Companies leaving Russia are bowing to public pressure, making no difference

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This week, McDonald’s announced its final exit from Russia, which makes it one of the almost 1,000 Western companies that have partially or completely ceased operations in Russia. They did so, not just to comply with the sanctions, but as a voluntary reaction to the war.

In some ways it’s a textbook corporate social responsibility — a form of self-regulation in which companies engage for the broader social good.

In this case, many companies severed their ties with Russia in response to pressure from governments, investors, consumers, competitors and the general public to support Ukraine. Some even made heavy financial sacrifice. McDonald’s, for example, expects hit of up to US$1.4 billion.



I challenge this decision by Western companies because it follows questionable ethical judgments. The apparent “social good” created by companies leaving Russia is anything but clear and needs to be critically examined.

The Immoral Moral Argument

Companies that provide goods and services used directly in war, including the financial services that finance it, have immediate liability. It makes sense that some companies would go out of business in Russia if they directly enable the invasion of Ukraine – financially, technologically or otherwise.

However, producing or consuming a Uniqlo sweater, a Happy Meal or a Renault Clio, has no effect on the war itself. The only impact corporate exits could have is on Russia Suppliers, employees and communities. The rights and interests of Russian stakeholders in Western companies do not seem to matter.

A sign outside a bar in Michigan states that it will stop serving Russian vodka, presumably in protest against the Russian invasion of Ukraine. (Shutterstock)

Some promoters have compared the current situation to the boycott of South Africa during apartheid when American and European companies had to apply anti-apartheid laws in their manufacturing plants and sales operations in South Africa.

Corporate exit and boycott in South Africa during this period was aimed at preventing corporations from being directly complicit in apartheid. It is much more difficult to establish such a direct link between the sale McDonald’s burgers or Lego Toys and the Russian invasion of Ukraine.

Corporate responsibility

To what extent are companies then responsible for the actions of their governments? To answer this, we can turn to genocide of the Uyghur minority in China. Many displaced Uyghurs are currently working as forced labor for western companies. No such call for a corporate boycott was made there.

There is a clear double standard about which wars and atrocities are widely condemned and which are not. There are 20 ongoing wars in the world at this moment. Which of them are eligible for a corporate boycott?

Protesters wearing masks and holding signs accusing Apple of using forced labor
Protesters stage a mock “Uyghur forced labor camp” outside Apple’s flagship store on March 4, 2022, in Washington, DC to highlight the alleged use of illegal Uyghur forced labor in its supply chain. (AP Photo/Manuel Balce Ceneta)

Saudi Arabia’s role in the war in Yemen, which has resulted in at least 230,000 dead since 2015, has never been examined. Such ethical attributions of corporate responsibility are arbitrary and debatable.

But Ukraine is more relevant to the West, because mainstream media illustrated, because Ukrainians “look like us”, with their “blonde hair and blue eyes” who “pray like us” and “drive cars like us”. Boycotting Russia on the basis of this type of outside pressure only panders to racism.

Whose side is the “good guy” on in this war?

War is condemnable in all its forms. The ultimate question for corporate engagement, however, is the moral status of the reasons for war. Who are the bad guys? Who deserves the punishment of sanctions?

On the one hand the the prevailing consensus seems to be that Russia is aggressively trying to rebuild the Soviet empire, ignoring the territorial integrity of Ukraine.

On the other hand, there are a number of arguments challenging this.

Russia started the invasion of prevent Ukraine from joining NATO. Last week, the United States and Australia threatened military action in the small Solomon Islands if this government allows China to have a military presence there. If the United States sees as a threat what is happening 12,000 kilometers from its borders, how can we expect Russia to accept NATO’s presence on its doorstep?

Protesters drenched in red paint outside a retail store.
Activists demonstrate outside an outlet of French home improvement retailer Leroy Merlin in Warsaw, Poland, May 7, 2022. Demonstrations took place across Poland against the company’s decision to continue operating its stores in Russia. (AP Photo/Pawel Kuczynski)

political scientist John Mearsheimer wrote about historical reasons to empathize with Russian concerns – including tracing the roots of the NATO conflict to 2008 when the George W. Bush administration began pushing for Ukraine to become a member – all by placing the initial responsibility for the war on the shoulders of President Vladimir Putin.

By sanctioning Russia, corporations are taking a moral stand in this war: Russia is the bad guy and deserves to be punished. I argue that this situation is much more ambiguous and that the ethics of such a position are dubious to say the least – as is the social good that comes from this form of corporate social responsibility.

Being ‘awake’ pays off

The commitments to social responsibility and ethical values ​​of a Russian exit are little more than hypocrisy. Ultimately, companies do these things to stay profitable, in our case, by giving in to pressure from their investors, employees and consumers.

“Woke” companiesas Vivek Ramasamy or Carl Rhodes would suggest, do this because they know maintaining an ethical veneer is good for the bottom line. Whether leaving Russia will actually bring a social good, like ending the war, is widely dismissed.

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It is perfectly legitimate to demand greater social responsibility and ethical behavior from companies. We need more. But publicly pressuring corporations to take on responsibilities that can only be done by governments and the democratic process is not the right way to do this.The conversation

Dirk MattenAssociate Dean for Research, Professor of Sustainable Development, Hewlett-Packard Chair in Corporate Social Responsibility, Schulich School of Business, York University, Canada

This article is republished from The conversation under Creative Commons license. Read it original article.

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