Many companies, across different sectors, have come under the spotlight as calls increase worldwide to put a stop to business with Russia as a result of President Putin’s invasion of Ukraine.
Shell faced backlash last week when it bought Russian crude oil for a heavily discounted price after many other companies had already begun dialling back their purchases. The oil major subsequently apologised for the purchase and pledged to donate the profits to humanitarian funds in aid of the crisis in Ukraine.
Shell has since announced that it will stop all spot purchases of crude oil from Russia immediately as it begins to wind down other operations in the country.
The company will also end its joint ventures with Russian businesses and its involvement in the Nord Stream 2 pipeline project in which it has a 10% stake valued at $1 billion.
BP, Russia’s largest foreign investor, has also announced that it will not enter into any new business with Russian entities.
The withdrawal of both companies comes as the US and the UK move to ban oil imports from Russia. Russia is the world’s third-largest producer of oil and US President Joe Biden said the decision will target “the main artery of Russia’s economy”.
It appears that government sanctions are a factor in other companies’ decisions to boycott Russia. Microsoft has stopped all new sales of its products and services to the country.
The company announced that it will work with “the governments of the United States, the European Union and the United Kingdom, and we are stopping many aspects of our business in Russia in compliance with governmental sanctions decision”.
Other tech companies are also participating in the boycotts. Nokia and Samsung have suspended shipments to Russia and Dell has halted sales in both Russia and Ukraine.
Apple has also stopped operations in Russia, pausing the sales of their products in the country. The company has also limited Apple Pay, causing problems such as large queues in the Russian metro.
The company has also announced that it has “disabled both traffic and live incidents in Apple Maps in Ukraine as a safety and precautionary measure for Ukrainian citizens.” RT News and Sputnik News (two state-backed news services) can no longer be downloaded from the App Store outside of Russia.
Media and Entertainment
Google has taken similar steps to Apple. Google Pay has been limited in Russia and Google Maps has disabled live traffic data in Ukraine. The multi-billion brand has also removed media outlets backed by the Russian government, such as RT, from its news-related features.
These media outlets can no longer make money from website ads, apps or YouTube videos.
The reliability of Russian media has come under increased scrutiny since the invasion, pushing some companies to take further action. Meta will restrict access to Russian state-backed media outlets RT and Sputnik across its platforms within the EU.
Content from RT and Sputnik, as well as posts with links to the outlets, will not be recommended by algorithms on Facebook or Instagram.
Spotify announced that as well as closing its office in Moscow, the company “took the additional step of removing all RT and Sputnik content from Spotify in the EU and other markets”.
TikTok said in a statement on Twitter: “In light of Russia’s new ‘fake news’ law, we have no choice but to suspend live streaming and new content to our video service while we review the safety implications of this law.”
A Netflix spokesperson told The Wall Street Journal: “given the current situation” Netflix has no plans to distribute news, sports and entertainment channels from media backed by the Russian state.
Other big names in the entertainment industry are also taking a stand. Disney, Warner Bros and Sony Pictures Entertainment are to pause releases of upcoming films in Russia.
The upcoming release of The Batman, for example, will not go ahead. Disney announced: “Given the unrelenting assault on Ukraine and the escalating humanitarian crisis, we are taking steps to pause all other businesses in Russia”.
Banking and Finance
The boycotts have also reached the finance sector. KPMG, the third-largest accounting firm in the world, will drop their Russian and Belarusian firms. The move will affect more than 4,500 partners and staff in the two countries.
PwC has also announced that their firms in Russian and Belarus would leave their network, affecting around 3,700 partners and employees.
The branches will not necessarily close down, but they will be legally separated from the firms. For example, they will not be able to use the company names or brands. The other accounting firms in the Big Four, EY and Deloitte, have followed suit.
However, the boycotts have left investors wary. American Express is suspending all operations in Russian and Belarus “in light of Russia’s ongoing, unjustified attack on the people of Ukraine”, according to the company’s website.
Amex cards will no longer work in shops or at ATMs in Russia and cards issued in Russia will not work outside the country. The company’s shares fell 8% after the announcement.
Mastercard and Visa made similar announcements and faced similar consequences. The shares in Mastercard Inc. and Visa Inc. fell 5.4% and 4.8% respectively.
However, it seems that companies are weighing up the risks and rewards of boycotting; only about 4% of the net revenue of both Mastercard and Visa is generated in Russia.
PayPal also experienced a drop in shares after announcing it would suspend its services in Russia. President and Chief Executive Dan Schulman said that the company “stands with the international community in condemning Russia’s violent military aggression in Ukraine.”
After the announcement, shares in PayPal Holdings Inc. fell 6.3%.
Other companies in the finance sector appear to be taking a more cautious approach. HSBC and JP Morgan have not fully withdrawn from Russia but have restricted the country’s access to capital markets, as have the Bank of China and Credit Suisse.
However, it seems the pressure to withdraw has been too much for some companies to ignore. After the hashtag ‘#BoycottMcDonalds’ began trending on Twitter, McDonalds set out to temporarily close its 847 restaurants in Russia, stating: “The conflict in Ukraine and the humanitarian crisis in Europe has caused unspeakable suffering to innocent people”.
Russia and Ukraine combined represented ~2% of McDonald’s systemwide sales in 2021. It appears that the backlash the company faced by not joining the boycotts outweighed any financial implications of withdrawing from Russia.
Similarly, Papa Johns has 188 franchised restaurants in Russia. The company has said that it will no longer receive any royalties from these branches. Last year, however, the royalties from these restaurants accounted for less than 1% of the company’s sales.
Coca-Cola is also suspending business in Russia, as is Starbucks and Heineken. Yum! Brands has agreed to close its 70 company-owned KFC restaurants in Russia, although this leaves the remaining 9,300 franchised branches.
The company is also working on an agreement to close its 50 Burger King restaurants in Russia.
Fashion and Cosmetics
L’Oréal, the world’s biggest cosmetics company, is shutting its Russian stores and pausing online sales. Estee Lauder will also close all shops in Russia, and suspend the shipment of products to the country.
Nike, Adidas, Zara, H&M, Mango, and John Lewis are also suspending operations in Russia. Amazon has also stopped shipments to Russia.
Other luxury brands have joined the boycotts; Chanel, Dior and Burberry have all closed their stores in Russia in response to the invasion. Hugo Boss has also suspended operations in Russia; Russia and Ukraine combined, however, make up less than 3% of the company’s revenue.
A Multi-Business Overview
Mercedes-Benz, BMW and Ford have also paused operations in Russia with the former two halting exports of vehicles to the country. However, Renault has not yet joined the boycotts. Renault has the most to lose, according to Bloomberg, with about 10% of its revenue coming from Russia.
Other companies are taking a more pro-active approach. Airbnb has not only paused bookings but is providing free short-term housing for refugees from Ukraine. Through donations from both the company itself and customers, Airbnb will temporarily house 100,000 refugees.
American e-commerce company Etsy also said it would cancel all balances owed to the company by sellers in Ukraine. The total sum of the cancelled listing and advertising fees is believed to be roughly $4m.
It seems that Airbnb and Etsy are following the lead of their consumers, many of whom have used the companies to show their support for Ukraine.
For example, people have used Airbnb to book stays in Ukraine with no intention of travelling there, meaning hosts receive payment without having to receive guests.
Despite the financial implications of the boycotts for some companies, therefore, the pressure is now mounting on remaining business to follow suit and back out of Russia. Companies may lose revenue by suspending operations in Russia.
However, by continuing business there, companies also risk backlash from the public and shareholders outside of Russia.
It seems that many companies are deciding that it is safer to join the boycotts than continue business in Russia and risk being boycotted themselves.