Russia’s invasion of Ukraine has forced nearly two million people out of Ukraine, according to the UN Refugee Agency. Frightened and uncertain about their future, they cross over borders into neighbouring countries to escape the bombings and bloodshed.
Meanwhile, a different type of exodus occurs in Russia. Many companies and investors have decided to cut back, or suspend, their activities in Russia. Others have chosen to leave altogether, which could have a lasting impact on the country’s economy.
Visa and Mastercard are the latest companies to suspend all operations in Russia. They join a growing list of international companies refusing to conduct business with Russia.
In response to the unprovoked attacks on Ukraine, the European Union, the UK, US, and Canada, among other countries, have imposed economic and political sanctions against Russia. Companies have cited their own corporate responsibility standards for their decision to withdraw.
Several factors influence their choices. For instance, companies need to comply with Western sanctions against Russia, safety concerns for staff and the potential reputational risk of conducting business as usual in the country all carry weight in their decision-making.
The list of international companies scaling back operations in Russia include Apple, Disney and Ford. Last week, the American automaker announced it was suspending operations in Russia. The company, which has a 50% stake in the Ford-Sollers joint venture, told its partners that it would halt work immediately. Ford, along with GM and Harley-Davidson Inc., joins the growing group of companies in the automotive industry pausing operations or leaving Russia in the wake of the country’s invasion of Ukraine.
When it comes to the energy sector, on a global scale, Russia is the third-largest producer of oil and the second largest producer of natural gas. According to Reuters, energy firm BP decided to abandon a 20% stake in the Russian oil giant Rosneft. A move that could cost BP $25 billion in non-cash charges.
Shell also announced it was leaving its joint venture with state-owned Gazprom. The UK-based oil and gas company said it is ending its involvement with the now suspended Nord Stream 2 pipeline project. The company’s decision is estimated to cost about $3 billion in assets.
Norway’s biggest energy company, Equinor has also initiated a withdrawal from joint ventures in Russia, a value estimated at $1.2 billion. American multinational oil and gas corporation, ExxonMobil, also joins the list of companies in the energy industry that have decided to pull out of key projects and halt new investments in Russia.
As for consumer goods, Ikea, the popular Swedish furniture company, has temporarily closed all stores in Russia, a move that impacts 15,000 workers. They join a growing list of companies like Nike and H&M who have taken similar action following Russia’s invasion of Ukraine. Luxury brand Prada is the latest company to temporary close stores in Russia.
The flurry of activity has spread to major tech giants like Apple. Although the American multinational company does not have any physical stores in Russia, they have paused sales of all iPhone and other devices in the country. Microsoft has also stopped selling its products and services in Russia.
Other big names that have acted against Russia include Meta, the parent company of Facebook. The company said it has blocked access to Russian state-controlled outlets across the European Union. In response, Russia is cracking down on social media censorship.
The country’s communications regulator, Roskomnadzor, officially blocked Facebook and continues to restrict Twitter from the millions of users across the country.
Photo credit: Alina Kuptsova, Pixabay
