Russia Impact Series
By Aliza Weiss
Intern, Trade Impact Foundation
Today, we live in a globalized economy, where one country’s economic activity impacts that of another country that is thousands of miles away. This has positive implications, as well as negative consequences in certain instances, such as the recent Russian invasion of Ukraine. However, amongst the positive and negative effects, comes the opportunity for corporate influence. Due to intertwined global economic activity, when a human rights violation occurs, businesses have a choice to make: “respect” the rule of law by respecting universal principles such as human rights and anti-corruption, or to furthermore take proactive actions to “support” human rights in countries they currently operate or expect to operate in the future.
The war between Russia and Ukraine have sparked international cooperation to sanction Russia in hopes of the economic toll causing Russian withdrawal from Ukraine. Large corporations have taken steps to comply with these sanctions, which have in turn helped further the global agenda of ending Russia’s invasion. Sanctions have been used historically to wholly or partially block trade between countries that are not abiding by international law. Previous occurrences, such as the end of South Africa’s Apartheid regime, offer evidence that sanctioning a country economically does in fact have a significant impact. This is in part because the population may protest their countries' unjust actions, in hopes of ending the sanctions, which have detrimental effects on their everyday lives. An example of this is Cuba where “Protesters shouted "freedom" and "down with the dictatorship" in demonstrations across Cuba, including the capital Havana.”
As governments and international organizations take such action to end the conflict, corporations have an opportunity. To bolster the impact of sanctions on peacekeeping and conflict prevention, corporations have a chance to contribute to conflict prevention by engaging in "supporting" actions, which entail surpassing the mandatory obligation of adhering to the sanctions and other legal requirements. Business and trade hold substantial power and can influence global peace and perhaps even prevent conflict.
One recent example of such corporate action is in the instance of Russia. In response to Russia’s invasion of Ukraine, numerous large advisory firms have worked to take actions above abiding by the sanctions, which is “respect,” by also working to “support” human rights by using company strengths to aid Ukrainians suffering human rights violations from Russia. A few of these firms are Deloitte, EY, and McKinsey. A thorough analysis of each firm’s “respect,” and “support” for the prevalent conflict and the actions taken in response are evidence that business' responses hold substantial value.
Deloitte: On March 7, 2022, Deloitte announced that they would withdraw from Russia and end all operations inside the country. Sanctioning off business in Russia was not an easy decision to take, as Punit Renjen, global chief executive of Deloitte, said, “splitting the Russian and Belarusian business was the “right decision” but that his firm’s 3,000 professionals in the countries had “no voice in the actions of their government[s].” Withdrawing and abiding by sanctions is the first step, but Deloitte went further to help Ukrainian colleagues and their relatives with relocation, immigration, transportation, and accommodations, through financial and psychological support. According to a report by Deloitte on July 3rd, 2022, they have aided over 50 of their colleagues and their families in relocating to Central Europe, specifically Poland, Romania, Moldova, Hungary, and Slovakia, and they anticipate assisting more in the coming days. In addition to raising funds for NGO’S across the region, Deloitte created a chatbot, named Irene, with the purpose of connecting NGOs with refugees. In these actions, Deloitte exemplifies the UNGC’s “support,” and not only “respect,” as they have abided by the sanctions required by the US and EU and also used their skills and resources to aid refugees.
EY: “In light of the escalating war, the EY global organization will no longer serve any Russian government clients, state-owned enterprises or sanctioned entities and individuals anywhere in the world,” stated EY on their website. EY’s decision to end its 4,700-person business in Russia in response to the invasion of Ukraine was no easy decision. At the time of these changes, EY’s Russian staff accounted for around 1.5 percent of its global workforce of 312,000. In addition to following sanction laws, EY provided at least 1 million USD in funding in support of the Ukrainian refugees affected by the conflict. Similar to Deloitte, assistance was given to EY staff members and their loved ones. The support included the organization of transport services, accommodations and meals, financial aid, immigration assistance, and psychology services. As a result of EY’s initiatives, more than 230 Ukrainians have come to Poland, amidst the continued relocation process. Through these activities, EY exemplifies not only the “respect,” but the “support,” aspect as well, using its resources to help innocent Ukrainians seek asylum and safety.
McKinsey: McKinsey publicly announced on their website that they were suspending work for Russian clients. Like Deloitte and EY, McKinsey & Company abided by the international sanctions, sanctioning off all business from Russia, following the “respect” aspect of UNCG. However, McKinsey went above and beyond, utilizing their offices in Prague, Dusseldorf, Wroclaw, Warsaw, Madrid, Lisbon, Frankfurt, Berlin, Budapest and London to aid Ukrainians in harm. Similar to the other advisory firms, McKinsey colleagues focused on using their unique skills to aid Ukrainians, such as Brussel based colleagues channeling their analytics capabilities and technical knowledge into launching an external site connecting Ukrainians in need with resources and people that can help. Dusseldorf Solution Leader Dmytro Prosyanko noted this by stating, “Everywhere I look, people are contributing in the ways they can,” and adding that “[e]ngineers are writing code to optimize logistics, and others are volunteering to ensure educational continuity for Ukrainian children sheltering in hotels. It’s 24/7, everyone is pitching in.” Mckinsey as a whole has directly donated $2 million in cash to the International Committee of the Red Cross (ICRC) and has now raised over $13 million through colleague contributions and matches. In other words, McKinsey has “supported” Ukrainians, above abiding by the required sanctions.
Although they may seem independent and insufficient, the actions of these advisory firms, a case study in the numerous corporate actions taken in response to the Russia-Ukraine conflict, illustrates how the actions taken by corporations may affect global peace-keeping efforts and may be viewed as direct efforts to support an end to worldwide conflict.