Canadian Pensions Take a Public Stance on Russia

BCI put out a statement this week that it's actively working to sell remaining Russian securities:

In response to the Russian invasion of Ukraine, BCI is actively working to sell the remaining Russian securities from our clients’ portfolios.

“BCI has not only been working to sell the Russian shares in our clients’ portfolios but also to have Russia removed from all global and emerging market indices,” said Gordon J. Fyfe, BCI’s chief executive officer / chief investment officer. “We don’t normally comment publicly on our investment activities, however given the egregious actions of Russia it is important to make an exception.”

BCI started selling down our holdings in Russian securities prior to the invasion, however trading in these securities has now ground to a halt, given international sanctions, trading restrictions, and Russia’s ban on foreigners selling Russian securities.  Regardless we will continue to work to sell the $107 million in Russian stock that remains.

BCI recognizes that holding Russian securities in our portfolio is not aligned with our values as an organization nor that of our clients and our hearts go out to the people of Ukraine. BCI is and will continue to comply with all Canadian sanctions and stands with the global financial community in our joint response to this evolving humanitarian situation.

It's extremely rare for BCI to take such a public stance on an ongoing conflict but Putin's war on Ukraine is so reprehensible on so many levels that the organization felt it needed to take a public stance.

Let me also state that I know Gordon Fyfe, he doesn't make public statements on investment strategy, ever, but he obviously felt compelled to let their views be known.

Another thing I can share with you, neither Gordon nor BCI believe in blanket divestment from oil & gas, they prefer engagement.

But the situation in Russia is beyond engagement, it's about human dignity and freedom and the right of Ukrainians to live in peace and security.

When engagement is futile, the only course of action left is divestment, especially knowing the entire world ex-China, Belarus, North Korea, Syria and Eritrea is against Putin and this invasion of Ukraine.

As with all wars, there's a humanitarian crisis going on as hundreds of thousands, if not millions of Ukrainians are being displaced, forcing them to leave their country or face Russian bombs, tanks and soldiers at home.

The statement clearly states, investing in Russian securities does not align with BCI's organizational values or that of its clients.

Note the $107 million BCI currently has in these securities represents a pittance in regards to its $200 billion portfolio but there's a much bigger message here.

And BCI isn't only divesting, it's also working to have "Russia removed from all global and emerging market indices" (MSCI and FTSE Russell will remove Russian listings from their indexes next week).

By the way, BCI isn't alone to take such a public stance on its Russian investments.

AIMCo also released a statement earlier this week stating it will divest from Russian securities:

In response to the invasion of Ukraine and the ensuing humanitarian crisis, Alberta Investment Management Corporation will divest all Russian holdings.

As Alberta’s investment manager, this decision is both values- and value-driven. It reflects a change in the price of geopolitical risk and sustained impairment to the underlying value of the respective companies. We have a fiduciary obligation to our clients to act in their best interests and we believe this decision aligns with our investment objectives, policies, and prudent investment of capital.

Our exposures fluctuate with market values and trading decisions. As of market close on February 28, 2022, AIMCo had less than $99 million in direct and indirect exposure to Russian securities, accounting for 0.06% of AIMCo’s more than $160 billion in assets under management. These holdings represent 0.16% of the entire $48.7 billion Public Equities portfolio and represent AIMCo-nominee holdings that are externally managed. Beyond public equities, AIMCo does not have any direct exposure to Russia.

We continue to divest all Russian securities as conditions permit, recognizing that at present trading in Russian securities has been curtailed by regulatory authorities. AIMCo also commits that it will not purchase Russian assets during the conflict or while financial sanctions are being applied to Russia or its leaders.

Evan Siddall, AIMCo's CEO, posted this comment Linkedin three days ago:

Today, IMCO put out a statement stating it is exiting Russian securities:

We are distressed by the recent and unjustifiable aggression we are witnessing by Russia against Ukraine. We are deeply concerned about this situation, and its impact on the well-being of people in Ukraine as well as global peace and stability.

We support the actions the Government of Canada and other governments around the world have taken to impose sanctions and other measures on organizations with close connections to the Russian Government and President Putin. We will ensure that IMCO fully complies with these measures.

We have actively engaged with our clients throughout this crisis. They have minimal exposure to Russia and therefore, we do not anticipate any significant direct or indirect impact on their portfolios.

As of March 1, 2022, IMCO had approximately $115 million in direct and indirect positions in Russian securities and currency, which represents 0.16 percent of our total assets under management. IMCO retains no positions in Belarus.

With the support of our clients, IMCO will exit its small Russian positions as soon as possible, recognizing that at present trading in Russian securities has been curtailed by regulatory authorities. Additionally, we will make no new purchases of Russian securities and we will take no positions in Belarus.

The entire IMCO team is keeping Ukraine in their thoughts, and we join the rest of the world in hoping for a swift and peaceful resolution to this terrible war.

PSP Investments also put out a statement today announcing it is divesting from Russian holdings:

Following Russia’s invasion of Ukraine and the ensuing sanctions imposed under the Special Economic Measures Act, in order to respond to the gravity of Russia’s violation of the sovereignty and territorial integrity of Ukraine, and grave human rights violations that have resulted, the Public Sector Pension Investment Board (PSP Investments) states that:

PSP Investments does not have material exposure to Russian investments and does not hold any private direct investments in Russia. The exposure that PSP Investments has is mainly through passive index replication activities and external investment manager activities. PSP Investments has taken steps as of late last week to divest of all its Russian investments. All residual positions will be written down to zero and PSP Investments is committed to exiting this market as soon as market conditions permit.

PSP Investments is deeply concerned about the humanitarian impact inflicted by this situation on the people of Ukraine. As part of our PSP Gives Back Program, PSP Investments will support the humanitarian relief efforts in Ukraine by partnering with the International Committee of the Red Cross. PSP Investments has set up a matching donation program and will match employee donations (up to C$2,000.00 per employee) toward Ukrainian humanitarian relief.  

OMERS put out this short statement on the crisis in Ukraine:

The situation in Ukraine is deeply troubling. We join the global community in condemning the actions of the Russian government and we fervently hope that a resolution will be found quickly to end this crisis. Russia is not an investment market for OMERS, nor do we hold any securities of Russian listed entities. We will not change this position so long as the attacks on Ukraine continue. OMERS will support government sanctions in solidarity with efforts to bring peace to the region and our hearts are with the Ukrainian people, there and everywhere. 

And HOOPP put out this statement on the crisis:

HOOPP is deeply troubled by Russia’s invasion of Ukraine and its implications for global stability. This humanitarian crisis is having a tragic impact on millions of lives. As a pension provider to healthcare workers, we are especially heartbroken to hear of reported attacks on civilian targets such as hospitals.

In response, we are joining other investors in putting an exclusion on Russian investments for the time being. HOOPP has no direct exposure to Russian assets and this was the case even before the current crisis.

HOOPP does not generally discuss our holdings but we felt it was important to share this information. We stand in solidarity with the global community in taking what action we can in response to this crisis.

Ontario Teachers' Pension Plan put out this statement on Ukraine (March 4th):

Ontario Teachers’ is deeply concerned about the humanitarian crisis in Ukraine which comes at an already turbulent time.

Ontario Teachers’ is not a direct investor in Russia, and we have no plans to be while Russia occupies Ukraine.  We support the sanctions imposed by governments and are working with our portfolio companies to navigate compliance.

Our hearts and minds are with the people of Ukraine, their families and friends.  We join others in calling for peace to be restored.

CAAT Pension Plan released this statement on the crisis in Ukraine (March 7):

CAAT Pension Plan is deeply concerned about the humanitarian crisis in Ukraine. CAAT has no direct investments in sanctioned Russian companies, and we have no plans to add direct Russian exposure at this time. CAAT supports the sanctions imposed by governments to bring peace to the region. Our thoughts are with the people of Ukraine, their families and friends.:

University Pension Plan Ontario (UPP) also put out a statement on the crisis in Ukraine and Russian investments (March 7):

UPP is deeply concerned about the hostile events unfolding in Ukraine and the impact on the Ukrainian people. Our Trustee, Alan Jette, and CEO, Barb Zvan, were among the business leaders to issue an open letter to the Government of Canada in support of stricter sanctions against Russia and its leaders, and stronger humanitarian efforts on the ground and for those seeking asylum.

UPP has no direct exposure to Russian assets and, like other investors, have put an exclusion on Russian investments. We have a very small indirect exposure – less than 0.2% of assets under management – through a subset of external managers. We are in active discussions with those managers to ensure continued compliance with global sanctions and trade restrictions and understand our options. We have made our position clear – breaches of international law have no place in UPP’s portfolio.

We stand with the people of Ukraine and the Canadian business community in taking what action we can on this crisis. We remain hopeful for an immediate and peaceful resolution.

Notice, in all these cases, Russian securities represent a pittance (or zero) of the total portfolio but these large Canadian pensions still decided to take a public stance and release their own statement decrying this war, exiting from Russian securities (as conditions permit) and showing their support for Ukrainians in Ukraine and their extended families all over the world including here in Canada.

Was it their clients that pressured them to release these statements? Maybe or maybe they just felt it was the right thing to do during these dark days.

And these are very dark days for Ukraine, Europe, Russia and the world.

What worries me the most now is how Putin will respond as he is increasingly isolated from the rest of the world. Will he back down or double down and maybe even invade Poland or another NATO country? 

I know it sounds impossible but I was surprised he invaded Ukraine, he badly miscalculated the global response or perhaps he didn't and just doesn't care.

But even Putin has to reflect on the toll these economic sanctions will take on his country.

He has to make a decision, does he want Russia to go back to the USSR days and be shunned by the global economy or does he want Russia to prosper over the long run, long after his death. 

Right now, the Russia ETF (RSX) tells you what the world thinks of the Russian economy and its future prospects:

There is literally only one man in the world who has the power to change this but he has dug himself in a corner and the world is waiting for him to stand down and find a peaceful resolution to this escalating crisis.

I'm worried but remain hopeful that a peaceful resolution can be achieved.

The alternative is just unfathomable, so let's all pray that cooler heads prevail in Russia and Putin does the right thing and stands down after negotiating some security terms he wants (to save face).

If this means that Ukraine can never be part of NATO as long as Putin is in power, then that might be a small price to pay to ensure the country and its residents can live in peace.

Below, Ian Bremer, Eurasia Group founder & president, discusses why Putin's Ukraine invasion is 'dramatically worse for Russia’s strategic position in Europe'.

And moving scenes as thousands of Berlin residents showed up at the central train station with sign boards offering refugees fleeing Ukraine a place to stay.