Russia’s war spurs corporate escape and exposes business risks

London (AP)

Car factories have become idle, beer has stopped flowing, furniture and fashion orders have stopped, and energy companies have cut pipelines.

Russia’s invasion of Ukraine disrupts business plans, increases the number of the world’s most famous brands, from Apple to Mercedes-Benz to BP, and makes them global exiles as companies seek to maintain their reputation. I was forced to withdraw from the country. And we will adhere to corporate responsibility standards.

Investors have been drawn to Russia in search of profits commensurate with geopolitical risks. That calculation changed after the Russian war caused a wave of global sanctions and export restrictions, disrupting its economy and disrupting the operations of multinational corporations there.

Mary Lovely, an economist and senior researcher at the Peterson Institute for International Economics in Washington, said: “Neither most nor multinationals want to be caught on the other side of US and Western sanctions.”

They have also expressed concern about the plight of the Ukrainians and have shown that they want to see them appear on the right side of history.

Complicating the push for corporate escape is a command from Moscow that temporarily restricts foreign investors from selling Russian assets. Prime Minister Mikhail Mishustin said Tuesday that it would help investors make “considered decisions” rather than succumbing to the political pressure of sanctions. It is not clear how that will affect the efforts of companies leaving Russia.

Oil and gas companies, already feeling the heat from climate activists to invest in renewable energy, were among the companies that announced their quickest and most dramatic withdrawal.

Energy company BP announced on Sunday that it will abandon its $ 14 billion stake in Russia’s state-owned oil and gas company Rosneft. The next day, Shell resigned from its joint venture with state-owned Gazprom and announced its involvement in the currently suspended Nord Stream 2 pipeline, which was built to bring natural gas to Western Europe.

ExxonMobil said it would withdraw from major oil and gas projects and stop new investment in Russia. All of their CEOs said they were shocked and saddened by the increasingly bloody conflict. Small energy companies follow suit.

Companies in other industries, including automakers, have shown that they are moving away from the Russian market, either because of concerns about Ukraine or to comply with Western sanctions.

Toyota said it has stopped production at the St. Petersburg plant, which manufactures RAV4 and Camry models, from Friday due to supply chain disruptions and is monitoring the event “very concerned about the safety of the Ukrainian people”. rice field.

Mercedes-Benz has stopped exporting vehicles to Russia and manufacturing there. The Volkswagen Group, which Porsche and Audi also own, did the same, saying that “sustainable solutions to conflicts can only be found under international law.”

Volvo Cars quoted Western sanctions as saying it had suspended deliveries due to “potential risks associated with material transactions with Russia.” Ford has shut down.

Harley-Davidson has stopped shipping motorcycles to Russia, saying the idea “continues for the safety of the Ukrainian people.” Putin is famous for riding a three-wheeled Harley when he visited Ukraine in 2010.

Others at greater risk in Russia may find it difficult to overcome the crisis.

French car maker Renault, whose second largest market is Russia, said it had temporarily suspended production at its Moscow plant “due to some logistics problems,” not to mention specifically until Saturday. Stated.

Danish brewery group Carlsberg has stopped production at three breweries in Ukraine, but said it will continue operations in Russia, which owns the St. Petersburg-based Baltika Breweries and employs 8,400 people. I did.

“Millions of lives have been affected and we strongly condemn the violence and aggression we have witnessed,” said Christian Wulff Sondergard, Vice President of Enterprises, in an email. .. Carlsberg has an obligation to “protect the livelihoods of all employees” in Russia, as the economy is under increasing pressure from sanctions, he said.

The Czech brewery Budvar, which counts Russia as one of the five major markets, said business is not a top priority and is looking for ways to help, including finding accommodation for Ukrainian refugees. Stopped delivery of beer to the country.

“It’s really hard to do business in Russia under the best conditions. Now it’s just crazy. James Oroke, a professor specializing in reputation management at the University of Notre Dame Mendoza Business College, said: It says.

Companies need to choke losses as a cost to do business.

“It’s like dealing with the Manson family,” said Oruk, referring to followers of cult leader Charles Manson. “You honestly don’t want your name to be associated with those people, and it probably won’t cost you much to stop investing.”

IKEA, along with its neighboring ally Belarus, has suspended Russia’s operations and suspended Russia’s imports and exports. “The war has had a tremendous impact on humankind,” said a Swedish furniture giant. “It has caused serious disruption to supply chains and trade conditions.”

H & M, a fast fashion brand, has expressed concern about “tragic developments” and has suspended sales in Russian stores. Nike said on its Russian website that it cannot guarantee delivery.

Airplane makers Boeing and Airbus have stopped providing parts and service support to Russian aircraft carriers. Boeing has suspended its major business in Moscow and temporarily closed its office in Kyiv.

Even Hollywood studios are delaying the release of new films in Russia. Russia is not a major movie market, but is usually ranked in the top 12 countries by box office revenue. Warner Bros., Walt Disney, and Sony Pictures quoted “Humanitarian Crisis.”

High-tech companies also headed for the door.

Apple said it would stop selling the iPhone and other popular devices in Russia, but computer maker Dell Technologies has “stopped” sales in both Ukraine and Russia.

Google and TikTok have blocked Russia’s state media channel from the platform after a petition from the European Union. Apple has blocked downloads of RT News and Sputnik News from the App Store outside Russia.

In addition to sanctions, it is public opinion that businesses must respond as the human costs of war increase.

A company’s commitment to the environment, society and corporate governance, known as ESG, is being tested. ESG has become a topical acronym that is increasingly being seen as an important way for companies to promote responsible business qualifications.

“But there may also be an element of greenwashing,” said Vanessa Lubano, associate professor at Columbia Business School. ..

“Stakeholders such as employees and consumers will want to see if a company’s actions and actions are consistent with the communicated support that the company is expressing for Ukrainians.” She said.

Some companies have gone beyond delivery and outages.

Lego, Ford and Volkswagen Group have said they will make millions of dollars in charitable donations to help Ukrainian refugees.

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Russia’s war spurs corporate escape and exposes business risks

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