More than 1,000 major companies pledged to leave Russia after Vladimir Putin launched his devastating war in Ukraine, but some well-known companies are accused by researchers of violating their pledge.
Not all of the companies on the list left, but more than 1,000 left. This unprecedented corporate exodus, championed and chronicled by Yale professor Jeff Sonnenfeld, has dealt a serious financial and symbolic blow to Moscow and the Russian economy.
Now, as Russia’s brutal war in Ukraine passes the 500-day mark, Sonnenfeld and his team are naming and shaming a slew of companies they accuse of breaking promises to leave or at least cut their presence in Russia considerably, including well-known companies such as Heineken, Unilever, Philip Morris and Oreo manufacturer Mondelez.
Yale’s research, 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 operate like wartime profiteers,” Sonnenfeld told CNN in an interview. “It’s more than disappointing. It is shameful and unethical.
Sonnenfeld, who has testified before Congress about companies leaving Russia, does not accuse those companies of breaking the law. Instead, he argues that by staying in Russia they are breaking a moral code and simultaneously “immolating their own brands.”
“Consumers should realize that by supporting these companies, they are endorsing something that powers Putin’s war machine,” he said.
“Implicit endorsement of Putin’s regime”
The “poster child” for this issue is popular Dutch brewing giant Heineken, Sonnenfeld said.
In March 2022, just a month after invading Ukraine, Heineken received praise for pledging to leave Russia. Yale even gave Heineken its highest rating of “A,” reserved for companies making a “clean break” with the country, on its Business Relationships with Russia scorecard.
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 series of new brands in Russia, gobbling up market share caused by the exodus of other major beer brands.
“They are not withdrawing. They double down,” said Steven Tian, director of research at the Yale Chief Executive Leadership Institute.
Yale has now downgraded Heineken to a ‘D’, finding that the company ‘continues to drag its feet on actually exiting, under the pretense that it is awaiting Russian regulatory approvals to close its sale’.
By contrast, other big companies – including BP and ExxonMobil – have taken massive writedowns to meet commitments to leave Russia.
“It’s nothing but institutional inertia or ideological arrogance. It makes no sense,” Sonnenfeld said. “The symbolism today is an implicit endorsement of Putin’s regime.”
In a statement to CNN, a Heineken spokesperson called the war in Ukraine a “terrible human tragedy” and said the company was “determined to leave Russia.” Heineken said it stopped selling the Heineken brand in Russia and found a potential buyer for its Russian business. However, this potential deal, submitted to Russian authorities in April 2023, is still pending regulatory approval, the company said.
“We expect a significant financial loss to 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.
Unilever ice cream and Mondelez snacks
In March 2022, snacks and candy giant Mondelez promised to reduce “all non-essential activities in Russia while helping to maintain the continuity of the food supply”. Mondelez said it would focus its business on “basic offerings.”
However, Mondelez – the company behind Oreo cookies, Triscuit crackers and Nabisco snacks, says it still employs 3,000 people in Russia. Yale research said Mondelez shows “no tangible signs of progress toward exit” and continues to do business in Russia. This is despite boycotts that have hit Mondelez from European grocers and other businesses refusing to order and stock the company’s products.
Mondelez did not respond to a request for comment, but in a statement last month the company said it had scaled back operations and halted product launches and ad spending in Russia.
Unilever, the company behind Dove soap, Ben & Jerry’s ice cream and Lipton tea, has pledged to sell only “essential” products to Russia.
Yet Unilever still sells 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 in which the company said it continued to “condemn the war in Ukraine as a brutal and senseless act of the Russian state”, but explained that leaving Russia is “not easy” without handing over assets to the government or injuring employees there.
The Kyiv School of Economics and the Moral Rating Agency, an organization that tracks companies’ pledges to leave Russia, estimate that Unilever’s support for Russia’s economy amounts to around $712 million a year.
“A bar of Dove soap starts to look pretty dirty when there’s enough to buy a Russian tank,” Mark Dixon, founder of the Moral Rating Agency, said in a statement last week.
Nestle, WeWork and Philip Morris
Like Unilever and Mondelez, Nestlé also pledged last year to only sell “essential” products like infant formula in Russia.
Yet Yale researchers found that the maker of Kit Kat candy bars, Nescafé instant coffee and Purina still sells pet food, candy bars and other non-essential products in Russia.
Nestlé did not respond to a request for comment.
Despite its March 2022 pledge to leave Russia, coworking giant WeWork is still allowing users to book workspaces in Moscow.
In a statement to CNN, a WeWork spokesperson said the company still has “full intentions of ceasing operations in Russia,” adding that it is in the “final stages of our divestiture plans.”
Tobacco giant Philip Morris said last year it was working hard to get out of Russia. But today, Philip Morris is one of Russia’s largest remaining multinationals, with assets estimated at $2.5 billion, including several factories there, according to Yale research.
In a statement to CNN, a spokesperson for Philip Morris said the “situation is complex” and that the company is “constrained by recent regulatory developments in Russia, including the restrictive conditions that must be met for any operation assignment is approved by the authorities – and the restrictions resulting from international regulations.
Fast food chains still in Russia
Several American fast food chains are still operating in Russia, more than a year after McDonald’s and Starbucks decided to leave the country.
Sonnenfeld’s team discovered that Sbarro Pizza still has a location in Moscow that appears to be supported by a Russian-language website.
Sbarro did not respond to a request for comment.
American fast food chain Carl’s Jr. still has a presence in Russia and even features its food on an Instagram page in Russian.
In a statement to CNN, Carl’s Jr.’s parent company, CKE Restaurants Holdings, acknowledged the company has 17 franchise 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 franchisees of TGI Fridays operating in Russia.
TGI Fridays did not respond to a request for comment, but in a March 2022 statement, the company said only local franchisees can choose to stay open and pledged to donate the proceeds of its franchise fees. to a group supporting Ukraine and its refugees.
Some companies have defended their continued presence in Russia citing a desire to avoid causing more problems for Russian-based employees and customers.
“It’s 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, professor of marketing at the Kellogg School of Management in Northwestern University.
Calkins said there are a lot of concerns on consumers’ minds right now and that might not be one of them.
“I suspect companies don’t feel a lot of pressure to deliver on their promises,” he said.
Sonnenfeld rejects this argument, saying the purpose of the corporate exodus is to increase pressure on Putin’s regime. As a role model, he pointed to the divestment movement of major Western brands from South Africa in the late 1980s during apartheid.
“The idea is to increase the level of discomfort,” Sonnenfeld said, “so they start wondering who the author of their misfortune is.”
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