Russian troops are invading Ukraine. Many world leaders have taken quick action to respond. At the UN, 141 countries voted in favor of a resolution reaffirming Ukrainian sovereignty, independence and territorial integrity. U.S. Ambassador to the UN Linda Thomas-Greenfield protested to her Israeli counterpart over Israel’s refusal to join 87 countries in backing a U.S.-led resolution to condemn Russia’s invasion of Ukraine at the UN Security Council on Friday.
Geopolitics is about national security. Global business is about obligations to shareholders, customers, and employees. How should corporate leaders respond?
While the US Department of Treasury has announced that “the United States consulted closely with partners to tailor the economic costs of these actions to weigh most heavily on the Government of the Russian Federation (GoR) and its economy while mitigating impacts to America and its allies, some government actions have enormous impacts on business, and in addition to expressing their own concerns about Russia, corporate leaders must figure out how to mitigate damages caused by government sanctions, and how best to protect employees in Russia from the consequences of the sanctions and possible retaliation.
Our good friend Jeff Sonnenfeld, sometimes known as “the CEO whisperer,” has been monitoring and coordinating corporate responses, with 380 companies curtailing Russian operations and connections. The list itself has had an impact on those who had not taken any action.
Sonnenfeld acknowledges that “Disengagement may also be a little easier for finance and heavy industry than it is for consumer products firms. Fashion and packaged goods firms usually lead the pack in social justice and human rights causes because their brands are susceptible to public condemnation. In Russia’s case, Western heavy industry, business-to-business tech, and professional services are leading the boycott.” When Pharma companies insisted that they needed to maintain operations for humanitarian reasons, VEA Vice Chair Nell Minow supported that decision, though noting that it needs to be reviewed on a daily basis. But Sonnenfeld disagreed, saying they are
“being misguided at best, cynical in the medium case, and outright deplorably misleading and deceptive.” …He noted that banks and technology companies also provide essential services. “Russians are put in a tragic position of unearned suffering. If we continue to make life palatable for them, then we are continuing to support the regime,” Sonnenfeld said. “These drug companies will be seen as complicit with the most vicious operation on the planet. Instead of protecting life, they are going to be seen as destroying life. The goal here is to show that Putin is not in control of all sectors of the economy.”