The lightning pace of businesses boycotting Russia over the invasion of Ukraine means corporate activism on social and political issues will never be the same.
Official sanctions in support of global diplomacy are nothing new — though never on this scale. But the scope and speed of businesses cutting ties with Russia has set a new benchmark for how individual companies can respond to a cause.
In the midst of Ukraine’s military and humanitarian crisis, it seems almost quaint that corporate boards were so recently agonising over whether to lend their business weight to high-profile issues such as vaccine mandates, or climate change, or Black Lives Matter, or same-sex marriage. Such hesitancy appears to have been swept aside in the righteous rush to isolate Russia.
There is no real doubt that the boycott is warranted. Yet setting aside whether it can be effective in moderating Putin’s foreign aggression, there are many unanswered questions which go to the heart of effective issue management.
First, there is the carefully crafted corporate language to communicate corporate positions. Such as withdrawing from Russia versus suspending operations, which suggests a desire to promptly return. Or the companies which say they will continue operating in Russia but will not make further investment, or will cease supplying product, or will redirect local franchise profits to humanitarian aid. In the flood of company statements such distinctions might be lost, but they are important, nonetheless.
Then there is the question of how far the boycott will spread, especially for companies in China, where the government has expressed “regret” about the military action, though abstained on a United Nations resolution condemning Russia’s invasion.
In Britain, for example, two highly credentialed non-executive directors of Huawei UK resigned over the failure of the Chinese telecom giant to quickly condemn the conflict in Ukraine. And in the US, Commerce Secretary Gina Raimondo has warned that Washington could “essential shut down” Chinese companies that defy American sanctions on technology exports to Russia.
However, the key unknown is how long these business decisions will endure. At the start of the boycott, it was not a question of who will act first but how to avoid being last. There was a predictable bandwagon effect as companies large and small wanted to be seen taking action, not matter how symbolic. Like when Woolworths in Australia announced its home-brand boneless Chicken Kiev would be renamed Kyiv to reflect the preferred Ukrainian spelling as a “small but meaningful” act of solidarity.
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Now that the substantive boycott is in full swing, the much bigger strategic question is when will it be okay to do business in Russia again? With Putin threatening to void intellectual property protection for patent holders registered in countries which Russia deems to be “unfriendly”, and threatening to seize assets of commercial organisations which leave Russia, which company will be the first to blink?
For multinational giants such as McDonalds and Starbucks, which have shut down Russian stores but are still paying local staff, when and how does the boycott end? It’s a critical executive decision with enormous financial and political implications for many organisations, and getting it wrong could trigger a genuine reputational crisis.
With the world watching, none of the big corporate players will want to risk being seen as the first mover, but when does the boycott ease? When massive losses force Russia to withdraw? When shattered Ukraine has no choice but to sue for peace? When Putin manages to install a puppet government? When a prolonged guerrilla war against occupation finally comes to an end?
We may not know the answer for weeks or months. But we do know the Russian boycott will likely become the benchmark for how companies respond to major issues for years to come.
Tony Jaques is an expert on issue and crisis management and risk communication. He is CEO of Melbourne-based consultancy Issue Outcomes and his latest book is Crisis Counsel: Navigating Legal and Communication Conflict.