Wisconsin treasurer calls on state to divest $90M in Russian assets

Wisconsin’s state treasurer is calling on the state’s retirement fund to divest its $90 million in Russian assets.

In a letter to the State of Wisconsin Investment Board released Monday, State Treasurer Sarah Godlewski said Wisconsin should “immediately identify any direct investments in Russia held by the Wisconsin Retirement System, the State Investment Fund and other state trust funds” and develop a plan to divest from them.

In a statement to Wisconsin Public Radio, a spokesperson for the fund said about $90 million, or less than 1 percent of the state’s $147 billion fund for public retirees, is linked to Russian assets. The fund does not directly hold any Russian stocks or bonds. Disinvesting is complicated by the fact that, according to the investment board’s statement, “over 80 percent of the exposure is held through accounts managed by external managers over which SWIB does not exercise investment discretion.”

Godlewski, who is also a Democratic candidate for U.S. Senate, said divestment is both prudent and right in the wake of Russia’s invasion of Ukraine. International sanctions put in place in the days after the invasion late last month cut off some Russian banks from the international banking system, froze funds in Russia’s central bank and personally targeted a long list of Russian oligarchs.

“The Russian ruble has already fallen at least 50 percent within the last month, and it’s going to continue to fall as more and more companies are pulling out of Russia,” Godlewski said in an interview with WPR. “We also have a moral obligation when we are seeing civilians losing their lives.”

Wisconsin’s pension fund for state employees is among the nation’s 10 largest, including more than 650,000 participants. Godlewski’s call comes as state legislatures across the country have taken steps to divest or encourage divestment of public pension funds from Russian holdings:

• California’s pension systems reportedly held some $1.7 billion in Russian assets late last month. The governor and a bipartisan group of lawmakers have called for divestment.
• In New York, pension systems for teachers and the New York Police Department said they would divest a combined $167 million in Russian holdings.
• Pennsylvania reportedly has up to $300 million in Russian investments and holdings in Belarus, a close Russian ally. The state pension fund has voted to divest those funds.

But even states that have taken steps toward divesting from Russian companies have found their progress stalled. Russia closed down its financial markets as the international sanctions put its economy in free fall. That has made it challenging for large investors to sell off their Russian assets.

It’s also not clear who would buy them. A spokesperson for Ohio’s School Employees Retirement System told the Columbus Dispatch that “the reality … is that there is currently no market for the sale of Russian securities.”

In its statement, the State of Wisconsin Investment Board said it is “monitoring the situation closely,” but that “finding willing buyers for these assets, or venues to transact on, remains difficult in these turbulent and illiquid markets.”

Despite these challenges, Godlewski said it’s important to take action quickly.

“Every day, we lose more and more money if we’re directly invested in Russia,” Godlewski said. “We’re only seeing the (Russian) currency continue to fall.”

Editor’s note: Wisconsin Public Radio is a service of the University of Wisconsin-Madison. Its employees belong to the Wisconsin Retirement System.