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With the war in Ukraine, geopolitics is entering corporate governance. Those who have chosen to stay in Russia are under increasing pressure.
Pressures coming from all sides. From civil society: the headquarters of TotalÉnergies was invaded yesterday by activists pouring black paint and brandishing explicit slogans “ your gas, their blood “. Pressure from their own employees: Leroy Merlin, the French DIY giant was challenged by the employees of its Ukrainian branch. The kyiv store was bombed this weekend, and in the process they signed a petition asking its owner, the Mulliez group, to stop all its activities in Russia. It also has Auchan and Decathlon stores. And finally pressure from President Zelensky: the Swiss group Nestlé was summoned this weekend by the Ukrainian president to stop all its production on Russian soil.
How are companies staying in Russia justified?
Most of them explain that they do not want to put their local staff in difficulty. This often applies to French companies. Together, they constitute the largest foreign employer in Russia. Their production is also an often invoked argument. Nestlé says it wants to continue manufacturing infant milk, it’s a basic necessity. US multinational agribusinesses are staying in Russia to, they say, avoid aggravating the brewing global food crisis.
These philanthropic attentions generally coincide with their economic interests. For Leroy Merlin, for example, the Russian market represents 20% of its global turnover. Will these companies be able to sustainably resist the pressure when they are increasingly stigmatised? There are still 80 foreign companies in Russia while 400 have already left.
Those who left were guided by ethical motivations?
For companies also having a presence in Ukraine, their managers have often been very sensitive to the fate of their Ukrainian employees. But most of the time, it is also in the well-understood interest of the company that the decision was made. Firstly because the massive and severe sanctions decided by the United States and the European Union were going to hamper their business and increase their costs. The leaders also took into consideration the legal risk, emanating from Westerners or Russians likely to take retaliatory measures. And finally, there is the reputational risk that could hurt their sales. Nestlé, for example, is the subject of a call for a boycott of its products.
Is the war in Ukraine changing their geopolitical approach?
All the groups present internationally are used to taking into consideration the foreign policy of their country of origin, and the situation of the country where they are investing; And they sometimes have to deal with radical political changes. Sanctions against the apartheid regime of South Africa is the oldest example of the contemporary period. They also know that they expose themselves to legal proceedings when they are suspected of pacting with the enemy.
The cement manufacturer Lafarge is still paying the price for its relations with jihadist groups in Syria. What changes with this war is to see that companies have reinforced the effect of sanctions by spontaneously withdrawing from the Russian market. Their social and environmental responsibility is therefore extended to the field of geopolitics. Ignoring it could be costly for those associated with oligarchs close to the Kremlin like TotalÉnergies. If Vladimir Putin is prosecuted for war crimes, they could be accused of complicity.
► IN BRIEF
Europe wants to boost its agricultural production to face the consequences of the war
This is the wish expressed yesterday by the Agriculture Ministers of the Twenty-Seven. Faced with the emergency, fallow periods planned as part of the greening of the CAP will be postponed and farmers should benefit from new aid to cope, among other things, with the rising cost of animal feed. This questioning of the so-called “farm to fork” strategy, justified in the short term, is contested in the medium term by the Commission.