Defend Truth


For corporates, doing the right thing is often harder than it seems


Sasha Planting is a seasoned financial journalist and Associate Business Editor at Daily Maverick Business.

The list of oil, banking and other companies planning to disinvest from Russia after its invasion of Ukraine is growing.

This week, Royal Dutch Shell announced plans to divest from Russian oil and gas. This follows similar promises from BP and Equinor, Norway’s state-controlled oil company. ExxonMobil has said it will begin the process of unwinding its involvement in an oil and gas project in the far east of Russia.

Tech companies have also come to the party. Apple shut off sales of all products and services in the country and has disabled traffic and live incidents on its maps app “as a safety and precautionary measure for Ukrainian citizens”. The company has also limited its Apple Pay service.

Google has dropped Russian state news and publishers from its news feeds, and Facebook parent Meta says it will limit access to Russian state news outlets so they appear less prominently on news feeds. Some would argue that it’s about time the tech companies “did the right thing”.

In the motor industry, Ford and GM have suspended exports of vehicles, as have Jaguar, Volvo and Land Rover. Boeing announced its intention to halt operations in Russia, including parts, maintenance and technical support for airlines in the country. Similarly, Airbus has suspended support services to Russian airlines, as well as the supply of spare parts to the country.

The symbolic power of these announcements is massive.

In the case of BP, those resources account for more than half of BP’s oil and gas reserves and a third of its production. Beyond the symbolism is the practicality. How exactly will these companies walk away from these huge investments – particularly in the energy sector? Who will buy them out? Who will ensure the operations are run competently and safely?

Complicating matters further is the fact that Russia’s central bank is severely limiting the sale of Russian equities by nonresidents, and the US is blocking that bank from engaging in dollar-denominated transactions – making it very difficult for, say, Western pension funds to exit any Russian investments. But as companies rush headlong into disinvestment promises, will some just be talking the talk? And will others dismiss it as an over-reaction in a heightened state of emotion? How far should the disinvestment principle be pushed?  

After all, should companies like Mondi and Barloworld, which have sizable investments in the country but which are in nonstrategic sectors, reconsider these? And what about Naspers/Prosus, which owns Russia’s classified ads business Avito, and has a 25.7% shareholding in Russia’s VK Group, which owns the country’s most popular social media site, VKontakte? This latter investment may become embarrassing.

The CEO of that business is Vladimir Kiriyenko, the 38-year-old son of Sergei Kiriyenko, Russian President Vladimir Putin’s first deputy chief of staff. US authorities have described Kiriyenko Snr as Putin’s “domestic policy curator” and have slapped sanctions on him and his family. To my mind it looks like Prosus is invested alongside the Russian government, which is an awkward place to be right now.

A Prosus spokesperson told me they are “closely monitoring the situation”, which “is evolving quickly”, adding that “it’s impossible … to speculate on the longer-term implications for our operations and investments”.

When it comes to politics and picking a side, companies have historically chosen to “remain neutral”, a euphemism for staying in business. But things are changing – particularly for public companies. Shareholders and customers are demanding that companies hold themselves to higher standards – the pursuit of profit is no longer enough.

Corporate leaders, from the financiers to the operators, are recognising that businesses cannot separate themselves from society. They are inextricably linked. And the narrow focus on profit maximisation and shareholder value at all costs – which used to be the standard behaviour of most companies – has changed forever. So when answering the question of how far the disinvestment principle should be pushed, companies need to be careful about the decisions they make because they could come back to bite them.

And, trust me, sitting on the fence is also a decision. Consumer sentiment, not to mention boycott, is a powerful thing. Nike learnt this the hard way when it became known that the Chinese government was forcing hundreds of young Uyghur women to produce Nike shoes. Similarly, Hershey’s, Mars and Nestlé felt the wrath of consumers when they arrogantly dismissed suggestions that the cocoa they bought was directly linked to child labour, human trafficking and slavery.

The list of examples can and does go on. Companies are now under pressure to take a stand, and they know it. The world is watching as ordinary, unarmed Ukrainians face off against Russian tanks. Companies have a moral obligation to set ethical standards, and to invest shareholder funds in line with these standards.

Companies investing in Russia have chosen to ignore the fact that the Russian government is running a kleptocratic and criminal organisation, as Bill Browder, founder of Hermitage Capital Management and the author of Red Notice, puts it. And any person who enters the Russian government does so not to serve their country but to steal as much money as possible. By extension, then, any company that profits off this state, and chooses to remain invested in it, needs to re-examine their own values. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest stockist, please click here.


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  • Steve Smith says:

    “…any person who enters the Russian government does so … to steal as much money as possible.” Gee, no prizes for guessing what THAT statement makes me think of here in good ‘ol SA!!!!!

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