Russia is “uninvestable for the foreseeable future”, said Stephen Bird, chief executive of Abrdn, a statement of the obvious for a fund management group. If BP and Shell can ditch long-held investments and partnerships, Abrdn can certainly wave goodbye to the 0.5% of its assets that it currently holds in Russia. The money is the customers’ anyway.
The moral clarity around the moves by BP and Shell owed much, of course, to the fact that the duo were in bed in state-backed energy companies that are arms of the Kremlin – Rosneft and Gazprom, respectively.
The position of Centrica, owner of British Gas, now commendably trying to extricate itself “as a matter of urgency” from gas supply agreements with Gazprom, is different. The company wasn’t compelled to do anything, but is choosing to do so.
An open question, then, is how far the disinvestment principle should be pushed.
Note that Kwasi Kwarteng, the business secretary, did not distinguish between trade with Russian state-backed firms and general trade in Russia when he said on Twitter that “there is now a strong moral imperative on British companies to isolate Russia”. On that basis, he applauded Jaguar Land Rover as it followed Swedish group Volvo in halting vehicle deliveries to Russia.
To pick on spirits group Diageo, its last annual report trumpeted a sales increase in eastern Europe “mainly driven by strong growth in Russia”.
Should Diageo be in the business today of selling premium bottles of Johnnie Walker whisky to wealthy Russian consumers, and paying local duties to the Russian government in the process? Well, like JLR, it has paused exports, but the approach does not yet sound like a fixed policy.
To be clear, non-supply of consumer inessentials is a long way down the list of voluntary sanctions that western business could adopt, or would hurt the Russian economy. And a collapsing rouble, plus the increased freight costs, may make debate redundant anyway.
But shareholders and western consumers alike will expect thought-out positions sooner rather than later. Symbolism also matters. Almost everyone claims to have ESG (environmental, social and governance) principles these days; we need to know what they mean in practice.
MPs should bet on regulation
A glance at the 2021 numbers from Flutter, owner of Paddy Power and Betfair, might tempt one to cast cynicism aside and conclude that the gambling industry’s vows to clean up its act are getting somewhere.
Safer gambling measures were estimated to have cost “in excess of £90m” in revenues last year, said Flutter, warning shareholders that “improvements we have made, and will continue to make, will impact near term growth”.
Revenue from customers in the “higher value band” – the category where problem gambling is concentrated – has halved since 2019. These days the company tries to emphasise its focus on “recreational” customers, judging (surely correctly) that that is a better place to be in the long term.
Investors seemed surprised. Flutter’s stiffer “play well” policies weren’t the only reason for a subdued outlook for UK growth this year (the lockdown boom in online gambling is also clearly over), but they were a factor. Flutter’s shares fell 12%, despite the group’s adventure in the liberalising US market proceeding to plan.
For a wider picture on the industry’s self-reform approach, though, look at the other tale from the UK gambling sector on Tuesday: 888’s thumping £9.4m fine, the third highest from the Gambling Commission, for failings that can only be viewed as basic and glaring.
In one case, 888 placed a deposit cap of £1,300 a month on the account of an NHS worker who was known to the operator to be earning £1,400 a month. In another, a customer lost £37,000 in six weeks before 888 carried out common sense affordability checks.
Itai Pazner, chief executive of 888, expressed “regret” that “previous implementation of our processes failed to meet required standards in the UK” but the failures cannot be viewed as ancient history.
This happened in 2020, a time when the regulator had warned the industry about heightened risks during Covid. And 888 is supposed to be a serious company: it has been allowed to buy William Hill.
For MPs, who will soon be considering a government white paper on gambling reform, the moral ought to be clear: corporate expressions of good intentions are no substitute for strong and clear regulation.
