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One Year Into the War in Ukraine: Investor Actions Needed to Address Human Rights Issues

This marks the one year anniversary of Russia's invasion of Ukraine. We at Nia condemn the invasion and we stand strongly with the people of Ukraine as they continue to defend their homes, their sovereignty, and their communities. We join the U.N. in calling for peace. And, as we mark this anniversary, we cannot overemphasize the importance of the role of investors in the protection of human rights in Ukraine and across our planet.

The consideration of human rights has always been a critical element of socially conscious investing, originating with groups of nuns who have been organizing and bringing human rights values into investment decisions for decades. In fact, divestment from South Africa was first advocated in the 1960s, in protest against South Africa's system of apartheid, and yet was not implemented on a significant scale until the mid-1980s. Large investors including major universities divested in 1984 and the U.S. government followed with widespread sanctions in 1986. These investor actions and pressures led, in large part, to the dismantling of the apartheid system.

Investors have the same power to affect change in Russia and Ukraine. By raising our voices to our investment advisors, and choosing to divest from companies involved in or supporting the Russian economy, collectively we can leverage our assets, bank accounts, retirement savings and investment portfolios to express our concerns and actively reduce resources in Russia.

Just as climate focused investors have taken action – by divesting from extractive fossil fuel and mining companies, reinvesting those dollars into solutions focused companies, and by requesting that all companies assess and report on their Scope 1, 2 and 3 carbon emissions data – it’s time for investors to take action to stand up for human rights in Ukraine. Investors can remove from their portfolios, or divest from companies actively involved in Russia. Each of us can also ask for and require companies to provide transparency on any involvement, direct or indirect with Russia.

Just as twenty-seven European Union member states have aligned with the remarkable bravery and determination of the Ukrainian people via economic sanctions (voting for nine rounds of sanctions and all supporting Ukrainian ascension to the European Union), investors can show support as well by either divesting from companies that continue to do business in Russia, and/or by engaging with those corporations demanding human rights be prioritized over short term profits.

Recent reporting from the New York Times indicates “a year into the war, hundreds of Western businesses are still in Russia, including blue-chip and midsize companies from Europe and the United States. They are doing business despite Western sanctions and boisterous boycott campaigns pressed by Ukrainian officials, consumers and human rights groups.”

Another European study shows fewer than 9% of international firms have divested in Russia since the war began.

The question now for boardrooms, investment firms and individual stockholders across the world: When will investors flex their power to protect human rights in Ukraine?

Jeffrey Sonnenfeld and his team at the Yale Chief Executive Leadership Institute have created an index, grading companies based on their approach to Russia’s aggression. They report that more than 1,000 companies have altered their operations or left Russia as a result of its invasion of Ukraine. These companies curtailed their operations voluntarily, without being sanctioned, including household brands such as Etsy, and McDonald’s which closed 850 restaurants across the country. Other examples from the graded index are included in the table below:

What has not been reported by the Yale group (yet) are the companies that produce the components actually used in Russian weapons of war. Nia is a member of the Investor Alliance for Human Rights where we actively monitor and engage with those companies that are in violation of international laws, and present risks to human rights globally. Below we share a table listing companies found to be supplying components used by Russia as tools of war.

A recent report about the enabling of war crimes, written by the International Partnership for Human Rights and the Independent Anti-Corruption Commission, exposes additional companies that are making and selling components used in tanks, missiles and drones. U.S. and Internationally-made components that are used to carry out human rights atrocities by Russian forces have continued to reach Russia long after its full scale invasion of Ukraine, raising moral and ethical concerns for the companies involved, and for those investors in those companies.

While some companies are saying this is not intentional, we as investors can ask corporations for transparency in where they are selling and distributing their products. Components made by Infineon (a tech company not mentioned in Enabling War Crimes Report) were also found in Russian weapons. The company has denied selling to Russia or knowingly allowing their parts to be used by Russia for military weapons. Approximately one third of their sales are currently to China, which could be an issue, one where investors deserve more transparency.

Of course, restricting Russia’s access to such components would have an immediate effect on its war effort and ability to continue its aggression. Here is where investors can raise our voices. From communicating to these companies our stance on military weapons, to actively filing resolutions. As one example of actions investors can take, Akademiker Pension has filed a resolution with Carlsberg, asking the company to undertake human rights due diligence, and asking the board to report on the company’s efforts to respect human rights and labor rights in accordance with the United Nations Guiding Principles on Business and Human Rights (UNGPs), as well as to report on which, if any, human rights related financial risks the company has identified, and how it seeks to address these.

In the supporting statement the resolution notes that “companies that are operating (directly or through the value chain) in conflict-affected areas are expected to perform heightened human rights due diligence in light of the increased risk of human rights violation in these areas." Similarly, Friends Fiduciary has filed at Texas Instruments asking for a report on whether they are currently in violation of international laws.

We echo the recommendations in the Enabling War Crimes report, that businesses must enhance their own due diligence, must ‘know your customer’, and increase end-user surveillance to ensure their products are not being used in ways that do not align with their ethical and legal commitments. Just as we are holding companies accountable for monitoring and managing their Scope 3 emissions data, taking responsibility for where their products are being used globally is a key component of strong governance and ethical business practices. Ignorance as to a product’s end-user is neither a moral nor should it be a legal defense for involvement in war atrocities.

We at Nia make the call to investors to step away from the index in an effort to know what we own and to go a step further and proactively invest in those companies that hold both human rights and our planet in high regard. Research is actually supporting divestment from Russia as a solid financial strategy, with those companies that fully withdrew from Russia showing better financial returns than those who stayed and dug in. These reports are adding strength to values-aligned investment strategies. Knowing we get the economy we invest into, at Nia, we invest into those companies playing a key role in our transition to a sustainable, equitable and fair economy. For us, selecting companies whose business practices are proactively aligned with a world that prioritizes human rights over short term profits is essential. Engaging with those companies whose products are contributing to war efforts is also a needed strategy for these times. Join us.


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