Australian companies must immediately rethink their ties to Russian companies as the invasion of Ukraine continues, a leading shareholder advocacy group has said.
Days after Russian troops arrived in eastern Ukraine and war broke out in Europe, the Australasian Center for Corporate Responsibility (ACCR) said local businesses must do what they can to limit their financial exposure to the crisis.
The federal government has already added hundreds of Russian government officials and billionaire oligarchs, including President Vladimir Putin, to its list of sanctioned individuals.
Australia has also joined a wider effort to freeze assets and deny national banks access to international trade.
In a joint statement, released on Monday, Prime Minister Scott Morrison openly supported international measures aimed at “imposing significant costs on the Russian economy by disconnecting its main banks from the international financial system and disrupting trade and investment flows. Russians”.
In addition, the NSW government would sell $75 million of Russian assets held by the state investment fund, The Sydney Morning Herald reports.
As Australia officially tightens the screws on Russian investment, the private sector must step up efforts to divest Australian capital from companies linked to the Russian state and close allies of Putin, the ACCR said.
“The world has spoken, and the strategy now is to completely isolate Russia,” said Dan Gocher, ACCR’s director of climate and environment.
International titans are already turning their backs on state-owned companies.
BP revealed its decision to shed its 20% stake in Rosneft over the weekend, in a move that is expected to result in charges of around A$35 billion.
In a statement, BP Chairman Helge Lund said Russian military aggression had fundamentally changed BP’s position, meaning “our involvement with state-owned Rosneft simply cannot continue.”
“Australian businesses need to align” with the strategy set out by BP, Gocher said.
It is now up to Australian companies to “immediately review their relationships with companies owned or partly owned by oligarchs aligned with Russian President Vladimir Putin”, he added.
Some local actors have already expressed their support for the cause.
Talk to ABC News On Monday, Fortescue Metals Chairman Andrew Forrest said the company would pull out of planned hydrogen projects in Russia.
Even so, Australia’s relatively limited economic relationship with Russia means that any withdrawal of state or private capital will only complement an international effort.
Figures from the Department of Foreign Affairs and Trade show that Australia also lacks trade leverage.
In fiscal year 2019-20, Australian goods and services accounted for just 0.3% of Russian imports, ranking Australia 47th.
Australia also ranked 94th among Russia’s export destinations, with round-up deliveries to Australia accounting for 0.0% of the country’s outbound trade.
That said, some other exports to the region could impact Australia’s relationship with Russia: Morrison also said Australia would supply lethal munitions to Ukraine through NATO.