Updated: August 2, 2023
Since the illegal invasion of Ukraine by Russia in 2022, the world has been coming to terms with this devastating situation and how to best support Ukraine.
Democracy is underpinned by the pillars of free speech and free will. The freedom to choose is vital in the continuance of our rights on the open market. Consumers deserve to be fully informed so they can make the best judgements possible based on financial, ethical and moral reasons.
In fact, community involvement is crucial for customers to help them make informed decisions that advance the common good and makes them feel involved in improving the global and local situation.
- Providing fuel that perpetuates Russia-Ukraine conflict
- Why impose sanctions on Russia?
- What companies remain on the Russian market?
- What Western companies have left the Russian market?
- How can consumers show their support?
In response to the illegal Russian invasion, PissedConsumer.com works to emphasize the consumer’s right to be informed and shame the companies that still continue to do business with Russia.
As a result, PissedConsumer has initiated a number of strategies to help consumers understand the ways businesses interact with Russia so they can make informed choices about where they spend money.
Firstly, shoppers can use a new feature on company profile pages that shows if a company is still conducting business in Russia, helping them decide whether they want to give their money to this company.
Secondly, PissedConsumer.com emails international companies that are still operating in Russia, such as Procter & Gamble or Pepsi, trying to open up communication about their Russian trade.
This policy is assisting in creating a list of product alternatives so that consumers can access great products that are not tied to Russia.
Although around 1,000 companies have exited Russia since the illegal war began, there are approximately 400 multinationals that continue to trade inside Russia. It’s good for shoppers to be able to avoid shopping with them if they want to support Ukraine.
Providing Fuel That Perpetuates Russia-Ukraine Conflict
When an international company conducts business outside its home nation, it is subject to the taxes of the country in which it operates.
How this tax revenue is spent is determined by the priorities of the state in which the company conducts business. It could contribute to education, national infrastructure or, indeed, fund military production and war.
On the 24 of February 2022, after amassing on the border for months, the Russian military entered Ukraine. This action was anticipated by the government but still came as a shock. The Russian invasion quickly prompted an international response in the form of sanctions on Russian banks, businesses, and individuals.
In the year following this catastrophic invasion, substantial sanctions have been put in place across the globe. Economic pressures have been placed on Russian government figures, institutions and companies.
Gold and diamond exports have been a major part of Russia’s economy, with gold exports worth around $15.4bn in 2021. Both material exports have been banned by Western states since the invasion in 2022, but it’s challenging to track Russian diamonds as they are sent to places like India to be polished then re-exported.
Russia’s Central Bank has had its assets frozen by the EU, US, and other Western economies. Individuals proven to be linked to the Russian government or who may be propping up Putin’s regime have also been sanctioned, including the former owner of Chelsea Football Club, Roman Abramovich.
The UK’s government has frozen the assets of Russian banks and prohibited Russian companies from borrowing money. The US, UK, and EU banned companies from exporting critical oil extraction equipment without a special license in order to restrict Russian military support.
Recent research into international oil companies has uncovered that they continued to export items worth over $200 million post-February 2022 to help Russia keep their oil operations flowing. In fact, the oil sector provides nearly 50% of Russia’s government revenues.
Some of these companies have made the decision to leave Russia, but there are still a few operating in Russia as of last month, such as SLB.
Why Impose Sanctions on Russia?
The purpose of sanctions is to either bring Russia under sanction to the negotiating table or to strengthen domestic opposition to its government and compel the population to force regime change.
In addition to sanctions imposed by states, hundreds of Western and international companies have withdrawn their operations from Russia. Yet, despite the Russia-Ukraine war, many world brands continue to conduct business in Russia.
US consumers have voiced multiple complaints about international brands that have yet to pull out of Russian markets. A growing number of online reviews left by regular consumers on PissedConsumer.com express concern at this ‘hall of shame’ and urge for taking action.
Consumers have the power to express their opinions and either support or boycott such brands in response to their decision to financially support the country of the aggressor and the loss of innocent lives.
After nearly 18 months of sanctions, many consumers are willing to pay more for products, rather than give their money to companies still operational in Russia. However, according to political activist Dimitry Abramson, it is difficult to change shopping habits.
Abramson does promote doing your research and finding alternative products that will often be cheaper and better than the original.
While the list of major Western companies that have suspended operations in Russia is growing, there are many still present in Russia, feeding revenues into the war. Consumers can make the choice to support Ukraine and buy elsewhere.
In this interview, Michael Podolsky and Dmitry Abramson discuss how consumers can make a change and help stop the war.
As Abramson says, some companies lost revenue exiting the Russian market, but this has been minimal and they have undoubtedly done better than those who have refused to stop trading in Russia. These companies, in Abramson’s view, will have a ‘tarnished brand image for years to come’.
What Companies Remain on the Russian Market?
Many industry experts consider how companies still doing business with Russia are able to continue. There’s no doubt that companies remaining in Russia must be in a challenging position.
Multinationals that are still operating face a difficult choice: leaving has become more complex, but staying has significant risks. Unbelievably, global companies made $214 billion in 2022 through Russian sales, generating $3.5 billion in Russian taxes.
Procter & Gamble
Despite discontinuing its investments and reducing its product offerings in Russia, P&G remains committed to providing essential health, hygiene, and personal care items that are "needed by the many Russian families who depend on them in their daily lives."
The National Agency on Corruption Prevention (NACP) recognized Procter & Gamble as an international sponsor of the war. In March 2022 the company announced the discontinuation of capital business investments in Russia and leaving only health and hygiene products in the market. Currently, P&G corporation owns two plants in Russia, one of which is the razors and blades Gillette factory, and employs about 2,500 people.
P&G continues to earn money on the Russian market. The company paid $5.2 million in 2021 tax revenues and raised its Russian product prices by 40% in March 2023, almost offsetting its lost income.
Highlighted in its 2022 report, P&G announced that organic sales had increased in Russia as a result of higher product prices.
Under a new Russian law, businesses still operating have to take part in mobilization initiatives. This means each company has to help enlist staff for the army, and fund their military gear.
Ukrainian President Volodymyr Zelenskyy recently called out Nestle for remaining in Russia, whilst Ukrainian PM, Denys Shmyhal, took exception to Nestle CEO Mark Schneider:
"Unfortunately, he shows no understanding. Paying taxes to the budget of a terrorist country means killing defenseless children and mothers. I hope that Nestle will change its mind soon."
Whilst Nestle has ceased supplying many consumer goods to Russia, items such as baby food, cereal, and pet food continue to enter the country.
Nestlé has not publicly disclosed its Russian profits. When annual results were announced in February, CFO François-Xavier Roger said the multinational had no plans to stop operating in Russia “for the time being,” although it has cut the number of product offerings.
PepsiCo said in September that it was suspending the sales of international brands in Russia, including 7UP and Pepsi. It would, however, continue to sell ‘necessary’ products, like baby milk and food.
During 2022, PepsiCo's revenues from Russian sales grew by 16%. In fact, these Russian sales accounted for 5% of the company’s net income in 2022, increasing from 4% in 2021.
What Western Companies Have Left the Russian Market?
There are those companies that have left Russia and ceased operations there. Undoubtedly, this was a complex process, but one supported by many consumers across the globe.
French food company Danone had been finalising the sale of its Russian operations to a local buyer when there was a sudden change in circumstances. In July 2023, Russia seized control of the Russian Danone subsidiary and said it has ‘temporary management’ of its assets.
Danone has issued a statement that declares it is investigating the situation and is “preparing to take all necessary measures” to protect its operations as Danone Russia.
German chemical company Henkel announced in April 2022 that it would cease operations in Russia and leave the country. Then, in April 2023, a press release declared that Henkel had sold its business activities to a Russian finance investment group.
The move has been approved and Henkel has commented that the sale price was around 600 million euros.
Shell is a British oil and gas company which still continues some operational functions in Russia, despite stating it would leave in 2022. Shell was involved in around an eighth of Russia’s shipped gas exports last year.
A spokesperson for Shell said that these actions did not violate international sanctions, but were part of ‘long term commitments’.
Shell has exited its partnership with Gazprom and ended its involvement in the Nord Stream 2 pipeline.
Additionally, the spokesperson for Shell said: "There is a dilemma between putting pressure on the Russian government over its atrocities in Ukraine and ensuring stable, secure energy supplies.”
How Can Consumers Show Their Support?
PissedConsumer.com conducted a poll among its users, the US consumers, to find out where they stand on companies that do business in Russia and how this would affect their purchasing decisions.
The data speaks for itself. Over 77% of US consumers responded ‘no’ to the question of whether they support companies that continue to do business in Russia, while the other 23% said ‘yes’.
Almost 80% of US respondents to a recent survey said they would not buy from brands that do business in Russia.
When asked how they would be prepared to pay over the odds in order to lessen the influence of Russia over the US economy, 34.3% stated they would pay 11% more, and 36.7% said they would be ready to overpay 3%.
This survey also shows that most US consumers do not want to buy from companies that remain in Russia and help support the war against Ukrainian civilians.
As consumers, we can support companies that have left Russia or those that have never traded in Russia. Research is vital so we can avoid giving money to companies that do not align with our moral and ethical views.
Here are some effective actions to take:
- Email companies to ask about their Russian trade.
- Check product manufacture information before purchase.
- Replace products linked to Russia with safe alternatives.
- Buy local produce when you can.
- Talk to friends and family to spread the word.
With just a few simple steps, we can all help support Ukraine and its fight against this illegal aggressor. Being educated about companies and their Russian operations can make all the difference.
Updated lists of businesses and their current status with regard to Russia can be checked on the Yale website here. Please share your comments and thoughts below. If you'd like to bring awareness, you are welcome to leave a review on the company via this form.