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Makers of basic necessities face ‘tradeoff’ supplying Russia with cookies, soap

Makers of basic necessities face 'tradeoff' supplying Russia with cookies, soap

Multinational corporations, including manufacturers of daily necessities like Pampers diapers and Dove soap, are treading a narrow line by continuing to sell their goods in Russia, as pressure mounts on them to make a statement against Russia’s recent invasion of Ukraine.

Nevertheless, certain financial services organizations, oil and gas industries, and shops that withdrew completely from Russia have fallen behind the world’s largest manufacturers of packaged food goods and home essentials. Consumer goods firms in Russia say that their items are relied upon by the average person in the country.

The Yale School of Management’s Jeffrey Sonnenfeld is keeping track of large corporations’ plans to exit from Russia. “I give them credit for doing more today than they did yesterday,” Sonnenfeld said. “The more extensive the withdrawal, the more likely it is that the chances for global peace will improve.” Sonnenfeld went on to say that it was a “mistake” to attempt to minimize the harm done to the Russian people by continuing to provide basic necessities.

“There is no third ground,” he said emphatically.

“It’s not just about making money,” said Katie Denis, a spokesman for the Consumer Brands Association, a trade organization that represents corporations such as Procter & Gamble and Mondelez International. “It comes down to whether or not you intend to continue generating items that people need. “It’s a very different situation than the one that corporations who came out earlier are facing.”

WORTH THE RISK?

Aside from this, corporations do not want to be seen as causing damage to average Russian residents by putting them out of employment.

Federated Hermes is urging companies to be “open and transparent about what they do in Russia” and to share “what decision-making process they’ve gone through to come to a conclusion” on working in the country through phone calls and letters, according to Hannah Shoesmith, director of engagement at the asset management firm. Federated Hermes is focusing its marketing efforts on consumer goods firms, according to Shoesmith.

According to Shoesmith, “we would not just urge corporations to leave Russia without first requiring them to analyze the effect on human rights.” “Companies must make trade-offs in order to succeed. It’s not quite as black and white as that.”

Additionally, Shoesmith said that businesses should “begin to think seriously” about their stance on taxes that are paid to the Russian government.

According to her, “efforts are being made to come up with good ways surrounding paying taxes.” In the event that they pay taxes in Russia, what are the creative solutions they might devise to make up for the difference?”

Shoesmith said that during previous military coups and refugee crises, businesses paid donations to nongovernmental organizations (NGOs) whose mission was to assist individuals in need equal to their tax bills.

‘CORPORATE SUICIDE’

The Yale School of Management’s Jeffrey Sonnenfeld is keeping track of large corporations’ plans to exit from Russia. “I give them credit for doing more today than they did yesterday,” Sonnenfeld said. “The more complete the withdrawal, the more likely it is that global peace will be achieved,” says the author.

It was a “mistake,” according to Sonnenfeld, for the U.S. to attempt to minimize harm to the Russian people by continuing to provide basic necessities.

“There is no third ground,” he said emphatically.

“It’s not just about making money,” said Katie Denis, a spokesman for the Consumer Brands Association, a trade organization that represents corporations such as Procter & Gamble and Mondelez International. “It comes down to whether or not you intend to continue generating items that people need. “It’s a very different situation than the one that corporations who came out earlier are facing.”

WORTH THE RISK?

Aside from this, corporations do not want to be seen as causing damage to average Russian residents by putting them out of employment.

Federated Hermes is urging companies to be “open and transparent about what they do in Russia” and to share “what decision-making process they’ve gone through to come to a conclusion” on working in the country through phone calls and letters, according to Hannah Shoesmith, director of engagement at the asset management firm. Federated Hermes is focusing its marketing efforts on consumer goods firms, according to Shoesmith.

According to Shoesmith, “we would not just urge corporations to leave Russia without first requiring them to analyze the effect on human rights.” “Companies are forced to make a trade-off in order to survive. It’s not quite as black and white as that.”

Additionally, Shoesmith said that businesses should “begin to think seriously” about their stance on taxes that are paid to the Russian government.

According to her, “efforts are being made to come up with good ways surrounding paying taxes.” In the event that they pay taxes in Russia, what are the creative solutions they might devise to make up for the difference?”

Shoesmith said that in the past, during military coups and refugee crises, businesses paid donations to nongovernmental organizations (NGOs) that were tasked with assisting those in need of assistance.

‘CORPORATE SUICIDE’

Despite the fact that his firm, based in San Francisco, has no direct exposure to Russian companies, Joe Sinha, chief marketing officer at Parnassus Investments, said his firm is reaching out to the portfolio companies it owns in the United States that have more than 2 percent or so of revenue exposure to Russia to inquire about their plans to remain or leave the country.

“We’re not attempting to dictate what they should do; rather, we’re trying to understand their responsibilities and options,” Sinha said. While Parnassus supports measures such as sanctions that cut off Russian banks and technology corporations with ties to the military, he noted that the analysis for food companies that serve customers may be different than for other businesses.

“It would be detrimental to individual people who have nothing to do with the regime in the case of particular products and services,” he said. “There are some ambiguities.”

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