Corporations halt operations in Russia following invasion of Ukraine

Basmalla Attia, Advertising Director

Many American corporations took a strong stance against Russian Federation President Vladimir Putin’s actions in Ukraine by cutting off all of their business in and with Russia, and redirecting profits toward humanitarian causes.

Sanctions from western nations appear unable to make Putin rethink or hesitate to execute further attacks on Ukraine.

As a result, many corporations stopped operations in Russia. Some of these companies include Estée Lauder Companies Inc., Fortinet Inc., Yum! Brands Inc., Coca-Cola Co. and McDonald’s Corp.

However, this act took time. It was not until loud public statements, increased pressures from the public and sanctions imposed on Russia left them no door other than the exit.

In support of Ukraine, the public urged boycotts of companies via social media by making hashtags like #BoycottPepsi, #BoycottCocaCola and #BoycottYumBrands trend.

Additionally, New York City Comptroller Thomas DiNapoli urged American businesses to shut down operations in Russia because they put much at risk, including what they stand for and the reputation they will gain.

Starbucks Corp. first expressed its sentiments on March 4, in which it vowed to donate royalties from Russia to humanitarian efforts in Ukraine and contribute $500,000 to humanitarian relief efforts for Ukraine. It also announced that business in Europe, the Middle East and Asia would continue to work to support financial contributions and service.

On March 8, Starbucks suspended all business activities in Russia, including the shipment of its products.

McDonald’s also released a statement in which it expressed concern about its Ukrainian workers, the help that it will provide them and the reason it saw Russia’s action as unsustainable.

“We understand the impact this will have on our Russian colleagues and partners, which is why we are prepared to support all three legs of the stool in Ukraine and Russia,” McDonald’s CEO Chris Kempczinski said.

McDonald’s also mentioned that it understands the problems the Russian population is facing, which is why it is willing to provide a support system for them by continuing to give its workers in Russia their full salary, just like its workers in Ukraine.

Such sentiments were followed by many other corporations.

Yum! Brands, which includes fast food chains KFC and Pizza Hut, has shut off all of its operations in Russia and has redirected the profits toward humanitarian aid.

Yum! Brands activated a disaster relief fund and matched donations to charities providing relief to organizations such as UNICEF, Red Cross, World Food Programme and International Rescue Committee, in addition to providing food for refugees.

The shutdown of these companies won’t be cheap. It will cost McDonald’s $50 million a month, and Starbucks is going to close 130 of its shops.

It is important to note that halting operations is also accompanied with the decision to continue paying workers. Knowing the risk and the cost burden of this decision made corporations think for a while before making any decisions.

The shutdown of many huge American brands is bound to leave the Russian population in despair as the places are not just restaurants or shops, but also symbols carried in people’s memories.

“I was in Moscow in the ‘90s after the first McDonald’s restaurants opened, and I remember the excitement,” Matthew Schmidt, an associate professor of national security at the University of New Haven, told NBC News.

Additionally, this is bound to leave some sensitivity and impacts on the market if American corporations think to open again in Russia.

Other conflicts have occurred and continue to occur in the world yet American corporations have not taken as strong of a stance to those, an example being the Palestine-Israel conflict.

This act of halting operations has set a precedent for American corporations, and going forward, they will be held more accountable for their decisions in other conflicts.