Ukraine’s response shows what real corporate social responsibility looks like
The Ukraine crisis has revealed how powerful true corporate social responsibility can be.
In a startling and organic show of unity, everyone from the banking industry to the entertainment industry has cracked down on its operation in Russia, albeit at its own expense.
This should serve as a model. True corporate social responsibility shouldn’t be about tapping and greenwashing; companies should act on their principles, instead of just putting them in the company newsletter.
Since Putin began his shock invasion of Ukraine, an unprecedented set of sanctions have been put in place. The EU has so far expelled seven Russian banks from the SWIFT global payment network. The US government has imposed export taxes on Russia’s oil refining sector, much of the world’s airspace is now closed to Russians, including private jets, and Switzerland, deemed neutral and known as a tax haven for the ultra-rich, came out of the shadows of freezing Russian assets.
All of these sanctions will increase the pressure on Russian President Putin and have already put the Russian economy and its currency, the rouble, under enormous pressure. But there is a limit to state power, other than a military invasion or a no-fly zone that Western leaders have ruled out.
The private sector has revealed all it can do when it wants. Apple has suspended all sales in Russia, Apple Pay has been severely restricted, and Russian state broadcaster RT has been kicked out of the App Store. ExxonMobil, BP and Shell, hardly the bastion of morality, are selling off their Russian assets. Disney has canceled movie launches in the country and H&M, Nike, Volkswagen, Toyota and Mercedes-Benz have all ceased operations and deliveries. The list continues.
This is what true corporate social responsibility should look like. The economic impact on all of these companies will be enormous, but equally, they will pale in comparison to the repercussions for Russia, which will be immense. Putin did not imagine that the invasion of Ukraine would have such a financial impact, just as he did not anticipate the resistance of the Ukrainian people.
According to cyber-hacking group Anonymous, which has declared full-scale war on Russia, it was a high-level leak from the FSB (Federal Security Service of the Russian Federation) that alerted Ukrainian President Volodymyr Zelenskyy that he was their number one target, suggesting that Putin’s miscalculation could soon spark a power struggle in the Kremlin.
When used correctly, corporate responsibility can be a tremendous force for good. However, too often in the past it was a cynical attempt to simply sell more products, while continuing to act as if nothing had happened.
The most outrageous corporate social responsibility flaw of recent years, explored in the Netflix series “Dirty Money,” is Volkswagen’s clean diesel campaign. The company claimed that its diesel vehicles reduced nitrogen oxide (NOx) pollutants by 90% thanks to impressive new technology. Dozens of environmentalists bought their cars thinking they were reducing their pollutants and fighting climate change.
In fact, the Volkswagen device had installed machinery in their vehicles to disguise the actual emissions from their cars which were actually 4,000% more NOx than the legal limit.
Volkswagen was then investigated by the Federal Trade Commission and the Environmental Protection Regulation, which concluded that they had flouted regulations for seven years and sold 500,000 cars equipped with an emission control device. than in the United States.
This reveals something clever about corporate responsibility. Traditionally, companies are only interested in using social issues to promote their brands and are happy to get back into shape – bad behavior – when the spotlight is off.
The focus is on Russia right now and it would make the optics incredibly bad for big business not to act. Yet one only has to look at big business attitudes toward China to wonder if corporations really care about doing business with tyrannical despots.
While Disney and Apple’s boycott of Russia is laudable, they haven’t shown the same level of responsibility towards working with China. Most Apple products are still made in China. Disney recently paid hundreds of thousands of dollars to make its live-action remake of “Mulan,” doing much of the filming in the Xinjiang region, where Uyghur Muslims continue to be ruthlessly persecuted by the Chinese state.
The response to Ukraine has been swift, decisive and truly courageous. It should be a model of how all companies should view their corporate social responsibility. It’s not about sponsored runs and bake sales, it’s about doing business in a way that’s consistent with company values.
It shouldn’t stop at Ukraine. On the contrary, Ukraine should be a major turning point. When many companies have revenues greater than the GDP of many countries, it is reasonable for them to take responsibility accordingly.
Big business should not be linked to human rights abuses anywhere in the world. Companies have an obligation to stand up to abuse wherever they see it, regardless of the impact on the bottom line.
We’ve seen what companies can do when they want. We should remember that the next time the world sees human atrocities on this scale.