Ukraine war pushing investors to take a closer look at their portfolios

Over the last few weeks, asset managers and pension funds both have pledged to divest their Russian holdings because of the humanitarian crisis happening in Ukraine.

The war in Ukraine is forcing investors, especially those who prioritize environmental, social and governance (ESG) factors, to take a closer look at the stocks and other assets they hold, whether individually or through funds.

“I hope we see more investors connecting the dots on value and values,” said Christie Stephenson, executive director of the Peter P. Dhillon Centre for Business Ethics at the UBC Sauder School of Business, in an interview.

Over the last few weeks, asset managers and pension funds both in Canada and elsewhere have pledged to divest their Russian holdings because of the humanitarian crisis happening in Ukraine.

“This crisis is an ESG investing case study happening in real time,” Stephenson said.

It also demonstrates that money managers need to pay more attention to issues around injustice and the social and political climate of different regions when deciding on what assets to hold, she added.

Portfolio managers are now fielding questions from average investors about their direct and indirect exposure to Russia and about which sectors might be better choices at this time, adding new scrutiny to existing ESG standards.

In an interview, Ryan Bushell, president and portfolio manager at Newhaven Asset Management, said he expects to see natural gas infrastructure providers viewed much more positively.

Conversely, technology names, which have previously been ESG favourites, are likely to be evaluated further given the destruction of capital that has occurred as of late, he explained.