BUSINESS IN RUSSIA
of employees, and the amount of profit.” Each of these factors might tip the scales one way or the other: “For most of our clients in the food industry, it was easier to take the decision to leave because their business in Russia is a small part of their global operations,” Martin adds. Another consideration is the nature of the product. “If you produce oil and gas that is used by Russia’s army, then it’s much harder to justify your presence in the country, Martin continues. “But if you feed people, then you might well argue that you need to stay.” Nestlé, for example, announced they would continue to sell only infant food and medical nutrition, without making any profit.
The power of pressure
What can counteract financial considerations, explains Martin, “is the strength of stakeholders’ that matter, namely the senior employees who have to make the decisions, the wider workforce who want to feel that the company’s decision aligns with their own values, and
the regulators and business customers whose support is essential to success.” Companies that ignore how employees feel about their behavior will do so at their own risk: “Employees in Western Europe have made very strong statements about their companies, when these seemed to want to protect their investments in Russia. Companies shouldn’t underestimate their anger,” says Martin. “When your employees think that you’re not acting in the right way, they may not be able to change your views, but if you refuse to listen and follow through with them, you
“Consumers’ response is driven by headlines. They aren’t the source of enough power or commitment”
can really damage your ability to recruit and hold on to capable people.”
Outside pressure can quickly help reverse decisions announced just a few hours earlier. For example, British American Tobacco at first decided to remain in Russia, claiming duty of care towards their 2,500 employees, but two days later announced that they would leave, while still supporting their personnel.
Consumers’ weakness
In this analysis of what influences corporate ethical decisions, consumers are remarkably absent. “Consumers’ response is driven by headlines,” says Martin. “They aren’t the source of enough power or commitment. We keep seeing corporate scandals where consumers are outraged about this or that company. The clothing industry, for example, had multiple modern slavery scandals. Each time, everyone vows that they won’t buy those cheap T-shirts ever again and share prices drop. But then, usually within a few weeks, consumers return and forget about it.”
Krispy Kreme has closed its operations in Russia, but Burger King says it faces difficulties
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