Public pension funds moving to divest from Russian markets

With sweeping sanctions leveled almost universally by western nations at the Russia, American states are likewise moving to divest public pension funds from Russian markets. So far, Connecticut, California, Colorado, New York and Illinois have made clear intentions to siphon money quickly from Russia.

“Russia’s unlawful invasion of Ukraine has led to unprecedented sanctions against Russian companies and individuals,” said New York State Comptroller Thomas DiNapoli, in a statement directing a review of the New York State Common Retirement Fund’s investments for divestment from all ties to Russia. Sanctions enacted over the last week have sent Russia’s economy into a free fall, substantially increasing the financial risk of any organization that has money tied up in the nation’s markets.

While administrators review steps toward divesting, DiNapoli ordered an immediate freeze on all purchases from Russian companies, “due to the situation’s unpredictability and the likelihood that conditions will deteriorate. This will ensure that the (pension) fund does not increase its minimal exposure to the Russian economy while completing its divestment review, consistent with my fiduciary duty,” he said. “This crisis has underscored major political and investment risks relating to President Putin’s unhinged, tyrannical foreign policy, leading to sanctions that have significantly hobbled Russia’s already weak economic growth.”

New York State Common Retirement Fund has an estimated $110.8 million in public equity investments including direct holdings and co-mingled funds in Russian companies, according to the statement.

“New Yorkers, including current and retired police officers, stand in solidarity with Ukraine and are proud to play a role in contributing to cutting President Putin and his enablers off from global financial markets,” said New York Comptroller Brad Lander. “It is our hope that the world’s response accelerates an end to aggression and a swift resolution that saves lives and supports the many people displaced by this violence.”

On the opposite coast, California Gov. Gavin Newsom ordered the state to divest all pension investments in Russian financial markets, equaling $1.5 billion of a total $970 billion distributed across three funds—California Public Employees’ Retirement System (CalPERS), California State Teachers’ Retirement System (CalSTRS) and the University of California’s retirement system.

“The California Constitution is explicit in the fiduciary duties that are required of us on behalf of the hundreds of thousands of Californians who have invested in these systems. These fiduciary obligations and our moral imperative before these atrocities demand that you act to address Russia’s aggressions and immediately restrict Russian access to California’s capital and investments,” Newsom said in a statement.

Newsom called on administrators of the funds “to leverage its sizeable global investment portfolio to sanction the Russian government,” according to the statement.

In Connecticut, State Treasurer Shawn Wooden announced the divestment of $218 million from Russian markets of the state’s $47 billion public pension Connecticut Retirement Plans and Trust Funds.

Wooden noted the funds’ Russian investments have declined since 2014—the year Russia annexed Crimea from Ukraine.

“The Ukrainian people are experiencing an assault on their freedom and suffering devastating human loss due to an unprovoked and unjustified attack by the Russian government. The world’s condemnation is clear, and economic sanctions have paralyzed the Russian economy,” Wooden said. “We cannot stand idly by as the humanitarian crisis unfolds and Russian markets crumble, and I cannot continue to invest these pension funds in a way that runs counter to the foreign policy and national interests of the United States.”

Elsewhere, the Denver Post reported Colorado’s Public Employees’ Retirement Association will divest $7.2 million from Russian markets. The St. Louis Post-Dispatch reported that Illinois Gov. J.B. Pritzker asked the state’s employee pension system to likewise move toward divestment from Russian assets.