May 25, 2022

StrategisChhr

Skillful Business Crafters

As New York And N.H. reduce business ties to Russia, Mass. weighs doing the same

The Baker administration is beginning to sketch out an executive order that could change how Massachusetts state government interacts with Russian businesses, Gov. Charlie Baker said Monday after a handful of governors took action this weekend to stop doing business with Russian companies or to stop promoting Russian products.

As the Russian invasion of Ukraine continues, governors in New York and New Hampshire have moved to sever or reduce ties between their states and the regime of Vladimir Putin. New York Gov. Kathy Hochul signed an executive order Sunday barring the Empire State from doing business with Russian entities and New Hampshire Gov. Chris Sununu on Saturday ordered his state’s liquor stores to remove Russian spirits from their shelves.

“We’re taking a look right now at what an executive order might look like with respect to those enterprises who do business with the commonwealth who need to be Russian in their origin,” Baker said Monday after a meeting with Senate President Karen Spilka and House Speaker Ron Mariano. “I know I speak for the lieutenant governor and the speaker as well as the Senate president when I say I share the concern about shutting down some Russian immigrant family that’s been here in Massachusetts for years and runs a business that may have some sort of Russian overtone.”

The governor added, “But we are absolutely taking a look at our contracts and trying to determine if, in fact, we do have opportunities or possibilities associated with those contracts that involve Russian companies.”

Baker did not directly answer when asked if any vendors or companies that might be affected by such an order had been identified, saying that his administration “just started looking” through the list of about 100,000 entities that do business with the state.

Baker also said Monday that he is willing to do “everything we can” to help any refugees from Ukraine settle in Massachusetts.

“This is not the first time the Ukrainian people have had to deal with Russia and the Soviet Union, and they’re an enormously tough and patriotic community,” the governor said. “And if we have an opportunity here to help some of those who’ve been displaced, we’ll do everything we can … And I’m sure we have plenty of support from my colleagues here in the Legislature to help make sure we pay for whatever we need to pay for.”

Spilka backed Baker up on that point, telling reporters that the Legislature included $12 million for Afghan refugees and $8 million for Haitian refugees in last year’s American Rescue Plan Act spending bill.

“If need be, we can do some for Ukrainian [refugees] as well,” she said.

Spilka said her “heart breaks for the Ukrainian people. It was horrible watching the news this past weekend … seeing families torn apart and homes destroyed and hearing about the fatalities already inflicted by Putin.”

The House Republican Caucus was circulating a letter to all House and Senate members Monday afternoon to gather support for asking Treasurer Deborah Goldberg to conduct a review of the state pension fund’s portfolio and to immediately divest any holdings tied to Russian companies.

“By invading Ukraine, Putin has shown a blatant disregard for the basic principles of freedom, sovereignty, and respect for international law. Continuing to invest our state pension funds in Russian companies constitutes tacit approval of Russia’s deplorable actions,” the caucus wrote in the letter, which is open for signatures until 10 a.m. Tuesday. “Divesting our holdings in these companies, however, will send a clear message that the Commonwealth condemns Putin’s actions and supports the people of Ukraine, who have inspired the world with their incredible acts of heroism by standing firm against Russian aggression.”

Since the invasion of Ukraine, Sen. Walter Timilty has also filed legislation that would direct the state pension fund to divest all holdings in companies with business operations in Russia.

“While PRIM owns no currently sanctioned securities, we will continue to closely monitor the situation as we understand that the conflict has increased market volatility and geopolitical impacts remain unknown. With that said, PRIM is well positioned to navigate these volatile markets,” Pension Reserve Investment Management Executive Director Michael Trotsky said.

Trotsky said that while the state has no investments impacted by U.S. sanctions against Russia, it does have a $140 million “exposure to Russia.” That is less than 0.2 percent of the roughly $104 billion fund.

The full divestment of any type of funds invested by PRIM would require an act of the Legislature, and all divestment bills filed this session before last week had been referred by Democratic leaders for further study, essentially a dead-end for legislation.

Goldberg generally does not support the concept of divestment, most recently pushing PRIM towards “shareholder activism” when it came to investment in fossil fuel companies through the adoption of a policy that directs fund managers to vote against corporate directors of companies that don’t adhere to the goals of the Paris Climate Agreement.

Goldberg has in the past supported legislation to divest pension funds from gun manufacturers.

Rep. Patrick Kearney, a Scituate Democrat, has filed separate legislation proposing to ban the purchase and consumption by “any and all consumers” of products made in Russia.

https://www.wbur.org/news/2022/03/01/massachusetts-governor-baker-russia-executive-order-review