Financing the invasion of Ukraine

Mindful Money has been tracking these investments held by KiwiSaver and investment funds. At the end of September there were hundreds of KiwiSaver and investment funds with those holdings. Some divested before the invasion, but many have only divested over the past week. Only a few index funds still have investments, and most of those would sell if they could.

Divestment has had a major impact on the Kremlin and the companies that have helped finance the invasion. The value of the shares and bonds of major Russian companies has fallen by 80-99%, the value of the rouble has plummeted, and BP sold its 20% shareholding in Russian oil and gas producer, Rosneft. Divestment has helped de-legitimise Putin’s regime and contributed to economic and political pressure.

This highlights the power of divestment when undertaken at scale. For an individual invested in a listed company, selling their shares doesn’t make a difference. Someone else will buy them. But when the public acts collectively and demands action from their fund providers, there are real impacts. Around the world, people have demanded that their investment providers get out of Russian government bonds and the major Russian companies that are linked to the Kremlin. 

These impacts have also resulted in costs for investors. The exposure of New Zealand funds to these Russian assets has not been large so the losses will be manageable to the fund providers. It may be more difficult for those slow to divest to manage the embarrassment.