Home / World News / Opinion | C.E.O.s Are Going Out of Their Way to Punish Russia

Opinion | C.E.O.s Are Going Out of Their Way to Punish Russia

Companies aren’t just complying with government sanctions imposed on Russia in response to its invasion of Ukraine. In many cases they’re going beyond what’s required. Last Friday, Shell bought 100,000 metric tons of Russian crude oil at a record discount, a fantastic bargain that would ordinarily be cause for celebration at the company. Not with blood being shed in Ukraine, though. On Tuesday, Shell’s chief executive officer, Ben van Beurden, apologized, even though the purchase didn’t violate sanctions.

“We are acutely aware that our decision last week to purchase a cargo of Russian crude oil to be refined into products like petrol and diesel — despite being made with security of supplies at the forefront of our thinking — was not the right one and we are sorry,” he wrote in an extraordinary mea culpa.

It’s not just Shell. The Yale School of Management maintains a running count of companies that have fully or partly suspended business with Russia, including such giants as Amazon, Apple, Hyundai and Volkswagen. As of Wednesday more than 300 companies were on the list. Russia can get by without some of them, such as Norwegian Cruise Lines, but it’s severely hampered by the exit of others, such as Visa and Mastercard.

“This is a case where corporate C.E.O.s are acting on moral imperatives, which you rarely see,” Hans Taparia, a clinical associate professor of business and society at New York University’s Stern School of Business, told me.

Corporations are often accused of being superficial when it comes to promoting “E.S.G.” — environmental, social and governance issues — while they continue to chase the almighty dollar or euro. Yet with Russia we have a case where the opposite is going on. Big companies are taking bold steps to punish Russia that for many will noticeably hurt profits.

These measures have drawbacks beyond the hit to corporate earnings. The withdrawals of foreign companies and the suspensions of their services will hurt ordinary Russians, not just President Vladimir Putin and the oligarchs. In some cases the actions of companies will also hurt nations that are allied against Russia. Reducing or stopping purchases of oil and natural gas are obvious examples: Western leaders exempted fossil fuels from sanctions precisely to protect their citizens from high gas prices, but the big oil companies such as Shell are foiling that plan by voluntarily ceasing crude purchases. (On Tuesday, President Biden essentially caught up with the private sector by banning U.S. imports of Russian oil, natural gas and coal, of which the United States isn’t a big customer anyway.)

There’s even a possible military implication to the corporate enthusiasm for protest. Putin has said he regards allies’ sanctions as “akin to a declaration of war.” If companies go beyond what heads of state and diplomats intend in terms of severing Russia from the global economy, they could inadvertently prompt a response from the Kremlin — possibly cyberattacks.

Given all those downsides, why are so many companies going to such extremes to punish Russia? Responding to public opinion is clearly a factor. But I think it’s also because the executives in charge are people, too — they’re as appalled as everyone else by the death and destruction that Putin is visiting on Ukraine. Chief executive officers want to be able to say they took meaningful action “when they go home and sit down with their wife and kids,” Keith Krach, a former Silicon Valley executive who was appointed under secretary of state during the Trump administration, told me.

More pragmatically, the chief executives of multinational corporations also see their actions as helping to provide “global economic security,” Krach added. In trying to undermine Putin they’re not just serving the countries where they’re headquartered, he said: “It is like patriotism for the free world. It’s not just national security.”

Others say that the response to Russia’s invasion is a critical moment in the evolution of corporate responsibility. “Something is happening that I would call unprecedented,” Marjella Lecourt-Alma, the chief executive and a co-founder of Datamaran, which helps companies manage their E.S.G. risks, told me. “Ukraine is putting a finger at the heart of E.S.G. How do you define it? What is corporate decency today?” She added, “The world is asking companies to articulate in very, very clear terms what they are doing or not doing.”

On the whole it’s probably good that company chieftains and their boards of directors are taking into account more than just their bottom lines in decision-making. The war in Ukraine seems to be another event pushing companies in that direction, along with the pandemic and, in the United States, the attack on the Capitol on Jan. 6, 2021.

It’s complicated, though. The economist Milton Friedman’s dictum putting shareholders first — “the social responsibility of business is to increase its profits” — is cold but clear. When companies take into account the interests of a broader set of stakeholders, morality may be gained but clarity is lost. A company’s decision to stay in Russia can be justified as a benefit to local customers and employees, just as exiting Russia can be justified as the best thing for world peace. And so on. The result is to give the people running companies wide latitude to act as they see fit.

“The situation is extraordinarily challenging for a global brand like ours, and there are many considerations,” Chris Kempczinski, the chief executive of McDonald’s, wrote about the war in a memo to employees and franchisees that was released Tuesday. McDonald’s suspended operations in Russia after weeks of resisting pressure to do so, while promising to keep paying salaries. Yes, the world is a complicated place.

Child poverty in the United States predictably shot up in January after monthly child tax credit payments, which had kept many children out of poverty during the pandemic, expired. The share of children in poverty rose to 17 percent in January from 12.1 percent in December, according to the Center on Poverty and Social Policy at Columbia University. An earlier study by researchers at the center found no evidence that the child tax credit payments discouraged parents from working.

“We will not give up and we will not lose. We will fight until the end at sea, in the air. We will continue fighting for our land, whatever the cost.”

— President Volodymyr Zelensky of Ukraine, invoking the words of Winston Churchill, Britain’s prime minister during World War II, in a video address translated from the Ukrainian to the British Parliament on Tuesday

Have feedback? Send a note to coy-newsletter@nytimes.com.

About brandsauthority

Check Also

Broadacre growth: More people working on cropping, sheep and cattle farms but less in dairy and horticulture

The amount of staff working on a broadacre farms has increased during the past three …

%d bloggers like this: