Boss of Unilever defends decision to retain business in Russia

ITV News Business and Economics Editor Joel Hills reports on the World Economic Forum in Davos, which has been dominated by Russia's invasion of Ukraine

The World Economic Forum is like a magnet for multi-national companies. More than 600 chief executives are up in the snow this year. In the last eleven months, many of the companies they run have either withdrawn from Russia or suspended the business they do there. But some remain. Among them the British consumer goods giant, Unilever, whose chief executive today defended the decision to stay. “We’ve drawn an economic ring around Russia, we want to make sure that we are not contributing to the economy there,” Alan Jope told ITV News in Davos. “If we hand [our] assets over to the Russian state or some other Russian oligarch they will be used to support this war and we are minimising [the Russian] business not maximising that business.”

The Ukrainian government accuses firms which continue to operate in Russia of taking “blood money”. “I don’t agree,” Jope told me. “Our primary responsibility is to our 3,000 people who we have on the ground”.

The Unilever boss said the company is not taking any profits or dividends out of Russia

Unilever operates four factories in Russia, in St Petersburg, Tula, Omsk and Yekaterinburg. Together, these sites produce all of the company’s famous brands of ice cream (Carte D’or and Cornetto), mayonnaise (Hellman's), cleaning products (Domestos and Cif), tea (Brooke Bond and Lipton), cooking sauces (Knorr), deodorants and soaps (Dove).

Unilever condemned Russia’s actions, immediately after the invasion of Ukraine but, at the time, the company insisted that it would continue to supply what it called “everyday essential food and hygiene products” to the Russian people. Jope wouldn’t say if Unilever’s Russian business is making money but insisted that the company is “not taking any dividends or profits out of Russia”.

As it happens, Western sanctions and capital controls make that impossible anyway, for the moment, but a source close to the company later clarified that were any profits to be made, they would stay within Unilever’s Russian business and therefore out of the reach of the Russian state. According the latest analysis by the Yale Management School, more than 1,200 global companies have exited Russia entirely since February last year. But Yale’s research finds that, in addition to Unilever, a series of other firms have not, including Nestle, Proctor and Gamble, Astra Zeneca, GSK, Airbus, Novartis, Hilton, Hyatt, Dominos, Subway, Snap, Kraft Heinz, Mondelez, Accor and Johnson & Johnson.

Yale classifies these firms as “Buying Time” in Russia. Jeffery Sonnenfeld, a professor at the School of Management, argues all western companies should quit Russia to help fuel discontent against Vladimir Putin. He is dismissive of explanations that the provision of essential food, medicines and vaccines are good reasons for remaining. “Those are the worst reasons [for remaining],” Sonnenfeld insists. “This is economic warfare. The Russian people are the target.

"Russians need to be awakened by increasing discomfort, that’s the goal. And everything that [western companies] produce can be sourced locally.” Last March, the Wall Street Journal reported that prosecutors in Russia were threatening to arrest executives working for Coca-Cola, McDonald’s and IBM in Moscow, if they withdrew. All three companies did eventually leave. It’s not known if the threats were carried out.

Ukraine’s First Lady was in Davos today. Olena Zelenska appealed to business leaders to do more to help Ukraine resist Russia. The message to companies from another member of the Ukrianian delegation here was more direct. “Stop trade with Russia,” Vitali Klitschko told reporters. “Every dollar [that] you send to Russia is blood money." Stay or go? As Ukraine sees it, this shouldn’t be a dilemma for multi-national companies at a time of war. Many have quit Russia, others argue there are ethical reasons to stay. What’s striking though is that western governments are not pushing those who have stayed to leave. Not in public, at least.

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