Wall Street Journal: global companies are looking for ways to stay in Russia despite sanctions and pressure

March 23, Minsk. Large global companies are looking for ways to stay on the Russian market, despite sanctions and pressure from politicians, writes the American newspaper The Wall Street Journal.

Lay's potato chips, Gillette razors and Air Wick air fresheners are still sold in Russia, along with several brands of ice cream, a line of children's cosmetics and facial cleansers.

At the same time, parent companies PepsiCo Inc., Procter & Gamble Company, Reckitt Benckiser Group and Unilever said they had suspended the sale of all food and other goods in Russia, except for essential goods. However, practice has shown that the term "essential goods" can be interpreted quite broadly.

Companies are now under increasing pressure from politicians, investors, activists and consumers to further reduce sales and production in Russia amid events in Ukraine. However, in recent years, Russia has become a key market for many of the largest foreign companies.

Ukrainian President Volodymyr Zelensky last week publicly criticized Unilever and Nestlé for not exiting the Russian market. Ukrainian Prime Minister Denys Shmyhal said he spoke with Nestlé CEO Mark Schneider, who he said does not understand the side effects of continuing to sell in Russia.

Today Nestlé has six factories in Russia. A company representative said that all factories are working and 90% of the products that Nestlé sells in Russia are produced locally. The company said earlier that it is responsible to its more than 7,000 employees in Russia and will continue to "ensure a reliable supply of basic food for the local population."

The New York State Pension Fund recently asked PepsiCo, Mondelez International and Kimberly-Clark to reconsider their decision to continue operating in Russia. However, Kimberly-Clark and Mondelez declined to comment.

PepsiCo said it would stop selling carbonated drinks in Russia, but would continue to sell milk , cheese, yogurt, baby food and potato chips. "We must remain true to the humanitarian aspect of our business. This means that we must offer our products in Russia, including essentials such as milk," PepsiCo chief executive Ramon Laguarta said.

Many large companies say that they do not close the work of their enterprises in Russia, because they are responsible for their employees. A number of businesses have also said they remain on the Russian market because they are bound by joint venture or franchising agreements. Manufacturers of medicines, vaccines and medical equipment continue to do business in Russia, claiming to have an ethical responsibility to consumers.

Industrial conglomerate Koch Industries Inc. defended his decision to stay in Russia last week. "We will not leave our employees and transfer our production facilities to the Russian government so that it can operate and benefit from them," said COO Dave Robertson.

"Companies facing vague sanctions are balancing between the benefits of maintaining business relationships with Russian partners and the reputational damage from ongoing operations," Paolo Pasquariello, professor of finance at the University of Michigan, commented on the situation.

Labeling any product as essential, with the exception of medical products, seems like an attempt by companies to mitigate reputational damage, he said. "Sanctions are a form of economic warfare. Companies that consider their cheeseburgers, shoes or equipment essential goods end up undermining the idea of ​​sanctions," said Paolo Pasquariello.