With Russian businesses such as Gazprom, Rosneft, VTB Bank, Sberbank and more now under western sanctions, advisory firms may find it easier to find their way off the fence. Some have hidden in language and spoken of not stopping Russian-related work that “goes against our values,” others have hastily pledged they will review mandates.
But in a universe where megabucks is spent on so-called ‘thought leadership’ it is indeed, high time (as a lawyer commented on the LinkedIn post by Linklaters) for ‘action leadership’ instead.
The public is not stupid, and the public is made up of stakeholders – also of lawyers, and talent management and retention is becoming increasingly critical for firms. Differentiation – something boardrooms doubtless consider while marketing and branding budgets spend many hours and bucks pursuing – is suddenly very straightforward in the midst of this unprecedented international crisis moving at speed.
Someone always has to be first – but where Linklaters has led, others could swiftly follow….
The clear connection to how we link up governance, societal concerns with environmental issues (think attacks on nuclear power plants) and stakeholders (ESG) remains in danger of being elusive. The Russian onslaught on Ukraine should, at the very least, have immediately screamed ESG violation at every business that has relentlessly been mouthing the ESG mantra for the last few years hearing cash tills ring, when in fact they had to be taken to the very concept of ESG by the hand, with repeated pointing.
That is still true, around an essential part of ESG – diversity and inclusion. There is a vast gap between rhetoric, reinforced by the aggressive working of networking noise on social media, and reality.Yet there has been a lot of talk in corporate governance circles around the globe about ‘purpose beyond profit’, ‘stakeholder governance’ and ‘progressive, inclusive capitalism.’
In the United Kingdom, professional services firms have been watching very closely to see how they are impacted by the U.K. Government’s renewed emphasis on corporate governance, audit reform and most recently, on economic crime . But they have been slow to respond with action on how their businesses respond to Russia’s actions in Ukraine.
On March 1st, Grant Thornton became the first large professional services firm to cut its ties with FBK, its Russian-member firm which audits the state oil company Gazprom. It said on its website: “Given the highly complex situation, the Global Leadership Team at Grant Thornton International has agreed to the resignation of its Russian member firm (FBK) from the network, with immediate effect.”
According to the Financial Times, the Big Four accountants – Deloitte, EY, KPMG and PwC – employ more than 13,000 people in Russia, roughly 1.1% of their global total, through alliances with domestic firms. At time of writing, they have given few details on how the Russia-Ukraine conflict is going to affect the clients with whom they work.
But the professional services herd is beginning to notice leadership in its midst. Accenture said on March 4th that it was discontinuing its business with 2,300 staff in Russia, and both BCG and Mckinsey have taken a stance of sorts, edged forward by social media reaction. Mckinsey said it would not work for Russian government entities, reported the Wall Street Journal, while BCG rather lamely said it would not take on new work in Russia.
All this matters. It particularly matters from a vantage point in the U.K. as our government has been very slow to make the fight against economic crime, money laundering and ‘Londongrad’ real, and there are still too many clever professional people who – their politics aside – remain unconvinced of its resolve in introducing not only hard sanctions on Russia, but transparency on money flows and company ownership.
As Julia Maschkow, CFO and Managing Director of IG Europe, the European subsidiary in Frankfurt of IG Group, a leading broker in online trading, said today : “It is not the time to do half things.” She was commenting on my LinkedIn post sharing the FT’s piece on February 28th : ‘UK fast-tracks law to tackle Russian ‘dirty money’.The U.K government is now seeking emergency legislation to speed up its sanctions on Russian oligarchs. But “not the time to do half things” is something the professional advisory firms need to understand, as we end another day of the Ukraine crisis, with its devastating loss of life and trust. It is crunch time on corporate governance, what we value as our ethical standards, and how we act – rather than what we think – is the only thing that counts.Beyond Time For ‘Action Leadership’: Professional Advisers Need To Take A Stand On Ukraine — Dina Medland