As western corporate titans flee their Russian connections â citing both moral and economic imperatives â others say they are stuck, especially, in food service and natural-resource based industries. McDonaldâs, Starbucks, Papa Johnâs and Yum Brands â the conglomerate behind KFC and Pizza Hut â have all stayed mum on their plans for business in Russia after its invasion of Ukraine even as they come under growing pressure on social media and from large investors to quit Russia.
Dozens of marquee names have suspended operations â including Shell, BP and ExxonMobil â in response to the unprovoked attack that has devastated Ukraine and drawn international condemnation. But others are walking a finer line, such as French oil company TotalEnergies, which said it would halt new spending in Russia but maintain its partnerships there, including a nearly 20-percent stake in Russian gas producer Novatek.
Boeing, meanwhile, announced Monday it would look elsewhere for the titanium it uses for is passenger jets but it stopped short of pulling out of a joint venture to produce it. Russiaâs metal industry â key to electric vehicles and semiconductor chips â is so dominant that analysts speculate it may be âtoo big to sanction."
The moves represent how deeply entrenched certain industries are in the region and Russian economy. In agriculture, Ukraine is such a large wheat producer that it is known as the âbreadbasket of Europe.â Russia is also a large grain producer.
Russiaâs economy is small compared with that of the United States â $1.5 trillion vs. $20.9 trillion â but itâs also too large to ignore. It would be, experts say, like a major corporation pulling out of Texas.
But for economic sanctions to pack the most punch, they say, Russiaâs financial isolation must surpass what western governments can impose and make corporations feel that operations in Russia are risky for both their public appearance and balance sheet.
âThe financial impact is not going to rock the market, or their particular stock price,â said Gary Kalman, the U.S. director of financial corruption watchdog group Transparency International. âI do think that the reputational threat is larger in terms of peopleâs perception.â
Some of those corporations are getting called out on social media and by institutional investors. On Twitter, activists have been circulating lists of brands to boycott as they continue to do business in Russia, including McDonaldâs, Coca-Cola, PepsiCo, Yum Brands restaurants and Starbucks.
McDonaldâs owns the vast majority of its more than 900 locations in Russia and Ukraine, though it sold off 15 percent of them to franchisees after Russiaâs 2014 annexation of Crimea.
But other food brands donât have as much control over their Russian operations. Most Starbucks, Papa Johnâs, KFC and Pizza Hut locations in Russia are owned by franchisees, limiting the corporationsâ abilities to curtail their operations.
Representatives from McDonaldâs, Coca-Cola, PepsiCo, Yum Brands and Papa Johnâs did not respond to requests for comment.
Starbucks chief executive Kevin Johnson wrote in a letter to employees on Friday that the companyâs 130 Russian stores were âwholly owned and operated by a licensed partner.â Johnson said the company will donate royalties it receives from its Russian business to humanitarian efforts in Ukraine.
Corporations in heavier industries have found it just as difficult to extricate themselves completely from Russian markets. Chicago-based aerospace giant Boeing depends on Russian titanium for things like fasteners and landing gear used in commercial jets like the 737, 767, 787, 777 and 777x. Titanium parts also are widely used in aircraft engines.
On Monday it suspended all purchases of titanium from Russia. It said it has enough titanium stored away to keep producing planes without Russiaâs help in the short-term.
But Boeing did not commented on the future of its Russian investments, including a titanium-production joint venture it started more than a decade ago. It reaffirmed that relationship as recently as November when it signed a memorandum of understanding with Russiaâs VSMPO-AVISMA, which describes itself as the worldâs largest titanium producer. The company is chaired by Sergey Chemezov, who is often described as a close associate of Russian President Vladimir Putin.
âOur inventory and diversity of titanium sources provide sufficient supply for airplane production, and we will continue to take the right steps to ensure long-term continuity,â Boeing spokesman Paul Lewis said in an emailed statement.
TotalEnergies CEO Patrick Pouyanné said during a Monday energy industry conference that his company would not renounce its Russian connections because of Europeâs dependence on imported natural gas.
Pouyanné said the company did not face any pressure from authorities in France, which uses far less natural gas that other western European countries, to cut ties with Russia.
âI had discussions obviously with the highest authority in my country and there is no push from them for us to exit Russia,â he said, according to Reuters.
At least one major public institutional investor called on corporations doing business in Russia to reevaluate their operations. On Friday, New York State Comptroller Thomas P. DiNapoli wrote to 10 companies with investments held by the stateâs pension fund â including McDonaldâs, PepsiCo, Mondelez and Kimberly Clark â urging them to reconsider their participation in Russian markets.
Together, New York retired civil servants hold $1.6 billion in the corporations, including a $501 million stake in PepsiCo and $410 million in McDonaldâs.
âWe believe that companies that continue to operate in Russia and invest in Russian assets face significant and growing legal, compliance, operational, human rights and personnel, and reputational risks. Furthermore, due to the situationâs unpredictability and the likelihood that conditions will deteriorate, companies must ensure that assets will not become stranded or otherwise encumbered by sanctions,â DiNapoli wrote.
Maryland Comptroller Peter Franchot on Monday applauded American companies that halted their operations and partnerships in Russia, and called on U.S. law firms, lobbying groups, developers and accounting firms that work with the Kremlin or and Russian organizations to cut off their relationships.
âThe most effective way to stop Putin from his unprovoked invasion of Ukraine is to hit him and his oligarch enablers in their wallets,â Franchot said in a statement. â ⦠Weâre not going to get involved militarily, so we must be forceful in our efforts to weaken them economically and financially.â
Jeanne Whalen contributed to this report.
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