KNOW NOW:
US Corporations in Russia
Feeding the War Machine
This is the Oreo, the world’s most popular cookie that’s fast becoming the symbol of American industry dodging global sanctions on Russia.Turns out the #1 product from America’s favorite confectioner, Chicago-based Mondelez Corp, is also beloved in Moscow. While Putin’s polemical call for enmity toward the US-led West grows stronger, even more powerful is the Russian appetite for that black and white American icon – vanilla cream sandwiched by two chocolate wafers – and Mondelez has no intention of giving up its flagship’s billion dollar market there.
The Oreo maker is among hundreds of other US firms active in Russia that are on lists shaming them for putting their commercial interests above the US Treasury’s demand to shut down US trade and investment there. Yale University’s School of Management elevated them to public accountability. Calculating their short-term profits, many US manufacturers, financiers and traders have simply dug in against what BlackRock CEO Larry Fink calls “an economic war” to powerfully enforce sanctions. It takes leadership and a CEO who understands corporate responsibility to wage that war. Fink moved fast to suspend his company’s purchase of Russian securities. BlackRock oversees the world’s largest collection of assets - some $10 trillion worth; its high-profile retreat is not only symbolic but signaled an early and decisive lead for other American CEOs who grasp the war’s impact on their company, their economy, their country.
But where are the rest of America’s CEOs? What does Fink see that so many refuse to recognize? Why don’t more financial giants join JPMorgan’s Jamie Dimon, who well understands the costs – he expects a $1 billion hit for JPMorgan, the largest US bank by assets. He presses for greater sanctions, contending the cost of doing nothing is far greater. This week, the Kremlin added another layer to the mix, criminalizing companies operating in Russia if they follow any of the sanctions against the Russian war machine. Clearly US corporations that continue to do business with Putin’s government and controlled economy are now consciously aiding, if not underwriting a regime steeped in human rights offenses with its every step.
International finance specialist Natalie Jaresko, Ukraine’s former finance minster who just wrapped up her latest assignment running Puerto Rico’s Financial Oversight and Management Board, crystalizes American companies active in Russia: “They’re paying taxes and making investments in Russia, financing war crimes and war criminals, paying salaries of soldiers who are raping women, trafficking children, and forcing deportations.”
From a pure business perspective, Jaresko adds, it’s foolish.“I keep going back to Larry Fink’s big message: stakeholder capitalism. For a penny today, these companies are giving up talent and consumers in the future… think about the cost of reputation.” This, in a world where creating value for shareholders centers on doing the right thing, on surviving and thriving in an increasingly demanding world of consumers who judge companies on what they do.
Jaresko is leading a global effort to emasculate the Russian war machine. Last week, alongside the Ukrainian American Bar Association and Razom for Ukraine, she filed a formal petition with the US Securities and Exchange Commission to require US public companies to disclose their business with/within Russia and Belarus.
The impact? The mass pullout of global corporations combined with the US and European economic sanctions against Russia are putting pressure on the country. JPMorgan’s new assessment of sanctions against Putin’s war shows a strong contraction in the Russian economy, which, if emboldened by widespread American pullback, could dismember the war effort.
DO NOW:
Motivated to help and looking for practical ways to engage? Here are two organized ways to hold companies accountable: Boycott Russia and Squeezing Putin. Interested in holding American political leaders accountable? Here’s a direct link for contacting your members of Congress. And here are a half dozen other ways to stay current and track: Stop Business with Russia, Exit Russia, The Good Lobby, and Yale School of Management. Look at these companies celebrated for ceasing their Russia ties. See the impact, sector by sector, especially Tech and Finance.
Amy Kaslow
Assistant Editor: Jordan Lee