Ukraine response shows what real corporate social responsibility looks like

When corporate responsibility is used correctly it can be a tremendous force for good. However, too often in the past, it has been a cynical attempt to simply sell more products.

The Ukraine crisis has revealed just how powerful real corporate social responsibility can be.

In a surprising, organic show of unity, everyone from the banking to entertainment sectors cracked down on their Russian operation, even if it came at their own expense.

This should serve as a blueprint. Real corporate social responsibility should be more than back-patting and greenwashing; companies should act on their principles, instead of simply putting them in the company newsletter.

Since Putin began his shocking invasion of Ukraine, an unprecedented package of sanctions has been rolled out. The EU has so far kicked seven Russian banks out of the SWIFT worldwide payment network. The U.S government has placed export taxes on Russia’s oil refining sector, much of the world’s airspace is now closed to Russians including private jets, and Switzerland, famously neutral and known as a tax haven for the ultra-rich, has stepped out of the shadow to freeze Russian assets.

All of these sanctions will ramp up the pressure on Russian President Putin and have already placed the Russian economy and its currency the ruble under enormous strain. But there is a limit to state power, short of a military invasion or a no-fly zone that Western leaders have ruled out.

The private sector has revealed just how much it can do when it wants to. Apple has suspended all sales in Russia, Apple Pay has been strictly limited and the Russian state broadcaster R.T has been kicked off the App Store. ExxonMobil, BP, and Shell, hardly the bastion of morality, are selling off their Russian assets. Disney has scraped film launches in the country, and H&M, Nike, Volkswagen, Toyota, and Mercedes-Benz have all ceased operations and deliveries. The list goes on.

This is what real corporate social responsibility should look like. The economic impact on all of these companies will be enormous but equally, they will pale in comparison to the repercussions for Russia, which will be immense. Putin did not imagine that invading Ukraine would take this much of a financial toll just as he failed to anticipate the resistance of the Ukrainian people.

According to the cyber hacking group Anonymous, which has declared its full-scale war on Russia, it was a high-level FSB (Federal Security Service of the Russian Federation) leak that alerted Ukrainian President Volodymyr Zelenskyy that he was their number one target, suggesting Putin’s miscalculation might soon trigger a power struggle in the Kremlin.

When corporate responsibility is used correctly it can be a tremendous force for good. However, too often in the past, it has been a cynical attempt to simply sell more products, while pushing on with business as usual.

The most scandalous corporate social responsibility failing of recent years, explored in the Netflix series “Dirty Money,” is Volkswagen’s clean diesel campaign. The company made the claim that their diesel vehicles reduced nitrogen oxide pollutants (NOx) by 90 per cent with impressive new technology. Scores of environmentalists bought their cars thinking they were reducing their pollutants and fighting climate change.

In fact, the device Volkswagen had installed machines in their vehicles to disguise their cars’ real emissions which were in fact 4,000 per cent more NOx than the legal limit.

Volkswagen were subsequently investigated by the Federal Trade Commission and the Environmental Protection Regulation which found they had flouted regulations for seven years and had sold 500,000 cars fitted with an emission cheating device in the U.S alone.

This reveals something malign about corporate responsibility. Traditionally, companies are only interested in using social issues to promote their brands and are happy to revert to form — bad behaviour — when the spotlight is off.

Attention is on Russia at the moment and it would make for incredibly bad optics for major corporations not to act. Yet we only have to look at major corporations’ attitudes to China to wonder whether corporations actually care about doing business with tyrannical despots.

While Disney and Apple’s boycott of Russia is commendable, they have not shown the same level of responsibility toward working with China. Most Apple products are still manufactured in China. Disney recently poured hundreds of thousands of dollars into making its live-action remake of “Mulan,” doing a fair amount of filming in the Xinjiang region, where Uyghur Muslims continue to be ruthlessly persecuted by the Chinese state.

The response to Ukraine has been swift, decisive, and genuinely courageous. This should be a model for how all companies should perceive their corporate social responsibility. It isn’t about sponsored running races and cake sales, it’s about doing business in a way that is consistent with the values of the company.

This shouldn’t stop with Ukraine. Rather, Ukraine should be a major turning point. When many corporations have revenues larger than the GDPs of many nations, it’s reasonable that they should shoulder their responsibility accordingly.

Major corporations should not be linked to human rights abuses anywhere in the world. Corporations have an obligation to oppose abuses everywhere they see them, regardless of the impact on the bottom line.

We’ve seen what businesses can do when they want to. We should remember that the next time the world witnesses human atrocity at this scale.

Article Credits: The Record