Companies leave Russia after Yale lists keep track of their actions

NEW HAVEN, CONN. – Efforts by a Yale School of Management professor to catalog what companies are doing in response to Russia’s invasion of Ukraine have drawn national media and industry attention.

More than 450 companies, including dozens of food and drink companies, on the list had reduced or eliminated their activities in Russia as of March 23. Jeffrey Sonnenfeld, DBA, Senior Associate Dean for Leadership Studies at the Yale School of Management in New Haven, wrote an underlined article that appeared in Fortune March 7. Since then, outlets such as CBS News, National Public Radio and MSNBC have interviewed him.

The list evolved and, on March 23, divided the companies into five groups based on the degree of their detachment from Russia: withdrawal, suspension, reduction, time saving and digging. In addition to compressing Russia financially, companies and their brands leaving the country can make Russian citizens question the news media in their own country, Dr. Sonnenfeld said in a March 22 interview with Food Industry News.

“It’s a symbolic way to make the Russian people understand that what they hear about their role in the world is different from the truth,” he said, adding that many Russians think their country is in trouble. liberating Ukraine from a neo-Nazi regime. .

“Of course, the reality is that their government is the vicious villain against millions of innocent civilians,” Dr Sonnenfeld said.

Companies that joined the list on March 22 shut down 25% of Russia’s gross domestic product (GDP) as they left, he said.

“It’s a huge message that something is wrong and they’re not getting the truth,” Dr Sonnenfeld said of Russian citizens.

JP Morgan Research predicts that Russia’s economy will contract by 35% quarter-on-quarter and seasonally adjusted in the second quarter, while inflation in the country could reach 17% by the end of the month. year, against a forecast of 5.3% before the war.

Dr Sonnenfeld compared the situation in Russia to apartheid in South Africa some three decades ago. More than 200 companies, including Coca-Cola Co., IBM and General Motors, withdrew from this country in protest against English rule.

“Bishop Desmond Tutu (a leader in the anti-apartheid struggle) told me personally over lunch in the early 1990s how important it was to marry government activity with corporate activity. and the very strong message of condemnation sent to South Africans,” says Dr Sonnenfeld. “It was 200 companies. Here, we are now approaching 500 companies.

The list, first published the week of February 28, originally had two groups: withdraw and stay. Several dozen companies then withdrew from Russia. Dr. Sonnenfeld, his team of experts, researchers and students from the Yale Chief Executive Leadership Institute are updating the list, now divided into five groups.

The first group, withdrawal, covers companies that have completely halted Russian operations. Aldi is an example of this, as the retailer pulled products from Russia.

Businesses that have temporarily reduced operations but have kept return options open make up the second group, suspension. As of March 23, food and beverage companies in this group included Burger King, Coca-Cola, Grupo Bimbo SAB de CV, McCain Foods, McCormick & Co., McDonald’s Corp., Papa John’s International, Inc. and Starbucks.

The third group, downsizing, includes companies that are downsizing current operations and delaying new investments. They included Bunge, Kellogg Co. and PepsiCo, Inc. on March 23.

The fourth group, save time, are companies that hold back new investment and development. ADM, Barilla, Cargill, Danone SA, Dunkin’, Focus Brands, General Mills, Inc., Kraft Heinz Co., Lamb Weston, Mars, Inc., Mondelez International, Nestle SA, Subway and Yum! The brands were in this group on March 23.

Companies in the fifth group are “digging in”, which means that they are not leaving Russia or reducing their activities. Shares of these companies fell 12 to 35 percent after Russia invaded Ukraine on Feb. 24, Dr Sonnenfeld said.

Gruma SAB de CV, Monterrey, Mexico, remained on the “diggers” list on March 23. Gruma acquired Solntse Mexico, a tortilla company in Russia, in 2011, launched its Mission brand in the country in 2014, and opened a tortilla production facility in Russia. Russia in 2017.

Gruma’s share price on the Bolsa Mexicana de Valores, the Mexican stock exchange, closed at just under 265 pesos ($13.14) per share on March 22, from just under 280 pesos per share on March 22. 1st of March. Mexico, unlike the United States, had not issued sanctions against Russia as of March 23.

Companies continue to move to higher groups on the list. Subway switched to the digging group’s time buying group after announcing on March 21 that it would not make any direct investments or open restaurants in Russia and would redirect all profits from operations in Russia to humanitarian efforts providing meals to refugees across Europe. Subway has approximately 450 franchise restaurants, all of which are independent, in Russia, operated by local franchisees and managed by an independent master franchise, not by Subway employees. The master franchisee manages all operations, marketing and supply chain.

“They always fully support their franchisees,” Dr. Sonnenfeld said. ” It’s disappointing. They could cut advertising. They could cut the formation.