Geopolitical corporate responsibility can drive change, 26 July 2022

Both reputational and operational factors are driving the huge exodus: reputational as companies have chosen to disassociate themselves from Putin’s regime; operational as transportation routes and supply chains have been interrupted.

Few of these companies have made explicit the principles at stake, while many still face ‘tricky legal, operational and ethical considerations’ and some have kept operations in place. But the collective impact of the exit in response to Russia’s affront to international law has sent shockwaves around the world...

The new Declaration from the Business for Ukraine Coalition – an international civil society initiative of organizations and individuals – encourages companies to reinforce ‘responsible exit’ from Russia ‘in response to its unprovoked, full-scale war on Ukraine’...

According to an online survey of 14,000 respondents in 14 countries, including employees, NGOs, and other stakeholders, there is a ‘rising call’ for business to be more engaged in geopolitics, with CEOs ‘expected to shape policy’ on societal and geopolitical issues.

Such expectations have been intensifying with the impetus of the combined stakeholder capitalism and corporate purpose agenda, even as a political backlash in the US against the environmental, social, and governance (ESG) movement linking institutional investors and multinational corporations gains momentum.

The emergence of corporate activism is a further development – partly driven by employees and accelerated during the pandemic – on issues of economic inequality, racial injustice, and gender equality, as well as the climate crisis...

A new geopolitical corporate responsibility does not need to become a doctrine but can instead be an agenda to support the international rules-based order under stress. Such an agenda may help multinationals deal with expectations they already face, such as:

• Avoiding situations where they cause, contribute, or are directly linked to human rights abuses.
• Committing to the ‘shared space’ of the rule of law, accountable governance, civic freedoms, and human rights.
• Supporting peace, justice, and strong institutions both within nations and across the international community as set forth by UN Sustainable Development Goal 16.
• Demonstrating corporate responsibility at the national and geopolitical levels to enhance equity, transparency, and accountability.
• Diminishing inequality by tackling poverty and ensuring sustainability by arresting the climate crisis...

The war in Ukraine may be a catalyst, or even a turning point, for the emergence of a new geopolitical corporate responsibility. As multinationals face inescapable and irreversible pressures to address national and geopolitical challenges, this agenda can inform their commitments and actions to help uphold the international rules-based order on which they depend.