Analysis: Russian risk recalibration a wake-up call for investors | Reuters

Analysis: Russian risk recalibration a wake-up call for investors | Reuters

For funds undeterred in their investment choices by the killing of Saudi journalist Jamal Khashoggi or China's treatment of the Uyghurs, Russia's invasion of Ukraine is proving a wake-up call.

Buying into companies on the basis of environmental, social and governance (ESG) factors is one of the hottest trends in the fund management industry, attracting investments totalling more than $35 trillion by the start of 2020.

But for money managers from Boston to London the focus has largely been on companies, with governance risk largely ignored in decisions over whether to invest in a country itself.

China has denied allegations of abuses against the Uyghurs in southern Xinjiang. Saudi Arabia's government has said Khashoggi's killing was committed by a rogue group.

Now, as western banks and companies revisit hundreds of billions of dollars worth of exposure to Russia, more than half a dozen fund managers interviewed by Reuters said the Ukraine crisis was causing them to rethink how they assign country risk.