There can be no half measures when it comes to isolating Russia. Companies continuing to do business with Russia cannot claim that they are meeting their ESG targets.
Since we founded Emerging Europe a decade ago, we have been asked multiple times whether we have given as much attention to Russia as we have given to the 23 other countries that used to be part of the so-called Eastern Block.
Our answer has always been ‘no.’
Nevertheless, we have always looked at Russia because it has always had an enormous geopolitical and economic influence on the region, not least on Ukraine.
- The sports community should not reward Russia
- What future for the Ukrainian energy sector?
- Remembering the USSR, we prevent its reconstruction
Russia had violated Ukraine’s territorial integrity in 2014 with the illegal annexation of Crimea, the seizure of the towns of Sloviansk, Kramatorsk, and Druzhkivka in the Donbass region and shooting down of a Malaysia Airlines plane over eastern Ukraine, killing 298 people.
The full-scale invasion of Ukraine which began on February 24, 2022, proved that only by isolating Russia and its citizens can we make them realise what human rights and dignity, freedom, democracy, equality and the rule of law are, and how important these values are for Europe.
International and individual wars
And that isolation has to be full and unconditional even though there are Russians who not only condemn and object the war and the regime but also actively fight against them. And that there are people who are fighting their own wars in circumstances that they have not chosen, such as a young man who worked as a waiter in a restaurant in Astana, in Kazakhstan, in October last year.
This man, in his early twenties, had not only left Russia to avoid mobilisation but as a gay man he had left to avoid repression and discrimination. In early December 2022, Vladimir Putin signed into law a bill that expands a ban on so-called LGBTQ “propaganda”. After this young man’s grandmother had been arrested and beaten by the police while demonstrating against the regime, his mother told him to leave the country.
Such extreme decisions are often difficult to take. The same is true for businesses.
“On February 24, we stopped all goods from Russia. It was a tough decision, but it met our ESG (environmental, social and governance) commitments. Sometimes, you need to say, I will not take that money,” Anna Gorączka, chief green officer at Żabka Group, a large chain of convenience stores, said during the Future of Emerging Europe Summit and Awards in June 2022, in Brussels.
After February 24, we, as an organisation, took the decision to continue working only with organisations that ceased operations in Russia. And we welcomed the decision by several international companies who we helped to set up operations in the region to avoid any association with Russian entities and with entities in countries that had not implemented international sanctions against Russia, such as Serbia.
This situation requires that private and public organisations be more vigilant and do proper due diligence when engaging with new business partners. In the end, ESG does not only refer to the environmental protection but also governance, social aspects and human rights – all things which are clearly violated by Russia.
At the same time, I still see attempts to portray Russian businesses and organisations, or those that are set up elsewhere but owned and run by Russian citizens, as international.
Several months ago, when the Emerging Europe research team was working of the Future of Food report, published at the end of January, we were contacted by a PR specialist representing an insect farming start-up based in Estonia and founded by a Russia-born entrepreneur currently residing in the United Arab Emirates.
She pitched the start-up to the food tech showcase included in the report and when asked about the founder’s origin she wrote that the start-up “has no operations, employees or contractors in Russia. They do not pay money in Russia and do not receive money from there. [Its] employees and contractors come from Europe, Vietnam, Georgia, Singapore; and [its] clients are from Europe and are totally OK with dealing and signing contracts” with the start-up.
Last year, I was invited to speak about the value proposition offered by the emerging Europe region in the global business services sector alongside experts discussing other key delivery markets. I was also set to participate in the event this spring. That changed last week when I received the event’s agenda and spotted a Russian speaker, the founder of a London-based start-up supporting the Russian tech talent registered at the UK’s Companies House just five months before Russia’s full-scale invasion of Ukraine began.
I immediately emailed the organisers and cancelled my speaking engagement at the event. Within a few hours, the organisers had responded to my cancellation saying the Russian founder would no longer join the conference.
There are no double standards. Values are values and they need to be maintained, no matter what. And one cannot object to Russia’s invasion of Ukraine and support peace in Europe while remaining blind or deaf to all the atrocities Russia and its citizens are causing in Ukraine.
In February 2022, after Russian troops invaded Ukraine, a large number of international companies announced plans to cease business operations in Russia, but it appears that a year later a lot of them have fallen back on their promises.
When the Kremlin started the ‘special operation’ there were 1,404 companies based in the EU and G7 countries, as well as 2,405 subsidiaries, which were active in Russia. By late November 2022, only 120, or around 8.5 per cent of those companies, had divested at least one of their subsidiaries in Russia, despite international sanctions and commitments to leave the Russian market, according to a study by Swiss management school IMD Institute and the University of Gallen.
Companies that have decided to remain in the country are legally obligated to actively participate in Russia’s war against Ukraine, by delivering summons for military service, aiding in delivering equipment, creating military assembly points, and providing buildings, communications, land, transport, and information to the Russian army.
According Business4Ukraine, international companies currently employ around 700,00 people in Russia, including about 250,000 people employed by US, almost 125,000 by French and over 90,000 by German firms.
A lot of these companies will openly claim to support the UN’s Sustainable Development Goals as well as the ESG agenda. But do they, really?
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