Pressure mounts on US companies in Russia


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New York (AFP) – As a growing list of American multinational companies – from Apple to Levi’s – suspend operations in Russia, some companies are choosing to stay in the country despite reputational risks.

But they’re facing growing pressure: Calls for repercussions are popping up on social media under hashtags such as #BoycottMcDonalds and #BoycottPepsi – two companies that have received letters from the head of the New York state pension fund .

These companies “need to consider whether doing business in Russia is worth the risk during this extraordinarily volatile time,” Thomas DiNapoli said in a statement.

DiNapoli also sent letters to snack maker Mondelez; the cosmetics groups Estée Lauder and Coty; and brokerage firm Bunge.

A Yale University team that maintains a list of companies with a significant presence in Russia said about 250 have announced their withdrawal from the country since the invasion of Ukraine.

The group said the withdrawals are reminiscent of “the large-scale corporate boycott against apartheid South Africa in the 1980s”.

Many American companies still in Russia remain silent. Brands such as McDonald’s, Bunge, Mondelez, Estee Lauder, Kimberly-Clark and Coty did not respond to an AFP request for comment.

Legitimate reasons

Starbucks said its 130 cafes in Russia are owned by a Kuwaiti conglomerate. The coffee giant has pledged to donate any profit from its activities in Russia to humanitarian efforts in Ukraine.

Yum Brands said its roughly 1,000 KFC restaurants and 50 Pizza Hut restaurants in Russia are almost all independently owned under license or franchise agreements.

He announced on Monday that he had “suspended all investment and development of restaurants in Russia”.

Some companies may have legitimate reasons to stay, several experts in ethics and communication strategy told AFP.

Companies may be hesitant to leave because they manufacture essential products such as pharmaceutical ingredients, said Tim Fort, professor of business ethics at Indiana University.

“It’s a time when (you have to) choose your side, and it doesn’t strike me because it’s very difficult to choose,” he said.

“A single company leaving the country won’t tip the balance…but there is a cumulative effect,” Fort added.

‘What’s going on?’

A company as well-known as McDonald’s can have influence in Russia at a time when the general population has almost no access to sources of information other than official messages about the invasion.

“Russians (will) be able to survive without the Big Mac, but (ask) why is McDonald’s closed? What’s going on? It’s a stronger signal in that direction,” Fort said.

Richard Painter, a professor at the University of Minnesota, warned of “serious risks to Americans and Western Europeans currently in Russia.”

“These companies should do everything they can to bring their employees home,” he said.

Painter said companies “should think about the message that needs to be emphasized: that Russia can’t do this to Ukraine…while participating in the international economy.”

Economic sanctions imposed on Russia with broad consensus by Western governments “really are the best way to deal with Russia, as opposed to a military confrontation,” the former White House ethics lawyer said.

Some companies may be betting criticism will rain down in the short term but eventually subside, said Brian Berkey, a corporate ethics specialist at the University of Pennsylvania.

Other crisis situations, such as the Israeli-Palestinian conflict, have led to calls for a boycott against certain companies, but without much effect.

Support for such initiatives is not always unanimous, but “most people in the United States and Europe are united in thinking that what Russia is doing is clearly unacceptable,” he said.

Mark Hass, a communications specialist at Arizona State University, said the economic interest of companies choosing to stay in Russia “outweighs reputation”.

McDonald’s, for example, derives nine percent of its revenue and three percent of its operating profit from Russia.

But “if social media starts identifying you as a company ready to do business with an autocratic abuser, who is slaughtering thousands of people in Ukraine, you’re in big trouble,” Hass said.

“And it will hurt business more broadly than in Russia.”


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