More than 1,300 multinational companies have curtailed or abandoned business ties with Russia in light of Vladimir Putin’s invasion of Ukraine. This figure comes from the Yale School of Management, whose authoritative ranking/list of businesses leaving Russia (or not leaving) plays a key role in the praising and shaming of companies that are withdrawing or remaining. 

Yale’s ranking is split into five categories (A, B, C, D and F) going from best to worst; more specifically, from those that have left Russia completely (group A) to those that have done absolutely nothing since the invasion (group F), and then everything in-between. 

A slick public relations spin?

Although more than 1,000 companies have withdrawn from Russia, to varying degrees, there are about 200 foreign businesses that have done absolutely nothing. These companies are classified as group F.

“What is looked at a lot less is the next category of companies in the D collection, of which there are some 150,” says Professor Jeffrey A Sonnenfeld, who oversees Yale’s research team. “Although they have made a few concessions, many of them are actually group F companies that just have better public relations spin, meaning we legally had to acknowledge that they did something, even if it was the bare minimum, such as publicly condemning the war.

“What is worse is that some businesses have stated they are curtailing future investments, some of which seem illusory. What future investments? We never saw any announcement about them, no commitment being made in the past. We don’t know how much, where and what.”

Of this, Sonnenfeld claims that some group D companies are guilty, and names a few examples, such as the Netherlands’ Aalberts, Germany’s Ritter, UK-based Baker Hughes and the US’s Cargill, Schlumberger, Halliburton, Mohawk Industries and SC Johnson. 

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“And don’t get me started on France’s Danone, the yogurt company,” adds Sonnenfeld. “It says it is going to cut out all of its businesses, except the dairy business, but dairy is all it does. It doesn’t make integrated circuit chips. It doesn’t make movies. It doesn’t make cars. So what is it spending future investments on?” (Investment Monitor notes that in 2015, fresh dairy products represented 50% of Danone Group’s total sales, with baby food 22%, branded water 21% and medical nutrition 7%.)

Then there is the case of essential oils and dietary supplements providers Young Living, doTERRA and Nature Sunshine. “They are claiming to have cut off any supplies of body oils that they sell as exports into Russia, but their business was based on locally sourced Russian products to start with,” says Sonnenfeld. “So what are they talking about; what differences does that make? But because they have made these noises, we had to give them recognition as a group D category company, but you sure wouldn’t see them, or the others mentioned, as an inspirational model of business courage.”

Sonnenfeld’s statements need to be clarified, a doTERRA spokesperson told Investment Monitor

“For our global business, we previously sourced a few essential oils (not body oils) from Russia,” the spokesperson said. “At the start of the conflict, we suspended the sourcing of these oils from Russia, but continue to list the country of origin as Russia until we exhaust our previously sourced inventory.

“For the doTERRA business in Russia, we are not importing any sanctioned products to that business entity, which is controlled and managed by local directors and managers.”

A closer look at Aalbert’s rationale 

Investment Monitor reached out to the other aforementioned companies for comment. Only three responded. 

The most comprehensive feedback came from Aalbert’s Rutger Relker, the company’s director of investor relations, who told Investment Monitor that the company has, in fact, stopped investing in Russia, while also admitting that Aalbert’s main strategy is to buy time by reducing its Russian activities. 

When asked to share details about the investments that Aalbert has curtailed, Relker said that the company could not disclose those details as it is sensitive information. 

Relker then went on to insist that Aalbert’s decisions are not being driven by “revenue or the business” considerations, since the company’s business activity in Russia is already very limited, representing less than 1% of its overall business model. 

“So there is very little business rationale for us to remain in Russia,” said Relker. “Our main reason for staying is that we want to take care of our people there, some of whom have worked for us for decades. We feel loyal to them. Also, if we close our facilities there is a severe legal risk that our local management could be put in prisons.” In March and April, the Russian government did indeed threaten to nationalise the property of companies leaving or imprison corporate leaders (in Russia) who shut down their facilities. 

“I would like to add that we comply with Western sanctions,” said Relker. “We have a product which is not defence related. We don’t have trouble with the average Russian version. I think the issue is around the regime. Some of our employees are not even aware of what is happening. We actually had to tell them about what actually is happening because they are not informed by the local media.”

A spokesperson for SC Johnson told Investment Monitor: “In Russia, we feel we have a deep obligation to stand by our colleagues and support the livelihoods of the 200 SC Johnson people and their families there so long as we can do so safely and lawfully.”

The company also said that it has scaled back its operations to a limited assortment of products available in Russia, while also making no new investments and suspending all advertising.