Corporate Social Responsibility is playing a critical role in geopolitics. Multi-National Corporations have had to think about the risks of conducting business in the Russian Federation among far-reaching economic/trade sanctions. Also, companies need to meet obligations to employees within the Russian Federation and employee expectations in other operating regions. Not to leave out investors, customers, vendors, stakeholders, and communities from this calculus.

In a recent WSJ article; ““This is something that each company needs to decide,” said Amit Khandelwal, a professor for global business at Columbia Business School, referring to the question around Russian profits. “A company has obligations to its employees—both Russian and non-Russian—shareholders and customers,” he said.”

Companies like Bayer AG, Nestlé SA, Danone SA, Kimberly-Clark Corp., Unilever PLC, and Heineken have made decisions ranging from complete withdrawal to limited business activity. Some risk considerations for CFOs:
– Continuing to pay Russian employees. This is complicated with the sanctions regimes.
– Limit the products offered to basic needs (ex. baby formula) and medicine
– Donating profits to Ukrainian humanitarian aid
– Not taking dividends or royalties from Russian entities
– Ring-fencing cash flow from Russian operations. Financial reporting with uncertainty.

The implications for any combination of these choices has risk impacts unique to that company. Also, looking at scenarios in the 12, 18, and 24-month outlook is critical to think through responses as the world situation changes.

Companies should create if they have not already, cross-functional incident response teams to continue monitoring the situation and aligning response to the company mission and values.

No matter the action a company takes; communication transparency is foundational.

Continue the strategic risk conversation with our Managing Director, Valerie Nielsen at…

valerie.nielsen@longviewleader.com