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CNN Business
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More than 1,000 big companies pledged to leave Russia after Vladimir Putin launched his devastating war on Ukraine, but some well-known companies are accused by investigators of violating their pledge.
Not every company on the list left, but more than 1,000 did. That unprecedented corporate exodus, defended and chronicled by Yale professor Jeff Sonnenfeldit dealt a serious financial and symbolic blow to Moscow and the Russian economy.
Now, as Russia’s brutal war in Ukraine passes 500 days, Sonnenfeld and his team are naming and shaming a slew of companies they accuse of reneging on their promises to leave or at least drastically reduce their presence. in Russia, including well-known companies such as Heineken, Unilever, Philip Morris and Oreo maker Mondelez.
Yale’s investigation, shared exclusively with CNN, is based on whistleblowers, experts on the ground, students operating in Russia, corporate documents and media reports.
“These companies are breaking their promises. They are operating as profiteers in wartime,” Sonnenfeld told CNN in an interview. “It’s beyond disappointing. It’s shameful and unethical.”
Sonnenfeld, who has testified before Congress about the companies leaving Russia, does not accuse those corporations of breaking the law. Instead, he argues that by staying in Russia, they are breaking a moral code and simultaneously “self-immolating their own brands.”
“Consumers should realize that by supporting these companies, they are endorsing something that fuels Putin’s war machine,” he said.
The “poster child” for this problem is popular Dutch brewing giant Heineken, Sonnenfeld said.
In March 2022, just one month after the invasion of Ukraine, Heineken won praise promising to leave Russia. Yale even gave Heineken the highest grade of “A,” reserved for companies that make a “clean break” with the country, in its dashboard of companies’ relationship with Russia.
However, 16 months later Heineken still has seven breweries and 1,800 employees in Russia, according to Yale. Not only that, but Heineken has since launched a number of new brands in Russia, eating into market share caused by the exodus of other big beer brands.
“They’re not retreating. They’re doubling down,” said Steven Tian, director of research at the Yale Chief Executive Leadership Institute.
Yale downgraded Heineken to a ‘D’, finding that the company “continues to drag its heels on actually exiting, under the pretext that it is awaiting Russian regulatory approvals for its sale.”
By contrast, other major companies, including BP and ExxonMobil, took massive divestments to meet their commitments to leave Russia.
“It is nothing more than institutional inertia or ideological arrogance. It makes no sense,” Sonnenfeld said. “Today’s symbolism is implicit support for the Putin regime.”
In a statement to CNN, a Heineken spokesman called the war in Ukraine a “terrible human tragedy” and said the company is “committed to leaving Russia.” Heineken said it has stopped selling the Heineken brand in Russia and has found a potential buyer for its business in Russia. However, that potential deal, submitted to Russian authorities in April 2023, is still pending regulatory approval, the company said.
“We expect a significant financial loss for the Heineken company. The local operation continues so that the organization can protect the livelihoods of our people by avoiding bankruptcy or nationalization,” Heineken said in the statement.
In March 2022, snack and candy giant Mondelez promised to scale back “All non-essential activities in Russia while helping to maintain food supply continuity.” Mondelez said it would focus its operation on “core offerings.”
However, Mondelez, the company behind Oreo cookies, Triscuit cookies and Nabisco snacks, says it still employs 3,000 people in Russia. The Yale investigation said Mondelez shows “no tangible signs of progress toward an exit” and continues to do business in Russia. This despite boycotts that have hit Mondelez of European grocers and other companies refusing to order and stock the company’s products.
Mondelez did not respond to a request for comment but one statement Last month, the company said it had scaled back its activities and halted product launches and advertising spending in Russia.
Unilever, the company behind Dove soap, Ben & Jerry’s ice cream and Lipton tea, pledged to sell only “essential” products in Russia.
However, Unilever continues to sell Cornetto ice cream and other consumer goods in Russia, according to Sonnenfeld’s team.
Unilever declined to comment, but referred questions to a February statement where the company said it continues to “condemn the war in Ukraine as a brutal and senseless act by the Russian state,” but explained that exiting Russia “is not simple” without handing over assets to the government or injuring employees of ‘there.
The Kyiv School of Economics and the Moral Rating Agency, an organization that tracks corporate pledges to leave Russia, Unilever’s support to the Russian economy is estimated to be worth around $712 million annually.
“A bar of Dove soap starts to look pretty dirty when it’s enough to buy a Russian tank,” Mark Dixon, founder of the Moral Rating Agency, said in a statement last week.
Like Unilever and Mondelez, Nestlé also pledged last year to sell only “essential” products such as baby formula in Russia.
However, Yale researchers found that the maker of Kit Kat candy bars, Nescafe instant coffee and Purina still sells pet food, chocolate bars and other non-essential products in Russia.
Nestlé did not respond to a request for comment.
Despite its March 2022 promise to exit Russia, co-working giant WeWork still allows users to book workspaces in Moscow.
In a statement to CNN, a WeWork spokesperson said the company still has “full intentions to discontinue operations in Russia,” adding that it is in the “final stages of our divestment plans.”
Tobacco giant Philip Morris said last year that it did working hard to get out of Russia. But today Philip Morris is one of the biggest remaining multinationals in Russiawith assets estimated at $2.5 billion, including several plants there, according to Yale research.
In a statement to CNN, a Philip Morris spokesperson said the “situation is complex” and that the company is “constrained by recent regulatory developments in Russia, including restrictive conditions that must be met for any divestiture transaction be approved by the authorities, and the restrictions”. resulting from international regulations”.
Several American fast-casual chains continue to operate in Russia, more than a year after McDonald’s and Starbucks decided to leave the country.
Sonnenfeld’s team found that Sbarro Pizza still has a functioning location in Moscow that appears to be supported by a website in Russian.
Sbarro did not respond to a request for comment.
The American fast food chain Carl’s Jr. still has a presence in Russia and even showcases their food on a Russian-language Instagram page.
In a statement to CNN, Carl’s Jr.’s parent, CKE Restaurants Holdings, acknowledged that the company has 17 franchised restaurants in Russia, but said they are all independently owned and operated. Carl’s Jr. added that the Instagram page is not owned or operated by CKE.
Similarly, Yale found that there are still independent TGI Fridays franchisees operating in Russia.
TGI Fridays did not respond to a request for comment, but in March 2022 statement the company said only local franchisees can decide whether to stay open and pledged to donate proceeds from its franchisee fees to a group that supports Ukraine and its refugees.
Some companies have defended their continued presence in Russia by citing a desire to avoid causing further problems for Russian-based employees and customers.
“This is one of those things that’s easy to say but hard to do, and there’s a financial hit that can come with it,” said Tim Calkins, a marketing professor at Northwestern University’s Kellogg School of Management.
Calkins said there are many concerns on consumers’ minds right now, and this may not be one of them.
“I suspect that companies don’t feel much pressure to deliver on their promises,” he said.
Sonnenfeld rejects this argument, saying the purpose of the corporate exodus is to increase pressure on the Putin regime. As a model, he pointed to the divestment movement of major Western brands in South Africa in the late 1980s during Apartheid.
“The idea is to raise the level of discomfort,” Sonnenfeld said, “so they start to wonder who is the author of their misfortune.”
