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Companies graded on Ukraine response by Yale researchers

By Jennifer Mason


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Graphic: Jennifer Mason

Western companies have faced many pressures to take a stance since the Russian invasion of Ukraine began in February. One such pressure has come from the existence of a now viral list, compiled by researchers at the Yale School of Management in Connecticut, which tracks the status of companies’ operations in Russia using public sources such as government regulatory filings, company statements, financial analyst reports, as well as non-public sources including their network of company insiders, whistleblowers, and executive contacts.

The list, considered a “hall of shame,” is credited as a catalyst for the corporate exodus out of Russia over the past month. The researchers note on a landing page for the list, hosted on the business school’s website, that only several dozen companies had announced their departure when the list was first published on February 28. Now nearly five-hundred companies have withdrawn, close to forty in the clothing and jewelry businesses.

Apparel companies “missed the moment” in regard to Ukraine

On the podcast, “Sway,” hosted by renowned New York Times tech reporter, Kara Swisher, the head researcher of the project and Senior Associate Dean for Leadership Programs, Jeffrey Sonnenfeld, explained that the intention of the list was to certify that companies were actually making the moves that they claimed. He explained that the list gave hesitant companies the confidence to act. “Those CEOs could go back to their boards and say, hey look, we’re not going to be out there on some limb—that tall poppy syndrome as the Australians call it—we’re not going to get cut down to scale because we’ve stepped out in front. We’re going to be with the thundering herd,” he said.

Sonnenfeld expressed surprise at the industries that were early movers and those that were not. “The choreography has been surprising. To have big oil and energy companies on the frontiers of social change is not the normal pattern,” he told Deutsche Welle as Shell, BP, and ExxonMobil broke away early. “The companies that weren’t there were the consumer goods companies—packaged goods companies, food companies, apparel, fragrances—companies that usually are on a leading edge of social change missed the moment.”

How the Grading Works

The research team has created the following rankings that reflect a range of responses:

Grade A: The company completely halted operations or exited Russia making a clean break.

Grade B: The company has temporarily curtailed most or nearly all operations while keeping options open to return.

Grade C: The company scaled back some significant business operations while still continuing others.

Grade D: The company postponed new investment, development, and marketing initiatives while continuing substantive business in Russia.

Grade F: The company has defied demands for exit and is continuing business as usual.

Most of the fashion retail companies from luxury goods conglomerate, LVMH, to sportswear leaders Adidas and Nike, and fast fashion giant, H&M, received a B grade. The companies in this category have closed stores and suspended all shipments and operations but look to return eventually. E-commerce-based companies like Yoox, FarFetch, Ebay, Etsy, and Asos fared better because the nature of their businesses allowed for a clean break by halting shipments to Russian buyers and deactivating listings from Russian sellers. Salvatore Ferragamo was given top marks as well since they are also without stores in Russia and have suspended all shipments, effectively removing their business completely from the country.

Off-price retailer TJ Maxx also received an A because the company divested from its minority stake in Familia, a Russian off-price retailer valued at 186 million dollars, (39 million less than they paid for it in 2019 as reported by Reuters). They have also committed to stop buying from Russia and Belarus.

Decathlon, the sportswear retailer, earned an F because up until this week the company refused to take any action with regard to their sixty stores and e-commerce site in Russia. Since their announcement this week, Decathlon has disappeared from the list, perhaps as researchers assess their situation. The lone clothing retailer with a failing grade left on the list is the multinational Alibaba Group that is based in China and owns the e-commerce company AliExpress. AliExpress maintains a joint venture and stake in VK, the Russian social networking service.

Companies continue to pay Employees in Russia

Companies like LVMH and Nike as well as those from other industries have announced that they plan to continue to pay their employees in Russia, even while their stores and operations in the country are closed. But Sonnenfeld believes that defeats some of the purpose of closing in the first place. “They’re still pumping cash into the economy,” he told Swisher. “The well intended explanation for that is, we don’t want to cut off loyal, long-service employees who are innocent, not a part of all this. I don’t buy that. You want civil society to come to a halt,” he explained. “Putin is not in power because he’s loved. He’s there not as a legitimate democratic leader, of course. He’s there by brute force. You can take on the totalitarian and show that he doesn’t have the control he does. Then he loses support. It's one way to weaken him.”

“Desmond Tutu told me personally in the early nineties,” he said referring to the South African leader known for his anti-apartheid efforts, “that the symbolic side of the corporate pullout of South Africa was as important as was the substantial hit to their economy.”

President Zelenskyy might agree. He gave a speech before the French Parliament in March, but addressed the entire Western world at the same time, as everything he says is picked up by nearly every media outlet. “We have been fighting heroically against the superior forces of Russia, but we need more help,” he said through a translator. “We need more support so that we don’t lose our freedom.” The president urged French companies to leave the Russian marketplace, called for stronger sanctions, and admitted simply to all who were watching: “Most of the answers are in your hands.”

Yale School of Management