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Pressure mounts on US companies in Russia

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As a growing list of US multinational companies, from Apple to Levi’s, suspend their activities in Russia, some companies are choosing to remain in the country despite the risks to their reputation.

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New York

But they face mounting pressure: Calls for repercussions appear on social media under hashtags like #BoycottMcDonalds and #BoycottPepsi, two companies that received letters from the head of the New York state pension fund.

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Thomas DiNapoli

These companies “must consider whether doing business in Russia during this extraordinarily volatile time is worth the risk,” Thomas DiNapoli said in a statement.

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Estee Lauder and Coty

DiNapoli has also sent letters to snack maker Mondelez; Estee Lauder and Coty cosmetics groups; and brokerage firm Bunge.

Yale University

A Yale University team that maintains a list of companies with a significant presence in Russia said some 250 have announced their withdrawal from the country since it invaded Ukraine.

South Africa

The group said the withdrawals are reminiscent of “the large-scale corporate boycott of apartheid South Africa in the 1980s.”

Many American

Many American companies still in Russia remain silent. Brands including McDonald’s, Bunge, Mondelez, Estee Lauder, Kimberly-Clark and Coty did not respond to an AFP request for comment.

– Legitimate reasons -Starbucks said its 130 coffee shops in Russia are owned by a Kuwaiti conglomerate. The coffee giant has pledged to donate profits from its business in Russia to humanitarian efforts in Ukraine.

Yum Brands

Yum Brands said its roughly 1,000 KFC and 50 Pizza Hut restaurants in Russia are almost all operated by independent owners under license or franchise agreements.

It announced on Monday that it “has suspended all investment and development of restaurants in Russia.”

Some companies may have legitimate reasons to stay, several ethics and communication strategy experts told AFP.

Tim Fort

Companies may be hesitant to leave because they make essential products like pharmaceutical ingredients, said Tim Fort, a professor of business ethics at Indiana University.

“This is a time where (you have) to choose your side, and I don’t find it very difficult to choose,” he said.

“Any company leaving the country is not going to tip the scales… but there is a cumulative effect,” Fort added.

– ‘What is happening?’ -A company as well known as McDonald’s can have influence in Russia at a time when the general population has almost no access to sources of information other than official messages about the invasion.

Big Mac

“The Russians (will) be able to survive without the Big Mac, but (ask) why is McDonald’s closed? What is happening? It’s a stronger signal in that regard,” Fort said.

Richard Painter

Richard Painter, a professor at the University of Minnesota, warned of “serious risks to Americans and Western Europeans currently in Russia.

“These companies should be doing everything they can to bring their people home,” he said.

Painter said companies “should think about the message that needs to be emphasized: that Russia cannot do this to Ukraine…and at the same time participate in the international economy.”

White House

Economic sanctions imposed on Russia with broad consensus by Western governments “are really the best way to deal with Russia, as opposed to a military confrontation,” the former White House ethics lawyer said.

Brian Berkey

Some companies may be betting that criticism will rain down in the short term, but it will eventually subside, said Brian Berkey, who specializes in corporate ethics at the University of Pennsylvania.

Other crisis situations, such as the Israeli-Palestinian conflict, led to calls to boycott certain companies, but without much effect.

United States

Support for such initiatives is not always unanimous, but “most people in the United States and in Europe are united in thinking that what Russia is doing is clearly unacceptable,” he said.

Mark Hass

Mark Hass, a communications specialist at Arizona State University, said the economic interest of companies that have chosen to stay in Russia “outweighs reputation.”

McDonald’s, for example, derives nine percent of its revenue and three percent of its operating profit from Russia.

But “if social media starts to identify you as a company that is willing to do business with an autocratic aggressor, who is massacring thousands of people in Ukraine, you are in big trouble,” Hass said.

“And it will hurt business in a broader sense than just in Russia.”

Source Credit: TheGuardian

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