super Fund in business with Putin’s bank
The New Zealand Superannuation Fund is this country’s sovereign wealth fund, and it’s in business with the Russian Government.
It’s an extremely uncomfortable position to be in for the fund, which was set up in 2001 to cover some of the future cost of NZ Super.
The fund owns shares in Sberbank of Russia, Russia’s largest bank, which is now subject to sanctions from countries including the US and UK after Russia’s invasion of Ukraine.
Sberbank is an organ of the Russian government, which owns 50 per cent of its shares, and has an extra voting right, giving it absolute sway over it.
Sberbank answers to Putin. The NZ Super Fund answers to Finance Minister Grant Robertson, the second-most powerful minister in a free, democratic country which has condemned Russia’s invasion of Ukraine.
Over the Tasman, the New South Wales Government says it will drop A$75 million (NZ$80m) of Russian assets in one of its state investment funds.
The NZ Super Fund owns investments worth about $57 billion.
The fund’s shares in Sberbank were worth $9.3m before the invasion. Since the invasion Sberbank shares have fallen in value by just under 70 per cent.
This is both because of the impact of sanctions on the bank, and also because there are a lot more sellers than buyers. What Western pension fund wants to be in business with Putin?
The NZ Super Fund’s position is that it is considering what to do next. It has processes to follow.
It’s pretty obvious what it has to do. BP has just shown the way with the announcement that it will exit its stake in Russian oil company Rosneft.
Yes, Sberbank is more than Putin’s bank. Half of all Russian citizens have accounts with it.
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 broadly based around them not doing things the New Zealand government is opposed to, like supplying tobacco, or being involved in gross breaches of human rights.
NZ Super Fund is a signatory to the UN Global Compact, which require it to only do business with companies which uphold human rights and stand against corruption.
Excluding a company like Sberbank is a last resort for the fund. It only does it after it tries to engage with the company to get it to change.
I think we can all agree that engagement with Putin’s Russia hasn’t worked on Ukraine, which puts the fund in an awkward place.
It must get its money out of Sberbank. There is no alternative.