We are almost six months into Russia’s full-scale and unprovoked war against Ukraine. A total of 28,423 crimes of aggression and war crimes have been registered in Ukraine since the Russian invasion started on February 24, 2022, according to the Ukrainian Prosecutor General’s Office. While Ukrainians live with a constant death threat from day to day, international business has apparently left the war far behind.
In the early days of the war, many international businesses came under pressure to leave Russia. While taking a stance in response to the public’s requests was high on their agenda in March and April, the internet was overflooded with companies’ statements every day. Unfortunately, it was the last time the public heard from most of them about their intention regarding business in Russia.
Only those multinationals whose activities were affected by the sanctions in May-July responded with more recent statements. The rest of the companies, even those that made a public statement in the early days of the war, preferred to keep silent if not being asked for an update by the journalists. This is not surprising, since most of the companies still haven’t completely pulled out from Russia.
Silence is the preferred communication mode for most companies that keep doing business in Russia at a full or limited scale. According to the KSE Institute data as of the end-July 2022, some 1179 companies continue doing business as usual or operate at a smaller scale in the aggressor country. The B4Ukraine analysis of these companies’ public communications shows that 8 in 10 companies have kept silent about keeping operations in Russia.
Only 2 in 10 companies (258 out of 1179) made some sort of public communication about their decision to remain in Russia. And even those few statements were not always a result of high corporate responsibility. In some cases, companies were made to break the silence by the media, their employees, or their customers. For example, Germain retailer METRO didn’t speak up about the future of its Russian business at all until the Ukrainian division of the German retailer appealed to the management to close the business in Russia.
To limit the reputational damage, in their statements, most of the multinationals that remained in Russia but didn’t keep silent took two predominant approaches. Some of them focused not on the remaining operations in Russia but on the ones that they were cutting (usually, these were marketing and advertising expenditures as well as new investments). However, in some cases, even this angle didn’t compensate for keeping the rest of the operations in the aggressor country. Thus, some companies practiced another approach – they combined support for Ukraine with silence about their business in Russia. For instance, Philips (Netherlands), which is still selling its medical equipment in Russia, stated its support of Ukraine solely. Its spokesperson talked about the company’s ongoing activities in Russia only in response to media inquiries.
Though just a few hundred companies informed the public about their decision to stay in Russia, even fewer – only 1 in 10 companies (137 out of 1179) – also explained the reasons behind it. In their explanations, the multinationals usually referred to one or several of the five excuses: provision of essential goods, protection of employees, cutting operations as the law prescribes, fulfilling existing contracts, and continuing operations while they are legal.
Provision of essential/critical/basic goods to the Russian people is one of the most popular excuses. It was used by 27% of the companies who commented about their presence in Russia. This justification is widely used by international companies operating in FMCG (Nestle, Procter & Gamble, Auchan), food & beverages industry (Cargill, Barilla Group), pharma, and healthcare (Pfizer, Sanofi).
Being quite vague, the essentiality claim raises plenty of questions and needs to be investigated case by case. For example, a German multinational pharmaceutical and biotechnology company Bayer stated that, as a response to Russia’s invasion of Ukraine, it stopped all spending in Russia and Belarus that is not related to supplying essential products in health and agriculture. “We have an ethical obligation – in every country we operate in. Withholding essential health and agriculture products from the civilian populations – like cancer or cardiovascular treatments, health products for pregnant women and children as well as seeds to grow food – would only multiply the war’s ongoing toll on human life,” it said.
However, Bayer is not the only producer of seeds in Russia, as there is also a German company BASF operating in Russia. And while BASF provides necessary seeds that Russia does not produce itself (sugar beets, potatoes, sunflower, corn seeds), Bayer provides seeds of melon, pee, buckwheat, and pears – cultures that seem far less essential. Moreover, according to agrarian media Agroru, 92% of grain seeds are grown in Russia, so the country will not be left without food even without Bayer.
Similarly, the irreplaceability and, thus, the essentiality of Bayer’s medicine doesn’t stand up to criticism. Some of its meds, like Alka-Seltzer hangover relief tablets, are not actually essential. Others have local generics and analogs. For example, Bepanten cream has three analogs on the Russian market.
Provision of jobs and employer’s responsibility is the second most popular excuse with 20% of the companies using it. Like JTI, for example. The company said: “The Group remains committed to its 4,000 employees in Russia, including to secure their employment.”
Or the manufacturer of insulation Rockwool, which stated: “There are of course many considerations, above all else, our employees and their families. If we withdraw from Russia, it will first and foremost punish our own people and put at risk the livelihoods of their families.”
But if this is a question of ethical behavior with employees, then here is the complicated part. As official Russian statistics claims, 80% of Russians support the war. In this case, any company that remains in Russia pays money to people who believe the war is good and war crimes – murder, torture, rape, abduction of children – are acceptable.
In times when businesses pay extra attention to what employees do and say, it is surprising that companies ignore how bad their Russian employees’ attitudes are for their reputation. In Europe or the U.S., racist or sexist comments of companies’ employees often become a reason for letting employees go. So, what about the support of the war, shouldn’t there be the similar treatment?
Around half of the companies that provided any explanation for their stay in Russia referred to legal obligations that either require them to cut some specific operations or allow them to continue doing business in Russia.
Some 19% of the companies explain that their country prohibits certain types of activities or the export of certain products, so they reduce these areas of activity. Meanwhile, 9% of companies said that they wouldn’t cut their operations in Russia until they are not legally banned. For example, Emirati low-cost airline AirArabia, which even increased the number of flights between Moscow and the United Arab Emirates in July, explained: “Our job is to connect people and as long as it is open, we will do that within the law”.
Another 16% of the companies claim to continue fulfilling the existing contracts and other obligations. For example, Hyatt Hotel Corporation, which has at least six locations in Russia, said: “As this complex situation unfolds, we will continue to evaluate our existing management agreements with the third-party entities that own Hyatt hotels in Russia.” A similar explanation was used by the Swiss multinational Glencore, which keeps trading Russian oil: “Glencore will continue to honour its legal obligations under pre-existing contracts, subject to meeting all applicable sanctions in accordance with our Sanctions Policy and where it is feasible and safe to perform these contracts.”
In their explanations, companies appeal primarily to legal and business requirements and commitments, emotions, moral principles, or guidelines.
Around 46% of companies appeal to the fact that they have some sort of responsibility to their stakeholders or society in general. For example, the Austrian energy and petrochemicals company stated: “OMV takes its responsibility to supply Europe and Austria with natural gas seriously. Households, institutions, and the industrial sector rely on dependable gas supplies, including gas from Russia which is supplied under longstanding contracts.”
Referring to commitments makes the companies sound serious and responsible. But are they? Most of the mentioned commitments are vague and don’t refer to any due diligence behind the decision to stay in Russia or to downscale instead of complete withdrawal.
Meanwhile, companies rely a lot on emotions in their messaging to justify their presence in Russia. Around 17% of companies emphasize the human rights of the Russian people and their potential suffering in case of a company’s withdrawal and another 15% contrast them with the values and principles of a company.
Usually, appeal to the reader’s emotions was practiced by the same companies that use the essentiality excuse as if to emphasize quite vague and, therefore, justification. For example, the American global food corporation Cargill warned against food weaponization, which, ironically, is practiced by Russia in its war against Ukraine: “Food is a basic human right and should never be used as a weapon”. Meanwhile, P&G described possible dire consequences of their withdrawal from Russia: “Our many Russian colleagues, and the people of Russia, face challenges and uncertainty for their futures that are also significant. P&G will continue to support them, but the situation necessitates important changes immediately and over time”.
Equally, if not more emotionally charged language was used in the corporate statements that appealed to the moral standpoint of a company. For example, American producer of industrial packaging and containers Greif said: “In times of crisis, we lean on our values and use The Greif Way to guide our direction. Since this crisis began, our first consideration has been the safety, welfare, and well-being of our people, regardless of their nationality. Consistent with those values, we feel an obligation to remain in support of our over 500 Russian colleagues.”
All in all, the analysis shows that companies use public statements to shield their reputation first and foremost but don’t back them up with real actions. Less than a quarter of the statements include any kind of commitment – to curtail some operations, downscale the business, or even pull out from the market eventually. Moreover, only 28% of 258 companies that made any kind of statements, revisited them afterward to update or issued additional statements with new information.
Silent treatment and lack of a follow-up after a statement are nowhere close to how corporate accountability in response to the war in a center of Europe should look like. According to the Edelman Trust Barometer Special Report, there is a rising call from consumers, employees, and other stakeholders “for business to be more engaged in geopolitics” with CEOs “expected to shape policy on societal and geopolitical issues”. The public demands businesses to acknowledge geopolitical issues and demonstrate corporate transparency and accountability in response to them. Days when it was “just business” are gone. Now is the time for openly communicated commitments based on proper due diligence and backed up with real actions.