It took less than 24 hours for President Joe Biden and many of his Western allies to begin sanctioning Russia, its president, Vladimir Putin, and a collection of oligarchs close to the Kremlin after Russian ...
[caption id="attachment_221262" align="aligncenter" width="1280"] Ukrainian civilians and soldiers take shelter under a bridge in Kyiv, Ukraine, on March 5. The Russian invasion has led many Western companies to voluntarily pull out of its market. | PHOTO COURTESY OF MINISTRY OF INTERNAL AFFAIRS OF UKRAINE[/caption]
It took less than 24 hours for President Joe Biden and many of his Western allies to begin sanctioning Russia, its president, Vladimir Putin, and a collection of oligarchs close to the Kremlin after Russian forces invaded Ukraine on Feb. 24.
[caption id="attachment_203722" align="alignright" width="279"] Jacob Owens Editor Delaware Business Times[/caption]
The war drums had been sounding for weeks, driven in part by the Biden administration’s tactic of publicizing Russian troop movements to try to disrupt Putin’s plans. Yet actually seeing the once-unthinkable attack on the sovereign European nation and the subsequent humanitarian crisis was particularly jarring.The president has been committed to his promise to remove troops from harm’s way though, ending the Afghanistan War and refusing to commit troops to helping Ukraine, which despite being an ally nation is not a NATO member that would require such defense. The refusal of such military intervention, well-known to the assailant and defendant for months, meant that America had fewer tools at its disposal to assist the Ukraine cause.The ensuing boycott, divestment and sanction (BDS) campaign against Russia – led by the Biden administration’s sanctions on Russian banking, prohibitions on export of sensitive American technology to Russia, and import of the country’s oil – has been a master class on how to use economics to twist the screws into a belligerent though.Germany has mothballed the $11 billion Nord Stream 2 pipeline, a completed but not yet operational natural gas pipeline that is crucial to Moscow’s plans for future energy sales. The U.S. also joined most of Western Europe in backing the removal of two major Russian banks from SWIFT, the financial messaging system that allows international transactions to flow. Even traditionally neutral Switzerland has adopted some Western sanctions, freezing assets of Putin and more than 350 other Russian leaders.While many corporate consumer brands with Russian presences aren’t so far legally required to stop doing business there, many have chosen to do so. A database maintained by the Yale School of Management has tracked more than 400 companies that have pulled out of Russia in protest as of March 15.Some, like Apple, McDonald’s, Starbucks and Pepsi, will largely only serve to further disappoint the Russian public while undercutting corporate bottom lines. Others, like Visa, Mastercard, American Express, FedEx, UPS, and Maersk, will leave a more lasting hit to the country’s economic output as it’s cut off from credit payments and international shipping.Meanwhile, other firms are delving into divestment from Russian interests, such as BP selling its 20% stake in Russian energy company Rosneft and Shell phasing out involvement in Russia, including exiting a joint venture with another Russian energy company Gazprom.Norway's $1.3 trillion sovereign wealth fund, the world's largest, is divesting its Russian assets, while at least a half dozen American states are discussing doing the same with their pension funds. Officials in the nine states that control the sale of their alcohol, including Pennsylvania, have directed Russian-sourced alcohol to be removed from shelves.On the cultural front, FIFA has suspended the Russian national team from participating in qualifying rounds for this year’s World Cup while UEFA has moved the Champions League final, club soccer’s biggest game, from Moscow. Major rock bands Green Day, The Killers and My Chemical Romance have canceled upcoming shows in Russia while Disney and WarnerMedia said they would pause the release of any new content in the country.In totality, the breathtaking response by the world’s governments and business community can only be seen as a defining moment for the E and G in the burgeoning ESG movement. While progress in environmental issues may be easier to identify and work toward annually for companies around the world – Are you reducing waste and pollution? – the social and governance aspects can be a bit harder to wrap your arms around.Governance refers to a company’s leadership, preparation and response in crisis – all attributes that many are leaning on these days as they choose how to respond to world events. Many are choosing to take bold stands for what they feel is right, even if it means a decline in sales.While social issues have most often been framed around equity for people of color, women and the LGTBQ community, it can cast a much wider net. Being a leader on social issues may mean leaving a foreign market in protest of its leadership or donating a larger share of profits to benefit a country where you don’t even have a presence.The speed with which nations and companies have rallied in support of Ukraine highlights how much the internet and 24/7 global information has changed our world in recent decades. The BDS campaign against apartheid in South Africa took decades to fully take hold before it brought about change there, while many of the same actions have occurred within days in 2022.I can only hope that the measures will expedite an end to the bloodshed in Europe.