YOUR PORTFOLIO
The case for the defence
Russia ’ s invasion of Ukraine on 24 February 2022 highlighted the fragility of peace in Europe . Long taken for granted , it only took one dictator to escalate sabre rattling to a full military incursion to expose the illusion of a united continent . In investment terms , this has primarily focused minds on attitudes towards risk . Most investors accept the financial consequences of immediate withdrawal from doing business with Vladimir Putin ’ s Russia , but it has also forced some investors to reconsider their attitude towards certain assets that have largely been airbrushed out of the investable universe . Environmental , social and governance ( ESG ) considerations are now at the top of many investors ’ agendas and are being integrated into the processes of mainstream fund managers . There ’ s no place for defence stocks in any type of fund that hopes to be badged as ESG-friendly . However , Putin ’ s campaign has put the cat among the ESG pigeons . Whether or not you recognise a “ just war ”, most right-thinking people would agree that injured parties should be allowed to defend themselves . Russia ’ s invasion of Ukraine has not only reminded us of this fact , but sparked debate about whether it is appropriate to screen defence stocks out of ESG funds . Yet Jason Hollands , managing director of Bestinvest , thinks it is unlikely to cause much movement in the dial . “ While it is right to continually debate and challenge assumptions and principles , I think it highly unlikely that intentional ESG strategies would ever add such stocks to their portfolios ,” he says .
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