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NSW to dump $75 million in Russian assets to protest against Vladimir Putin’s war


Experts said the $75 million investment posed a greater risk to NSW after ratings agencies cut Russia’s credit rating to “junk” status, meaning it is riskier and below investment grade.

NSW Labor has been calling for immediate divestment of Russian assets across all government investments since October last year and will question Mr Kean about the NSW Generations Fund during the first session of budget estimates on Monday.

The fund was set up in 2018 using $10 billion from the sale of WestConnex to repay debt and guard against intergenerational budgetary pressures.

Analysts last year warned the fund could place taxpayer dollars at risk after the government borrowed more than $10 billion to bolster the fund despite the state’s rising deficit, which was set at $19.5 billion in December. More spending and disruption due to the Omicron outbreak could push the figure higher.

Investment in so-called emerging markets like Russia, Saudi Arabia and Cayman Islands emerged in documents obtained by NSW Labor under parliamentary order last year.

Opposition treasury spokesman Daniel Mookhey said the NSW government needed to act swiftly, as the world accelerated moves to throw Russia out of the global financial system.

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“Putin’s debt should not be in the NSW investment portfolio [with his] army currently marching into Ukraine,” he said. “NSW should no longer try to profit from this regime run by warmongers”.

Former NSW parliamentary budget officer Stephen Bartos said governments should feel a sense of urgency about moving away from investments in Russia, both financially and ethically.

“That is entirely within the mandate of the Generations Fund to do that. This genuinely is one of those cases where doing the right thing and being a prudent risk manager are one and the same,” he said.

“Divesting is a good idea, even if at a loss because that will actually have the effect of reducing the value of shares in Russia.”

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Mr Bartos said it would be a positive outcome if NSW could start a sell-off of Russian assets and companies and “in our own tiny way assist in reducing the value of shares”.

ESG advisory expert Mary Delahunty said she questioned how the Russian economy met NSW Treasury Corp’s principles of stewardship to “integrate ESG factors into investment decision-making”.

“One would be forgiven for thinking that would have naturally excluded Russian investment, given the fund was created in 2018, and we had already seen a Russian incursion in Crimea in 2014.”

Assets commonly excluded by investment managers, in line with ESG principles include coal, tobacco and munitions. Industry analysts say similar pressures are likely to emerge for funds across the globe in relation to Russian assets.

AMP chief economist Shane Oliver said many funds would have some exposure to Russia within their portfolio.

“It’s the principle that matters here. If a national decision has been taken to penalise Russia, it stands to reason state investment in Russia would be reconsidered as well.“

Responsible investment advisor Pru Bennett will head the government’s review into the state’s investment funds. Mr Kean said the review, to be completed this year, would address social and environmental risks that could become long-term financial risks.

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