Opinion

The Ukraine Crisis: How Corporations Should Respond To Russia’s Invasion

Michael Posner

By Michael Posner

By Michael Posner

Since the end of World War II, thousands of Western-based companies have benefited from the advent of the globalized economy. They have profited from selling their products to consumers in China, India and other far-flung markets while reducing costs by shifting manufacturing of everything from clothing to digital devices to low-wage economies. Western-based mining and oil companies have extracted raw materials in Africa and Latin America, and major U.S. and European banks have provided financing for all of these activities. This global outsourcing, which has created new opportunities for desperately poor citizens in developing countries, also has handsomely rewarded shareholders and corporate executives.

Global companies generally have thrived in this environment not only because of their ability to take advantage of advances in transportation, communications, and other technologies, but also because of a law-based international order that facilitates the enforcement of contracts, the movement of goods, and the reduction of cross-border rivalries and bullying which can disrupt trade. Now, as Vladimir Putin’s ruthless invasion of Ukraine threatens to tear down that international system, global companies have a lot to lose — and need to act.

Governments, especially those in the U.S. and Europe, bear primary responsibility for challenging Russia’s military assault. Western governments are providing Ukraine with advanced defensive weapons and imposing financial sanctions on Moscow. But companies operating in Russia or making money from Russian-related activities also have a responsibility to act. When deciding whether to suspend or maintain those businesses relationships, senior executives need to apply criteria that go beyond standard questions about whether their companies are making a profit or complying with local law. Instead, these companies must consider whether their commercial activities are aiding the Russian military, directly or indirectly, and even if they aren’t implicated in Putin’s lethal aggression, whether they ought to cease operations in Russia as part of the broader opposition to the invasion.

Read the full Forbes article.
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Michael Posner is the Jerome Kohlberg Professor of Ethics and Finance, Professor of Business and Society and Director of the NYU Stern Center for Business and Human Rights.