Yale professor who monitors companies still doing business in Russia ups the ante by highlighting those that are now ‘going deeper’

The Yale professor who is monitoring companies still doing business in Russia following its unprovoked invasion of neighboring Ukraine has upped the ante by reclassifying the list into five categories with the fifth titled “entrenching” or defying public demands. exit.

Some 39 companies, including Koch Industries Inc., the packaging company Ball Corp. BLL,
+1.51%
and the cybersecurity company Cloudflare Inc. NET,
-5.34%,
they remain in that category four weeks after the start of the attack.

More than 450 companies have announced plans to withdraw or downsize since Jeffrey Sonnenfeld and his Yale School of Management research team first published the list. The situation remains fluid for now, with the Yale team updating the list daily.

Watch: The Yale professor is aware of companies still operating in Russia despite the Ukraine invasion, and many have now folded.

“The idea here is to cripple the Russian economy,” Sonnenfeld told MarketWatch. “That’s what Gandhi did. [in India]this is how Ceaușescu was removed from power in Romania, [and] it is what led to the downfall of PW Botha in South Africa and led to the freedom of Nelson Mandela.

“It was critical in all of those cases that voluntary trade blockades work in tandem with economic sanctions, so that people can hear that they are becoming outcasts and that things are not what their leaders tell them. … It is a much more closed circle when the entire global economy is involved.”

Koch, the Wichita, Kansas company run by billionaire Republican megadonor Charles Koch, was explicit about its intent in a statement from last week signed by COO Dave Robertson. Robertson’s statement said Koch would continue to operate its two Russian glass plants, which are owned by Guardian Industries, a company acquired in 2017.

“While Guardian’s business in Russia is a very small part of Koch, we will not abandon our employees there or hand over these manufacturing facilities to the Russian government so that it can operate and profit from them (which is what The Wall Street has said Journal). reported that they would),” Robertson said.

Watch: Koch Industries breaks silence on operations in Russia and says it will continue to operate its two glass factories there

The executive recognized the “horrible and abominable aggression against Ukraine”, which he described as “an affront to humanity”.

But that was not enough to persuade Koch to withdraw from Russia, as Ukrainian President Volodymyr Zelensky urged companies to do when he addressed the US Congress by video link last week.

“All American companies must go [the Russian] market immediately because it is awash with our blood,” Zelensky said.

See also: Facebook, Google, Amazon and more marked Black History Month with fanfare, after donating to lawmakers who blocked voting rights bills.

Sonnenfeld described Koch’s statement as “pathetic” and said it “reveals that all they care about is losing assets.”

Apart from “entrench”, the other four categories on the Yale list are “withdraw”, which is used for those companies that completely break away from Russia; “suspension”, for companies that are temporarily restricting their activities, keeping their return options open; “climb backwards”, or scale back some activities while continuing others; and “buy time”, for companies that are postponing new investments, while continuing with the majority of business.

For the complete list of companies: Visit the Yale School of Management website

Companies that choose to dig in face substantial reputational risk at a time when young people, in particular, expect companies to reflect their values ​​and are willing and able to mobilize against them when corporate behavior disappoints, Sonnenfeld said.

“Gen Z is very careful about where they buy, who they buy from and where they invest,” he said.

When Yale first published its list in late February, the stock market was down 5% that day, but shares of companies on the list were down between 12% and 32%, he said.

The response from companies was also unusual, as the first to announce plans to withdraw from Russia were energy companies, “which have not always been on the right side on issues of social justice,” Sonnenfeld said.

That sector was followed by professional services, from the Big 3 accounting firms to Accenture, McKinsey and those in the legal profession, “firms that would often rather jump off a cliff than get involved in political issues,” according to Sonnenfeld.

“It’s impressive that these companies have made these decisions independently — it wasn’t mandated or even encouraged by trade associations, which have remained disappointingly mute,” Sonnenfeld said.

Some of the international companies that changed course this week and pulled out of Russia include French carmaker Renault RNO,
+1.09%,
who announced that it would be stop operations at its Moscow plant on Wednesday. Renault, which has a partnership with AvtoVAZ, Russia’s biggest carmaker, was facing calls to boycott its products on social media.

Watch: Production stopped at the AvtoVAZ factory, making the iconic Russian lada cars

The Swiss-based global food company Nestlé NESN,
-0.87%
it bowed to similar pressure, saying it would suspend sales of its KitKat and Nesquik brands in Russia. The company had said last week that it was without benefiting from their Russian activities.

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