One month ago today, when Russia invaded Ukraine and we circulated this poem for peace by Ukrainian teenager Daria Chebotariova, the response from the rest of the world, watching in shock, was still in doubt. Within days, however, Ukrainian President Volodymyr Zelenskyy made clear that he and his country would dig in and resist, Western and Asian governments assembled the most rapid and comprehensive sanctions imposed on a large modern power, and ever since, the flow of aid and weapons to Ukraine, the freezing of foreign assets held by Russia and its oligarchs, and the imposition of additional sanctions have continued seemingly unabated.
Among these tranches of activity intended to support Ukraine and isolate Russia, corporate divestment has emerged as a major factor. While companies have traditionally preferred to stay on the sidelines of (geo)politics, the pressure from customers, employees, shareholders and others to take a stand on issues such as police violence, voting rights and more has built rapidly in recent years. Even so, the corporate response to Russia’s war has been impressive. Within a month, more than 400 companies have made pledges to end, suspend, or otherwise curtail their operations and interests in Russia, piling on significantly to the impacts of government-imposed sanctions.
One of the biggest surprises of the Russian divestment movement has been its early leaders: oil companies like BP, which risked as much $25 billion in losses with its total withdrawal from Russian interests (announced just three days after the war began), or Shell, which gave up stakes in multiple Russian oil ventures, including its involvement with the Nord Stream 2 pipeline, totaling perhaps $3 billion in value. The significance of these moves is magnified by the fact that energy accounts for approximately 60% of Russia’s exports. Laggards on climate change, oil companies have led decisively in the effort to cut off the capital Russia will require to successfully prosecute its war.
Corporations of all stripes have followed suit. Banks and payment processors from Goldman Sachs to Paypal, large accounting and consulting firms such as KPMG and McKinsey, automakers including Ford and Volkswagen, and tech companies from Alphabet (Google) to Samsung have suspended financing, operations and shipments in Russia. Airlines, logistics firms, and media companies have closed up shop; even highly visible US food and retail brands such as McDonald’s, Nike and Starbucks—once symbols of Russia’s economic re-opening following the dissolution of the Soviet Union—have closed their doors in the country. (The remarkably small group of holdouts includes perhaps unsurprising names like Koch Industries and Halliburton.)
Experts including Fiona Hill, a former Russia specialist at the National Security Council, and Jeffrey Sonnenfeld, founder of Yale’s Chief Executive Leadership Institute, have applauded these withdrawals. Hill calls the decision for a business to pull out of Russia “the epitome of ‘ESG’,” likening the current situation to 1930s Germany in which “the major German enterprises . . . were being used in support of the war.” Sonnenfeld, whose institute maintains the most widely cited list of companies withdrawing from Russia, views the “Great Business Retreat” from Russia as potentially similar to the divestment movement that saw hundreds of companies leave South Africa by the late 1980s, in response to apartheid.
After putting out his initial list, Sonnenfeld more recently updated it to distinguish between full and more partial withdrawals. He gives an “A” grade to companies who leave fewer doors open, and progressively lower grades to those who have declared their suspension of Russian operations to be more partial or temporary in nature, including those such as McDonald’s who continue to pay their Russian employees despite business closures. In response to those like Nicholas Mulder of Cornell University, who recently published The Economic Weapon: The Rise of Sanctions as a Tool of Modern War and argues that sanctions work best when their removal is explicitly tied to concrete and progressive goals, Sonnenfeld points to data his team is putting together that suggest as much as 23% of Russian GDP has been impacted by corporate withdrawals—on top of the impact of government sanctions—and reiterates that the goal is for “civil society to come to a halt to show a totalitarian is not truly in total control, because that’s one way to weaken them.”
As with so many other aspects of the war in Ukraine, the world will have to wait to clearly understand the impact of the nascent Russian divestment movement. But for now, this much is clear: on yet another issue, companies are more responsive than they have ever been in aligning their businesses with the values of the many stakeholders that make their existence possible.