Friday, Aug. 19, 2022|
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LONDON — Car factories idled, beer stopped flowing, furniture and fashion orders ceased, and energy companies fled oil and gas projects.
Russia’s invasion of Ukraine has thrown business plans into disarray and forced a growing number of the world’s best known brands — from Apple to Mercedes-Benz and BP — to pull out of a country that’s become a global outcast as companies seek to maintain their reputations and live up to corporate responsibility standards.
Investors were drawn to Russia in search of lucrative profits they thought were worth the geopolitical risks. That calculation has changed after Russia’s war triggered a wave of global sanctions and export restrictions that have thrown its economy into turmoil and disrupted the operations of multinational corporations there.
“You basically have Russia becoming a commercial pariah,” said economist Mary Lovely, a senior fellow at the Peterson Institute for International Economics in Washington. “Pretty much no company, no multinational, wants to be caught on the wrong side of U.S. and Western sanctions.”
They’re also expressing concern about the plight of Ukrainians, showing how they want to be seen coming out on the right side of history.
Complicating companies’ push to flee is an order from Moscow temporarily restricting foreign investors from selling Russian assets. Prime Minister Mikhail Mishustin said Tuesday that it would help investors make “a considered decision” rather than succumb to the political pressure of sanctions. It’s not clear how that may affect corporate efforts to exit Russia.
Oil and gas companies, already feeling the heat from climate activists to invest in renewable energy, were among the companies that announced the most rapid and dramatic exits.
Energy firm BP said Sunday that it would abandon its $14 billion stake in Russian state-owned oil and gas company Rosneft. The next day, Shell said it was leaving its joint venture with state-owned Gazprom and its involvement in the now-suspended Nord Stream 2 pipeline built to carry natural gas to Western Europe.
ExxonMobil said it will pull out of a key oil and gas project and halt any new investment in Russia. All their chief executives said they were shocked and saddened by the increasingly bloody conflict. Smaller energy firms have followed suit.
Companies in other industries, including automakers, signaled they’re staying out of the Russian market. Toyota is halting production at its St. Petersburg plant that makes RAV4 and Camry models starting Friday because of supply chain disruptions, saying it was watching events “with great concern for the safety of the people of Ukraine.”
Mercedes-Benz suspended vehicle exports to Russia and manufacturing there. Volkswagen Group, which also owns Porsche and Audi, did the same, saying it believes a “sustainable solution to the conflict can only be found on the basis of international law.”
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