Western politicians like to say the war in Ukraine is the clearest clash between good and evil that the world has seen for decades. From that viewpoint, businesses with millions of euros invested in ongoing operations in Russia have nowhere to hide.
“Leave this market flooded with our blood,” Ukraine’s President Volodymyr Zelenskyy demanded in a speech to the U.S. Congress on March 16. “All American companies must leave Russia.” He made the same point to German and French lawmakers, too.
Yet plenty of European and American firms are still operating in Russia under Putin’s rule. While some are feeling the heat of international condemnation, others insist they are right to stay.
Are these companies undermining the economic war effort and weakening sanctions designed to pressure Moscow to end the invasion? Have they decided to rake in the rubles to boost profits, whatever the cost to the people of Ukraine? Or are there morally sound — as well as financially convenient — reasons why boycotting Putin’s Russia would be the wrong approach to take?
How businesses and political leaders answer these question is likely to shape the long-term economic impact of the war — for Russia, Ukraine and the wider world.
Since the conflict began, more than 400 Western companies have pulled or suspended their operations in Russia, according to a Yale University tally. Some of the world’s biggest multinationals have been forced into very public, and sometimes embarrassing, U-turns after initially opting to keep their Russian links.
Dutch energy giant Shell purchased discounted oil from Russia, sparking a huge public outcry. Eventually, the company admitted it had been wrong, apologized and announced it would withdraw from Russian oil and gas. Similarly, French oil company TotalEnergies recently announced that it’s gradually closing shop in Russia, after its ties to Russian companies triggered a major public debate in France.
According to Bill Browder, head of the Global Magnitsky Justice Campaign, companies still operating in Russia “need to withdraw as soon as possible. If not, they should be boycotted in the West. Profits over national security is unacceptable.”
Yet for companies heavily invested in Russia, it’s not always that simple.
In some cases, businesses argue they have to stay because leaving would cause serious damage to innocent Russian people. That’s a legitimate consideration, according to Phil Bloomer, who heads up the NGO Business and Human Rights Resource Centre. “Businesses should avoid delivering substantive harm, such as hunger or anything of that nature to the Russian population,” he said.
Some Western agri-food companies are using this argument to remain open in Russia for now. German agri-chemical company BASF said it would resume deliveries of goods “necessary to avoid famine.” These include seeds, pesticides and fertilizers.
German chemical giant Bayer also said that it is maintaining vital business in Russia and Belarus. It won’t withhold “essential health and agriculture products from the civilian populations,” because this “would only multiply the war’s ongoing toll on human life.”
Firms that do cut their Russian operations still face a duty of care toward their workers — and to respect their rights, according to Anita Ramasastry, a member of the U.N. Working Group on Business and Human Rights. “Companies often make these decisions quickly,” she said, “without having gone through that internal process of thinking about the harms that they might cause as they leave.”
Danish beer giant Carlsberg is among those trying to square the circle. It has decided to stop selling its brand-name brews in Russia but will keep the Russian Baltika brewery “as a separate business, with the purpose of sustaining our employees and their families.” French supermarket chain Auchan and cosmetics group Yves Rocher both say they need to stay in Russia for the sake of their employees, suppliers and customers, despite attracting public scorn.
But claiming to care must not become an excuse to carry on making money, according to Antoine Madelin, from the International Federation for Human Rights NGO. “At this point, it’s not enough to claim you are staying to protect your employees or local populations,” Madelin said. “You need to provide public evidence that you have robust due diligence measures in place and that pulling out would do more harm than good.”
So far, only 9 percent of 208 surveyed companies operating in Russia and Ukraine have provided such public answers on their due diligence relating to the war.
As the conflict drags on, the calculus for businesses becomes more complicated. Companies staying in Russia for the longer term will have to grapple with human rights implications, as well as the immediate publicity storm.
For instance, the EU’s oil sector is still largely sanctions-free, but this market could easily find itself open to allegations that it is fuelling Putin’s war. Russia has been warned that it could face prosecution for alleged war crimes in Ukraine, and the legal risk of complicity potentially extends to businesses too.
Then, there are the purely practical considerations. One concrete problem is how companies can fund their Russian operations, now that the country’s financial system is almost decoupled from the West. Foreign businesses require Russia’s authorization to transfer assets abroad.
Transport logistics are also increasingly tricky, with air freight being heavily reduced and talk of European ports closing to Russian ships. The Russian legal system is now also seen as stacked against foreign businesses and investors.
“The courts are not independent,” said Leena Linnainmaa, chair of EU board members’ association ecoDa. Directors of foreign companies with Russian branches face “threats of even maybe 10 years’ prison sentence” if they fall foul of local regulations.
In the end, whatever the moral dilemmas, for many companies the reality of doing business in Russia may prove just too hard.
Gabriela Galindo contributed reporting.
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