Some Companies’ Reputations at Risk as Russian War Atrocities Mount

The Russian war against Ukraine sparked an unprecedented backlash from U.S. and global corporations. Scores of the most recognized brands in the world dropped all or part of their business ties with the country soon after it launched a murderous, unprovoked attack on Ukraine. Those remaining have struggled to justify staying, though clearly, they should make a clean break. Among other reputational risks, they stand to lose all credibility on how they stand on racial equality, gender diversity and LGBTQ rights. 

Unprecedented unity on sanctions

Global fossil energy companies were among the first to announce the suspension of business in Russia, even before governmental sanctions regimen got under way. Many other companies soon followed, amplifying the impact of international economic sanctions.

In addition to pulling out of Russia, many companies have also rushed to provide humanitarian and defensive aid to Ukraine. In particular, leading U.S. tech companies responded to a direct appeal from the Ukraine government to apply their systems and equipment to the defensive effort. That includes Elon Musk’s Starlink communications venture. Though security experts initially cautioned that the system could enable attackers to find targets, the equipment has reportedly been helpful.

Who is defying demands to exit?

All in all, the business response to Russia’s unprovoked attack on Ukraine is unprecedented in terms of scale and unity. Still, there are some notable holdouts.

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The Yale School of Management has been tracking the corporate response in the form of a downloadable Excel list. The list is divided into five categories in descending order of impact. To date it includes more than 400 companies. Of those, an impressive number of 166 are making a permanent or “clean break.” Another 186 are suspending operations, which is also a forceful act. A lesser number are taking more limited action, with 28 scaling back operations, and 54 delaying future plans while continuing existing operations.

The fifth category, as of press time, consists of 32 companies that have been unresponsive to the rising tide of public and government sentiment. The school lists this category as “digging in,” defined as “companies defying demands for exit/reduction of activities.”

The key word is action. Through the “digging in” category, Yale draws attention to a shrinking number of companies that have taken no public action at all.

Other familiar names in the “digging in” category include Ball Corporation, Cloudflare, Credit Suisse, International Paper and Renault.

Brand reputation at risk when companies appear to overlook suffering

At this time, much of the public pressure has focused on two very different companies that do have one thing in common, and that is their high public profile. One of them is Koch, which Yale lists in the “digging in” category. The other is Nestlé, which is among those companies “buying time.”

Koch and Nestlé are not alone. Other global companies have taken some action but have also failed to break or suspend all operations. By staying, they have all exposed themselves to a reputational risk that will take years, if ever, to resolve.

Nestlé has put itself in the position of appearing to critics as overlooking Russia’s wanton destruction of residential buildings, schools, hospitals, care homes, hospitals and bomb shelters. Short of genocide, those actions have all the hallmarks of a terror campaign aimed at depopulating Ukraine, no matter the human cost.

That puts Nestlé squarely in the spotlight due to its oversized role in the global food supply chain. In a statement dated March 11, Nestlé insisted that has a responsibility to continue supplying essential foods and medical products in Russia. The forced displacement of millions and the bombing of civilian populations clearly undercuts that argument.

Nevertheless, as recently as March 21, the company persisted in defending its decision in terms of its responsibility to employees in Russia as well as its role as an essential food supplier.

Similarly, as of last week Koch inferred that its 600 workers in Russia will suffer if the company shuts down its two glass factories there. Meanwhile, news reports continue to show the millions suffering, dying and losing their jobs in Ukraine.

The diversity factor and the Russian war

The element of human suffering alone should drive the corporate response to the Russian war on Ukraine. However, Koch and Nestlé also illustrate how some companies also continue to put themselves at reputational risk as a matter of corporate social policy.

Stephanie Foggett, Mollie Saltskog and Colin Clarke of the counter-terrorism and security consultancy Soufan Group have drawn attention to the role of “tactical misogyny” in both Russian aggression and the far-right extremist and white supremacists movements in the U.S. and elsewhere.

They outlined their case last week, in an article published on the War on the Rocks online platform, a project of the firm Metamorphic Media.

Though cautioning that the far-right response to Russian aggression is complex and varied, they argue that the common denominator is “the creation of a white ethno-state and the destruction of Western liberal societies.”

That puts Russia’s attack on Ukraine in perspective as a matter of corporate social policy.

"The false ‘evidence’ levied against [Ukraine President Volodymyr] Zelenskyy includes the fact that he is Jewish — and thus part of the ‘global elite’ — and that he is a supporter of rights for the LGBTQ+ community, who the Kremlin claims seek to exploit children in order to groom them,” the three researchers explain. The latter narrative shows alignment with far-right extremist groups such as the Proud Boys, which frequently deploy homophobia and anti-LGBTQ+ rhetoric within their propaganda.

In short, companies that continue to maintain a footprint of any sort in Russia are aligning themselves with the world view of murderous extremists, a position that runs directly counter to the kind of support for gender diversity and LGBTQ rights that companies like Nestlé claim as part of their corporate identity.

"For years, Putin’s sexist rhetoric and deliberately cultivated macho imagery have played into the hands of white supremacist extremists who share his disdain for women and gender equality,” Soufan’s researchers write.

They also note that white supremacists in the U.S. commonly claim that the U.S. military is being “destroyed by diversity,” and that “in meeting the needs of women, minorities, and gender non-conforming servicemembers, Western militaries were lowering standards and fighting fitness."

Under the spotlight as sanctions mount

The “destroyed by diversity” world view made its way into White House policy in stark relief during the run-up to the 2020 presidential election, when former President Donald Trump lead the charge to brand diversity training as a sort of 21st-century red scare.

On September 22, 2020, Trump issued an executive order that banned certain types of diversity training among all federal agencies and their contractors, including the U.S. Department of Defense.

Unlike Nestlé, Koch is not widely known for a focus on gender equality and LGBTQ rights. However, the September 22 executive order underscores the company’s ties to steering public policy. Aside from their well-documented support for fossil energy stakeholders, the decades-long role of the Koch family in promoting right-wing policies is an attention-getter that extends from the John Birch Society in the 1960s on up to the present day. That includes financial support for the Federalist Society, which was instrumental in seating three conservative Supreme Court judges during Trump’s term in office.

Given this background, it is no surprise that Koch has become a focus of attention as sanctions against the Russian war effort mount. The company argues that its operations in Russia are limited to the two glass factories, but last week independent journalist Judd Legum of Popular Information detailed how groups backed by Charles Koch have launched a lobbying effort against the sanctions.

It’s also no surprise that the full weight of a decades-long campaign against civil and human rights in the U.S. has taken the precise form of the Putin world view outlined by the Soufan Group researchers, focusing like a laser against women, against transgender children and against diversity education in elementary schools, and it is no surprise that the first Black woman to be nominated to the Supreme Court is met with a whisper campaign that raises the same child-centered canard long wielded against Jews.

As the atrocities pile up in Ukraine, corporations that take their human and civil rights profile seriously need to take a long, hard look at their support for elected officials in the U.S., who promote the same world view practiced to the lethal, near-genocidal consequence by Vladimir Putin’s forces in Russia.

Image credit: Gayatri Malhotra via Unsplash