The factories of automobiles were shut down, the beer stopped flowing, furniture orders and fashion orders stopped, and energy companies fled petroleum and gas projects.
Russia’s invasion in Ukraine has thrown off business plans and caused a growing number world-famous brands, from Apple to Mercedes-Benz to BP, to leave a country that’s been a global outcast. Companies are trying to keep their reputations intact and uphold corporate responsibility standards.
In search of high-quality profits, investors were attracted to Russia. After Russia’s war, a wave global sanctions along with export restrictions have disrupted multinational corporations’ operations and thrown the economy in turmoil.
According to Mary Lovely, an economist at the Peterson Institute for International Economics (Washington), “Russia is becoming a commercial pariah.” “It is a common occurrence for multinationals and companies to get caught up in the US or Western sanctions.
They also expressed concern over the situation of Ukrainians and showed how they wanted to be seen as being on the right side.
Moscow’s order temporarily preventing foreign investors from buying Russian assets is a way to complicate companies’ efforts to flee. Prime Minister Mikhail Mishustin stated Tuesday that the order would allow investors to make “a thoughtful decision” and not succumb to political pressures like sanctions. It is not clear how this may impact corporate efforts to leave Russia.
Companies that made the most dramatic exits were the oil and gas companies.
Sunday’s announcement by BP that it would give up its $14 billion stake at Rosneft, Russia’s state-owned oil company and gas producer, was a statement from the energy firm. Shell stated that it would leave its joint venture of state-owned Gazprom, and its participation in the abandoned Nord Stream 2 pipeline designed to transport natural gas to Western Europe.
ExxonMobil announced that it would pull out of a major oil and gas project in Russia and will stop any further investment. Their chief executives expressed shock and sadness at the conflict’s growing violence. Many smaller energy companies have followed their lead.
Other industries have indicated that they are staying away from the Russian market out of concern for Ukraine and to comply with Western sanctions.
Toyota has stopped production at its St. Petersburg plant, which makes RAV4 models and Camry models, starting Friday. This is due to supply chain disruptions. Toyota said it was monitoring events with “great concern for the safety people of Ukraine”.
Mercedes-Benz has suspended Russian vehicle exports and Russia’s manufacturing. Volkswagen Group, which also holds Porsche and Audi, made the same statement, stating that it believes an “sustainable solution to this conflict” can only be achieved on the basis international law.
Volvo Cars stated that it had stopped deliveries due to “potential risks associated trading material with Russia”, citing Western sanctions. Ford has suspended its operations.
Harley-Davidson stopped motorcycle exports to Russia and stated that it was doing so “for the safety of the peoples of Ukraine.” Putin rode a three-wheeled Harley during a 2010 visit to Ukraine.
Russia has more at stake than others. It might be harder for them to navigate the crisis.
French automaker Renault said that Russia is its second-largest market and it would temporarily suspend production at its Moscow plant until Saturday. It didn’t give any details.
Danish brewery Carlsberg has suspended production at three of its breweries located in Ukraine, but indicated that it would continue operations in Russia, where it maintains Baltika Breweries, which is based in St. Petersburg and employs 8,400 people.
“Millions are being affected and we strongly condemn acts of violence and aggression that we are witnessing,” Christian Wulff Sondergaard, Vice President Corporate Affairs, stated via email. He stated that Carlsberg has an obligation to “protect the livelihoods of all our employees in Russia” as sanctions are increasing the pressure on the economy.
Budvar Czech Brewer, which has Russia as one its five largest markets, stopped beer deliveries to Russia. It stated that business was not its top priority and that it is looking for ways to help including accommodation for Ukrainian refugees.
It’s very difficult to do business with Russia in the best of circumstances. It’s just insane. “So getting out is a smart and profitable business proposition,” James O’Rourke, a professor in the Mendoza College of Business at the University of Notre Dame that specializes in reputation management.
Any losses will be borne by the company as a cost of doing business.
O’Rourke stated, in reference to Charles Manson’s followers, “This is like entering into business with the Manson families.” “You don’t want your name associated to those people and it won’t cost you much to disinvest.
Ikea has halted imports and exports from Russia and suspended operations in its Russian stores. Ikea, the Swedish furniture giant, stated that “the war has had an enormous human impact” and caused “serious disruptions to supply chains and trading conditions.”
H&M, a fast fashion brand, has stopped sales in Russian shops. It expressed concern over the “tragic developments.” Nike stated on its Russian website that it cannot guarantee deliveries.
Airplane manufacturers Boeing and Airbus have stopped providing parts and support for Russian aircraft.
Even Hollywood studios are putting off the release of new movies in Russia. Russia is not a major movie market, but it often ranks among the top twelve countries in terms of box office revenue. The “humanitarian crisis” was cited by Warner Bros., Walt Disney Co., and Sony Pictures.
All future acquisitions and projects from Russia are being halted by Netflix. According to reports, the streaming service had four Russian projects in its pipeline.
Technology companies are also heading for the doors.
Apple has stopped selling iPhones in Russia and other devices to Russians, while Dell Technologies has suspended its sales in Ukraine.
After a request from the European Union, Google and TikTok removed Russian state media channels form their platforms. Apple has blocked Sputnik News and RT News downloads from its App store outside Russia.
Companies must respond to the increasing human cost of war by responding to public sentiment and sanctions.
ESG is a term that refers to corporate commitments to sustainability, social, and corporate governance. ESG is a popular acronym that corporations use to promote responsible business practices.
Vanessa Burbano, Columbia Business School associate professor, said that there is also the possibility of greenwashing. This occurs when companies claim they have certain values or support ESG issues but their behavior and practices suggest otherwise.
She said that stakeholders like consumers and employees will be interested in seeing if companies’ actions and behavior are consistent with the support companies have shown for Ukrainians.
Some companies stopped deliveries and operations altogether.
Lego, Ford, and Volkswagen Group announced that they would donate millions of dollars to help Ukrainian refugees.
