McDo, Pepsi: pressure mounts on American groups that stay in Russia

On social networks appeared the keywords #BoycottMcDonalds or #BoycottPepsi.

The head of the New York State pension fund sent letters to the bosses of these multinationals as well as to the manufacturer of biscuits Mondelez, the cosmetics groups Estée Lauder and Coty, or even the brokerage house Bunge.

These companies "must ask themselves if doing business in Russia is worth the risk in this extraordinarily volatile period", he justifies.

A team from Yale University maintains a list of companies that still have a significant presence in Russia.

It highlights the role played by the voluntary departure of 200 large groups from South Africa in the 1980s in the fall of apartheid.

Many American companies still in Russia remain silent, like McDonald's, Bunge, Mondelez, Estée Lauder, Kimberly-Clark or Coty, which did not respond to a request from AFP.

Legitimate reasons

Starbucks claims that its approximately 130 cafes in Russia belong to a Kuwaiti conglomerate, and has pledged to donate any contribution of its business in the country to the humanitarian effort in Ukraine.

Yum!

Brands also points out that its approximately 1,000 KFC restaurants and 50 Pizza Hut locations are almost all independently owned and operated under license or franchise.

On Monday evening, the group also indicated that it was suspending its investments in the country while "evaluating all additional options", and pledged to donate all profits from Russia to humanitarian operations.

Many American companies still in Russia despite the war in Ukraine remain silent, like McDonald's, Bunge, Mondelez, Estée Lauder, Kimberly-Clark or Coty Sameer Al-DOUMY AFP

Some groups may have legitimate reasons to stay, note several experts in ethics and communication strategy interviewed by AFP.

“There are serious risks against Westerners currently in Russia and these companies must do everything they can to repatriate these people,” said Richard Painter, professor at the University of Minnesota and former lawyer in charge of the Ethics at the White House.

Some companies may be hesitant because they think they can play a role of intermediary between the parties or because they produce essential products such as pharmaceutical ingredients in the country, remarks for his part Tim Fort, professor of business ethics at the University of 'Indiana.

However, he adds, "this is probably a good time to choose a side and it does not seem very difficult to me to do so" in view of Russia's violations of human rights and conflict laws. .

“Wondering what is really going on”

The decision of a single company "is not going to tip the scales, but there is an accumulation effect", says Mr. Fort.

And a company as well known as McDonald's can have a real influence in Russia at a time when the official discourse minimizes the extent of the conflict and the population has almost no access to other information channels.

"Russians will be able to survive without Big Macs, but they will mostly wonder why McDonald's is closing, wonder what's really going on," says the expert.

For Mr. Painter, companies must think about the message to convey, namely that "Russia cannot start a war in Ukraine while participating in the global economy".

With the severe economic sanctions imposed with a broad consensus by Western governments, "it is the best way to deal with Russia", he asserts: the risk of the use of nuclear weapons within the framework of an open armed conflict is too great.

Perhaps some groups are betting that the criticism will rain down in the short term before falling, suggests Brian Berkey, a specialist in business ethics at the University of Pennsylvania.

Other crisis situations, such as the Israeli-Palestinian conflict, have already given rise to calls for a boycott against certain companies without necessarily having much effect.

Support for this kind of initiative is not always unanimous, however, while "the vast majority of the population in European countries or in the United States agree that what Russia is doing is clearly unacceptable", remarks Mr. Berkey.

For Mark Hass, a communications specialist at Arizona State University, the economic interests of companies that have so far chosen not to leave Russia "arguably still outweigh the reputational risks."

McDonald's, for example, derives 9% of its turnover and 3% of its operating profits from the country.

But "if social media begins to identify you as the company willing to do business with an autocratic abuser who is killing thousands of people in Ukraine, then the problem takes on another dimension and can affect your business far beyond the Russia,” says Hass.

© 2022 AFP