Stockholm (NordSIP) – Russia’s invasion of the Ukraine at the start of 2022 has sent the world into turmoil. From rising energy prices and inflation to refugees and general geopolitical chaos, the world of 2024 is distinctively different from what it was at the start of 2022.
Sustainable investors have never been shielded from these developments. From fixed-income markets to energy markets, the conflict has become the permanent backdrop upon which business is conducted. Now, a new sector appears to have been affected by these controversies: transportation and logistics.
DSV Operated in Russia
Over the last week, a scandal has been brewing among Nordic sustainable investors on account of their holdings of DSV, a Danish transport and logistics company – a competitor of DB Schenker. According to reports originally published by ShippingWatch, a specialist online publication covering the transport and logistics sector, there were instances of its services being used in Russia, in violation of its internal policies and possibly of international sanctions on Russia. The company appears to have accepted these claims and is taking the necessary steps to assert what happen and ensure it does not happen again.
“DSV has a clear policy that we do not transport to, from, or via Russia – apart from shipments involving medicine, pharma, or humanitarian aid. After looking into our shipments, we have unfortunately found that in a few cases, orders have been placed for the transport of cars from China to Russia, and that a subcontractor has transported clothing from Asia to Europe through Russia, in direct violation of DSV’s internal rules and guidelines. This is completely unacceptable, and we are investigating the matter with a view to taking the necessary personal consequences,” DSV told NordSIP via email.
“At the same time, we are tightening our internal procedures further to ensure that it does not happen again. Although there have been breaches of DSV’s internal rules, our investigations show that all international sanctions against Russia have been complied with,” DSV added.
In June 2023, DSV donated DKK 3.5 million worth of transport equipment to Ukraine’s armed forces. “I’m deeply moved by the resilience of the people of Ukraine as they go through this difficult time. Since the invasion, I’ve been proud to witness DSV come together across our global network. Our local branches have developed several initiatives to support Ukraine with donations of goods and services, and I’m grateful that we can continue to show our support for the country,” Jens Bjørn Andersen, Group CEO of DSV, said on that occasion.
Nordic Exposure
Beyond the fact that this is a Danish company, the sector has awakened to the story on account of the fact that DSV’s stock is held by several large Nordic investors. Denmark’s LD Fonde and Akademikerpersion hold DKK170 million and DKK483 million, respectively. Sweden’s Handelsbanken holds DSV stock in several of its funds, including the Handelsbanken Europa Selektiv, Handelsbanken Norden and its Handelsbanken Norden Index Criteria funds. Finland’s ELO and Ilmarinen each hold €4.85 million and €24million, respectively. Nordea also holds the stock via its European Enhanced, European Responsible Enhanced BQ, European Stars, European Stars Equity, Nordic and Nordic Stars funds. Norway’s sovereign wealth fund, NBIM, reports holdings worth of NOK11.8 billion in DSV.
LD Pension and Akademikerpersion have been engaging with DSV for a long time, and appear to have taken the lead on this matter.
“One might have had business activities that ended up on the wrong side of the Russian border, but as a freight forwarder, you are in control of whether or not you choose to enter Russia. DSV has clearly stated that they would not, which makes it understandably problematic that it now appears they have done so anyway. As investors, we obviously expect them to get this under control, and we look forward to receiving an explanation,” Anders Schelde, CIO of Akademikerpersion says.
“I’m not a lawyer, but it’s likely true that this isn’t a violation of sanctions. However, it’s clearly against the spirit of the sanctions, which are generally intended to avoid supporting the Russian war economy. Specifically, there is also a sanction with restrictions on Russian railways’ access to financial services in the West, so in light of that, a responsible company should not be supporting the railways’ revenue either,” Akademikerpersion Schelde adds.
