23 October 2023

The simple truth is that after 600 days of the great war, more than half of international companies are continuing operations in Russia, contributing to its war machine. Those who sided with Ukraine by leaving the Russian market are fewer.

The pace of corporate exits has now slowed significantly. During B4Ukraine’s attempts to establish a dialogue with 140 global companies and instil a sense of urgency in their decision-makers, we have encountered several prevailing excuses used to protect market share and bonuses in the Russian Federation.

Some of these explanations are highly creative: if only this kind of resourcefulness was applied to actually cutting ties with the aggressor, Russia would have a much weaker financial capacity to terrorize Ukrainians and commit war crimes in the country.

“We sell essential goods”

Six of the top 20 revenue generators in Russia use this justification to continue their operations in the country, namely PepsiCo, Auchan, METRO AG, Danone, Mars, and Procter & Gamble.

Even pharmaceuticals find it difficult to defend their products as essential in the Russian market to meet the needs of Russian patients, yet this claim is often used to shield sales of any consumer goods that are essential only to their manufacturers’ profits. For example, PepsiCo still sells sugary drinks under this guise, and Mondelez obviously cannot leave Russians without Oreo cookies, Milka chocolate or Dirol chewing gum.

Governments must intervene in order to stop the misuse of the essentiality argument by the world’s largest FMCGs.

“We have a duty to care for the Russian employees’ welfare”

The employee welfare argument is impossible to reconcile with the realities of the Russian legislation that obliges companies to assist the government with its mobilization efforts. The British conglomerate Unilever, Germany’s family-owned construction company Knauf, Switzerland’s food and drink processing company Nestlé and many more have confirmed to B4Ukraine their compliance with Russia’s Partial Mobilization Order.

A case in point: an IT specialist for Raiffeisen Bank in Russia was drafted, hastily trained, sent to the front lines and killed just two weeks later.

According to the media report, the Knauf subsidiary in Russia even used a company van to drive 15 conscripted employees to the army recruitment center to ensure they complied with the order to appear.

As a result, not only are companies unable to protect their employees but are increasingly at risk of becoming complicit in Russia’s war crimes...

“Our exit will benefit the Russian state”

UniCredit, Unilever and Rockwool are among those Western firms insisting that their withdrawal will benefit the Russian state, not Ukraine. I also had to hear the sure “Will it help the Ukrainians if the German factories go to the owners from India or China for nothing?”

At first glance, such arguments seem logical. However, they lack ethics and are full of deceit. They require a forecast of the impact of the risks faced by Western businesses in stable authoritarian regimes.

The truth is that without specialized management teams, expertise and support from the parent company, its Russian plants may face significant challenges and most likely will not be as successful as those owned by Western firms. The loss of access to innovative technologies, specialized management methods and intellectual property can seriously reduce the productivity and innovation capabilities of these plants...

Today, the potential losses may seem excessive to Western top managers, but this is only for those who forget the Russian proverb “Let’s sit down before we hit the road”...

In general, convincing businesses to leave Russia means convincing them that Ukraine can win, because in that case anyone pragmatically will see more prospects to participate in the reconstruction of Ukraine than to stay in Russia and sit on pins and needles until the very same happens to their assets what has already happened with Carlsberg and Danone...