Tag: Ukraine

The great anti-ESG backlash

Mary Pat Campbell

Link: https://thespectator.com/topic/great-anti-esg-backlash/

Excerpt:

The ESG story starts in 2004, when the three-letter acronym appeared in a UN report arguing for environmental, social and governance considerations to be hardwired into financial systems. Since then the term has been on a long but rapidly accelerating journey from NGO-world obscurity into the financial mainstream and subsequently the political limelight, prompting strong reactions from a chorus of prominent figures. Elon Musk calls it “a scam.” Peter Thiel says it’s a “hate factory.” Warren Buffett describes it as “asinine.”

Unsurprisingly for a piece of UN jargon that has become part of the political cut and thrust, “ESG” is often used to mean different things. Properly defined, it refers to an investment strategy that factors in environmental, social and corporate governance considerations. That might mean not investing in oil and gas companies, for example. Or it might mean only investing in companies that have a stated commitment to diversity, equity and inclusion. As it has grown in infamy, the acronym has also come to refer not only to investment products billed as ESG, but to other practices through which investment firms use their customers’ money to push political ends. For example, your pension may not be invested in an ESG fund, but the manager of that money may still be using stocks owned on your behalf to pursue political goals. A third, even broader, meaning is as a synonym for woke capitalism: a broad catch-all for big business’s embrace of bien pensant opinion, particularly on the environment.

….

This win-win rhetoric has been the rallying cry of the ESG crowd on what has looked like an unstoppable march. Make money and do good: who could possibly object? Millions have bought into this seductive logic. Globally, more than $35 trillion of assets are invested according to ESG considerations, an increase of more than 50 percent since 2016. From 2020 to 2022, the size of ESG assets in the United States grew by 40 percent. According to an analysis by the asset manager Pimco, ESG was mentioned on just 1 percent of earnings calls between 2005 and 2018. By 2021, that figure had risen to 20 percent.

….

If the anti-ESG movement has the wind in its sails, that’s in large part thanks to last year’s tumultuous geopolitical events and economic trends, foremost among them the war in Ukraine. The Russian invasion has transformed the ESG debate in two ways.

First, it has underscored the ethical dilemmas ESG champions would rather ignore. For example, many ESG funds rule out investment in weapons manufacturers. Is it really ethical to deny capital to the firms producing the material Ukraine needs to survive? Indeed, the socially responsible position is arguably the exact opposite.

Second, it has transformed the energy conversation in a way that has made many more of us acutely aware of the importance of cheap, abundant and reliable energy — and conscious that it cannot be taken for granted. In other words, each of us is a little more like Riley Moore’s West Virginia constituents, who don’t have much time for net-zero grandstanding given that they will be the ones who pay a heavy price for someone else’s pursuit of feel-good goals. What has always been true is becoming clearer: a financial system that starves domestic energy producers of capital not only hurts those whose savings are being used to pursue political ends, but ends up as a de facto tax on US consumers in the form of higher energy costs. ESG, says Goldman Sachs’s Michele Della Vigna, “creates affordability problems which could generate political backlash. That is the risk — political instability and the consumer effectively suffering from this cost inflation.”

Author(s): Oliver Wiseman

Publication Date: 22 Dec 2022

Publication Site: The Spectator

Price of Crude Jumps as EU Foolishly Doubles Down On Sanctions

Mary Pat Campbell

Link: https://mishtalk.com/economics/price-of-crude-jumps-as-eu-foolishly-doubles-down-on-sanctions

Graphic:

Excerpt:

“This is surely unworkable – a carve out for Hungary, which allows its refineries to enjoy sky rocketing margins on sales elsewhere in the EU because of their access to Russian crude. It’s almost laughable,” said Jeremy Warner.

It seems the carve out for Hungary was “workable” after all, with predictable results.

Russia, China, Hungary, and energy producers are the beneficiaries of these terribly counterproductive sanctions.

This is my “Hoot of the Day” but it’s early. I may easily need bonus hoots. 

Author(s): Mike Shedlock

Publication Date: 31 May 2022

Publication Site: Mish Talk

A Resilient Future

Mary Pat Campbell

Link: https://theactuarymagazine.org/a-resilient-future/

Graphic:

Excerpt:

If we consider how risk events unfold in reality, they usually occur through a sequence of interacting factors (see Figure 1). For example: A control does not quite work as intended because the usual supervisor is not available, and coincidentally a staff member has unintended access to a system from which they are able to extract personal information. On any other day, those conditions might have been different and resulted in another outcome. The reality, therefore, is that risks emerge as a result of a complex series of interactions among a large number of factors, and small changes in conditions can lead to significantly different risk outcomes.

Risk events also often involve active participants who learn and adapt their behaviors accordingly. Cyber is a good example—the attacker generally is trying to outthink their adversary and stay one step ahead. All of this means that past performance is not necessarily a reliable predictor of the future. There are too many things that can be subtly different, leading to hugely different outcomes.

Author(s): Neil Cantle

Publication Date: May 2022

Publication Site: SOA

Illinois Pension Funds Are Slow To Pull Out of Russian Assets

Mary Pat Campbell

Link: https://www.bettergov.org/news/illinois-pension-funds-are-slow-to-pull-out-of-russian-assets?eType=EmailBlastContent&eId=55511662-b854-49ee-8d24-b2010db00a33

Graphic:

Excerpt:

Despite strong rhetoric from Gov. J.B. Pritzker and other top state officials demanding public pension funds divest more than $100 million in Russia-based assets, state lawmakers now say they won’t act until the Fall veto session.

A key legislative proposal to force the pullout in the wake of the Russian invasion of Ukraine died in a Senate committee awaiting a vote.

Senate President Don Harmon, D-Oak Park, declined to be interviewed for this report, but his staff suggested the Senate had too little time before the session closed on April 9. The House bill — which passed by a vote of 114-0 on April 5 — was never taken up in the Senate chamber.

….

Using pension investment decisions as a way to prompt social change has long been controversial. In the past, Illinois funds have divested from companies and funds related to Sudan, Iran and businesses that boycott Israel following direction from lawmakers.

The Illinois State Board of Investments creates a prohibited list of companies for the funds to consider. The most recent list does not contain companies or funds connected to the Russian invasion.

“How, as a society, should we think about our pension systems assets?” Amanda Kass, Associate Director of the Government Finance Research Center at the University of Illinois – Chicago, asked. “I also see this kind of scrutiny of investing in Russian assets as part of this larger movement.”

Author(s): Jared Rutecki

Publication Date: 5 May 2022

Publication Site: Better Government Association

A Guide To The Public Pension Funds Divesting From Russia

Mary Pat Campbell

Link: https://www.forbes.com/sites/lizfarmer/2022/03/11/the-pension-plans-divesting-from-russia/

Excerpt:

As economic sanctions against Russia for its invasion of Ukraine spread, state and local public pension plans are looking at selling off their Russian-related assets and some are already doing so.

Lawmakers in at least a dozen states are pressuring their pension funds to divest from Russian-related investments. Divestment isn’t likely to have much impact on the funds themselves as Russian-domiciled investments make up less than 1% of most (if not all) state portfolios. But collectively, it sends a message. For example, California’s CalPERS is the largest pension fund in the world and it alone holds nearly $1 billion in Russian assets.

However, it’s likely that at least some (if not all of) these funds will be selling at a loss. Here is a snapshot of what’s happening across the U.S.

Author(s): Liz Farmer

Publication Date: 11 March 2022

Publication Site: Forbes

New York pension money ‘held hostage’ by Vladimir Putin, Russia

Mary Pat Campbell

Link: https://nypost.com/2022/05/14/ny-pension-money-held-hostage-by-vladimir-putin-russia/

Excerpt:

New York employees and taxpayers are unwittingly financing Russian companies and the oligarch pals of Vladimir Putin with at least $519 million invested in assets now frozen by the war-mongering dictator, The Post has learned.

City and state pension systems have pledged to sell off the holdings in protest of Russia’s assault on Ukraine, but Moscow has prohibited foreign investors from dumping the stocks.

“Putin is a thug and he’s holding our money hostage,” said Gregory Floyd, a Teamsters union leader and trustee of the New York City Employee Retirement System, NYCERS.

New York City’s five pension systems – covering teachers, cops, firefighters and other city employees – have invested a total $284.5 million in 33 publicly traded Russian stocks, according to records released to The Post by city Comptroller Brad Lander’s office. 

On Feb. 25, the market value of the Russian assets was $185.9 million, nearly $100 million less than the purchase price, the latest available records show.

Author(s): Susan Edelman, Thomas Barrabi

Publication Date: 14 May 2022

Publication Site: NY Post

U.S. Insurer Exposure to Russia, Ukraine, and Oil/Gas Companies Declines from 2020 to 2021

Mary Pat Campbell

Link: https://content.naic.org/sites/default/files/capital-markets-special-reports-Russia-Ukraine-Oil-Gas-YE2021.pdf

Graphic:

Excerpt:

Total Russian and Ukraine sovereign and corporate debt was $813.3 million at year-end 2021,
representing 97% of total exposure; the remainder comprised $28.8 million in stocks (see Table 2).
While life companies accounted for the majority of the bond exposure at $683.9 million (or 84% of total
Russia and Ukraine bonds), property/casualty (P/C) companies accounted for almost all the Russia and
Ukraine stock exposure at $28 million. About 90% of U.S. insurers’ exposure to Russia and Ukraine
bonds and stocks was held by large companies, or those with more than $10 billion assets under
management.

Author(s): Jennifer Johnson, Michele Wong, Jean-Baptiste Carelus

Publication Date: 14 Apr 2022

Publication Site: NAIC Capital Markets Special Reports

Mortality Angle of the Russian/Ukrainian Conflict: Bad Even Before Pandemic

Mary Pat Campbell

Link: https://marypatcampbell.substack.com/p/mortality-angle-of-the-russianukrainian?s=w

Graphic:

Excerpt:

It may not be fair to throw Finland in there, but if the excuse is hard-drinking and being northerly, Finland has that in excess, and they are beating all those other countries in life expectancy. So that’s not the difference.

Note that all the ex-Soviet states except Russia and Ukraine also had the post-USSR fall from 1989-1994… but started their mortality improvement in 1994, as opposed to a decade later.

Poland started doing well the moment communism went away. Isn’t that interesting?

But I want to note that Ukraine and Russia are lagging the comparable countries hugely. To be sure, Russia is huge, and includes Siberia, which is not the most congenial of locations. But Ukraine doesn’t have the excuse of Siberia.

Both places, in short, suck when it comes to mortality.

Author(s): Mary Pat Campbell

Publication Date: 27 Feb 2022

Publication Site: STUMP at substack

No Ordinary Panic – Bank Run in Russia

Mary Pat Campbell

Link: https://www.city-journal.org/russian-bank-run-is-no-ordinary-panic

Excerpt:

The war in Ukraine and subsequent international sanctions have triggered a bank run in Russia. But this is no ordinary run—it may become a run on the central bank itself, one that holds important lessons for introducing central bank digital currencies.

Reports show Russians lining up at ATMs to withdraw their cash. For now, the run is largely driven by fears of withdrawal limits and the anticipation that credit cards and electronic means of payments will cease to function. If that happens, cash at hand is the better alternative. For that scenario, central banks know what to do: provide solvent banks with plenty of liquidity against good collateral, as Walter Bagehot recommended.

But will that be all? As Western countries freeze the Russian central bank’s reserves and limit the ability of banks to transact internationally, the exchange rate of the ruble has collapsed, falling by more than 40 percent. Prices for ordinary goods may begin to rise, perhaps dramatically so. If that happens, then rubles would no longer be a good store of value. Russians may seek to convert them into foreign currency, but that’s hard to do with the current sanctions. Consequently, they may start to hoard goods instead, dumping their cash as they go along. The situation would no longer be a run on specific goods, but a run away from fiat money and toward goods—a run, in other words, on the central bank.

Author(s): Linda Schilling, Jesús Fernández-Villaverde, Harald Uhlig

Publication Date: 7 Mar 2022

Publication Site: City Journal

AFSCME asks state board of investment to divest holdings with Russia ties

Mary Pat Campbell

Link: https://www.wandtv.com/news/afscme-asks-state-board-of-investment-to-divest-holdings-with-russia-ties/article_78c20944-9e7c-11ec-90ff-0f1777a90bee.html

Graphic:

Excerpt:

As the Russian invasion of Ukraine continues, the AFSCME union in Illinois has asked the state board of investment to divest all holdings in assets tied to Russia. 

A letter from the executive director of AFSCME Council 31 was sent to Illinois State Board of Investment Chairman Terrence Healy. Council 31 Executive Director Roberta Lynch referred to the invasion as a “genocidal slaughter of civilians.” 

….

The state investment board governs investment policy for the State Employees Retirement System, as well as to other Illinois public pension funds that AFSCME members participate in.

Publication Date: 7 Mar 2022

Publication Site: WAND

Mortality Angle of the Russian/Ukrainian Conflict: Bad Even Before Pandemic

Mary Pat Campbell

Link: https://marypatcampbell.substack.com/p/mortality-angle-of-the-russianukrainian?utm_source=url

Graphic:

Excerpt:

These are awful trends. There’s nothing to caveat. Yes, Ukraine’s life expectancy is a little bit higher, but these numbers are awful, and yes, there was a cratering of male life expectancy after the collapse of the Soviet Union.

I will note that there was a general slide from the early 1960s until the early 1980s… a run-up for some reason (falsifying data?), and then absolute cratering. That’s just hideous.

Dropping about 5 years over a 5-year period is a horrible decrease.

There has been a recovery since 2004, but that life expectancy is still very low compared to other European countries, even other Eastern European countries, as we’ll see below.

Author(s): Mary Pat Campbell

Publication Date: 27 Feb 2022

Publication Site: STUMP at substack

Ukraine raises retirement age for women to 60 years old

Mary Pat Campbell

Link: http://www.xinhuanet.com/english/europe/2021-04/02/c_139854924.htm

Excerpt:

The Ukrainian government has raised the age of retirement for women to 60 years old since April 1 this year.

The change was due to the law on raising the retirement age for women from 55 to 60 years old, which was passed by the Ukrainian Parliament in 2011.

Now in Ukraine men and women retire at the same age.

The Ukrainian authorities explained that the increase in the retirement age for women was to mitigate the negative consequences of the aging population, and reduce the deficit of the Pension Fund of Ukraine, which at the end of 2020 reached 13.2 billion hryvnia (474.5 million U.S. dollars).

Publication Date: 2 April 2021

Publication Site: Xinhua