Russia shows the gap in ethical investment
Russian borrowers seem to have no trouble accessing capital markets, despite sanctions and international condemnation for the Russian government's alleged poisoning of the spy, Sergei Skripal, in the UK. But that shouldn’t surprise anyone. Despite the lip service paid to the idea of responsible investment, most investors are not so choosy.
The notion that investors should care what their money funds has gained ever more followers in recent years. The expanding panoply of thematic issuance accounts for a bigger wedge of business every year.
But despite the obsession with socially responsible investments (SRI), the market is still more than happy to provide financing to the most colourful of participants. While some wring hands over those who bought Russia’s latest bond, it’s nothing new.
There are plenty of borrowers, sovereign and corporate, that have raised billions on international markets with heavily oversubscribed order books — often executed in London — despite the various black marks against their names. The alleged poisoning of British citizens on British soil hardly seems like a deal-breaker when laid against the actions of some of Russia’s peers. Those who abandon Russia over the Skripal affair are as likely motivated by concern for their own reputations as they are by genuine ethical qualms.
Responsible, ethical approaches to investment could be a wonderful development for finance, but if they are to have a real impact and be more than empty virtue signalling, they must be robustly championed with consequences for those who turn a blind eye.
In a week when Australian public opinion turned on its own cricketers as never before for cheating, and following a decade of the public being sick to the back teeth of the shady side of Big Finance, what better time to broaden SRI principles beyond their quirky niche?
And as the UK is urged by its own government taskforce to make new strides in SRI leadership, what better place to start than the City of London — hub of global finance, not all of it squeaky clean.