Following Russian President Vladimir Putin’s decision to launch a ‘war of choice’ against Ukraine, leading foreign companies with multi-billion dollar investments in Russia, including BP, Shell, ExxonMobiland Norway sovereign wealth fund, announced that they were going to divest or cease their activities. Many others, including Apple, McDonald’sand Starbucks, began to suspend operations. Faced with an equally severe moral dilemma in apartheid South Africa, many international companies ceded and eventually helped coerce the government into negotiations that ended the system of enforced segregation.

As Putin made pre-war preparations to try to shield the Russian economy from sanctions, including setting aside more than $600 billion in foreign currency, he was unprepared to face the risk of an exodus mass of foreigners from the Russian market. On March 1, Russian Prime Minister Mikhail Mishustin announcement that the government had drafted a decree prohibiting foreign companies from withdrawing their investments. The Prime Minister warned foreign companies against making decisions based on what he described as “political” considerations.

But Russia’s foreign divestment has already begun and is rapidly gaining momentum. It is driven by corporate responsibility to shareholders and employees as well as external government and civil society stakeholders. The architect of South Africa’s divestment movement, the Reverend Leon Sullivan, framed as an act of “corporate civil disobedience” against immoral policies, laws and practices. Global business leaders are increasingly embracing the UN Guiding Principles on Business and Human Rightswhich broaden the scope of corporate responsibility.

Foreign companies play an important role in the Russian economy. Large-scale divestment from the Russian market will accelerate and multiply the devastating effects of Western government actions recent acts of economic coercion, including the US ban on the import of Russian oil, the blocking of sanctions against the financial sector, the freezing of the Central Bank of Russia’s hard currency reserves held in foreign banks, the ban on some Russian banks to use the SWIFT system and expanding the number of sanctions and the range of law enforcement actions against Russian oligarchs.

Foreign divestment strikes at the heart of Putin’s plan to stay in power by providing Russians with economic security while destroying his political opponents. Prior to his full-scale military invasion of Ukraine, Putin came to rely on his ability to attract and direct foreign investment into Russia by the world’s major multinational corporations. This included a desire to provide capital investment, advanced technology and access to global markets. Multinationals such as BP, Shell, General Electric, ABB and Siemens have teamed up and equipped Russian “national champions”, including Rosneft, Gazprom, Inter RAO and Russian Railways.

Putin can no longer depend on multinationals to modernize. Given the importance of oil and gas revenues to its ability to stay in power, divestment by global majors is particularly threatening. On February 27, under pressure from the British government, British oil and gas giant BP announcement that it would sell its 19.75%, $25 billion stake in Rosneft. February 28, Shell announcement that it would divest joint ventures with Gazprom, including the Sakhalin-2 natural gas and Nord Stream 2 pipeline projects. On March 8, Shell took a extra step, announcing that it would stop buying Russian oil on world spot markets. On March 1, ExxonMobil announcement that he was leaving his operation in Sakhalin-1 valued at 4 billion dollars.

The world’s sovereign wealth funds (SWFs) are also planning to divest, further limiting Russia’s ability to access the capital needed to upgrade infrastructure, improve public health and diversify local manufacturing. On February 27, the Norwegian company Norges Bank Investment Management announcement that it will sell shares in the Russian energy industry. At the same time, the Biden administration sanctioned the Russian SWF, the Direct investment funds in Russiawhich will make it more difficult for global sovereign wealth funds to include Russia in their portfolios.

In recent years, the boards of publicly traded companies and pension funds have become more accountable to activist shareholders who push them to adopt policies on political issues such as civil rights and voting rights. Traditional corporate social responsibility, which has focused on environmental, ethical and governance issues, has been expanded to include corporate political responsibility.

This trend places an increasing number of publicly traded companies foreign companies under pressure from shareholders and stakeholders to take a stand on Russia’s war on Ukraine. Even companies that cannot give in because they have deep-rooted retail operations and franchises are shutting down to protest the war. McDonald’s and Starbucks restaurants are closing. Apple suspended product sales. Mastercard and Visa have limited access to their credit cards.

During his public presentation on March 1, Prime Minister Mishustin indicated that the Russian government wanted to negotiate with foreign companies regarding their future plans. This provides an opening to increase pressure on Putin to end the war. Foreign business leaders from the United States and the European Union are expected to organize a high-level delegation to meet with the Prime Minister to advocate directly against the war.

The message is clear: Russia’s war against Ukraine is unjustified, unprovoked, immoral and inhumane. President Putin and his military leaders are committing atrocities that could be considered a violation of the Geneva Conventions on the treatment of civilians in wartime. Russia must end the war and withdraw its military forces from Ukraine immediately and unconditionally.

Could the growing number of foreign companies considering leaving Russia force Putin to recalculate the costs of his war and end it? Maybe not. But foreign companies certainly have a unique, crucial and timely opportunity and responsibility to make this point.

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