Highlights:

• The Russian invasion of Ukraine raised new questions for ESG investment and complicated existing trade-offs. For sovereigns, it showed that a good average ESG rating is not enough. Outright exclusion based on poor governance may become more popular.
• Finding alternatives to Russian gas can stand in the way of reducing emissions. Longer-term, accessing the resources for the green transition requires tighter links with countries with a patchy record on human rights.
• On the corporate side, mounting political pressure to improve ESG perception of the Defence Sector will face a challenging implementation. Most large players are selling to non-democratic countries exposing investors to significant reputational risk.
   

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