Chemicals giant Solvay recently announced that it would suspend operations and investment in Russia, along with making a EUR 1 million donation to relief efforts for Ukraine. The move was hardly unique and indeed was only the latest in a long line of companies — in energy, high tech and media, and automotive, as well as materials — cutting off Russian business following the invasion of Ukraine. These firms are taking an immediate financial hit to distance themselves from Russia — the most extreme case probably being BP's USD 25 billion writedown to drop its stake in state-owned oil producer Rosneft.
The willingness of firms to suffer financially for essentially moral reasons is an eyebrow-raising rebuke to the traditional economic doctrine of shareholder value. Of course, one can fairly question how much of it is driven by a heartfelt belief in the priority of values over profits, and how much is driven by fear of negative public-relations impact — or a simple calculation that logistical difficulties will make operations in the region challenging in any case. Still, however enlightened or cynical the reasoning, these moves are the latest sign that companies are feeling the need to really practice, not just preach, social responsibility. Innovation leaders should take a lesson about the durability of the sustainability trend and the willingness of businesses to take meaningful actions even at a short-term cost — and about the importance of following social trends and understanding their impact for innovation and business planning.
This blog is the final in a series of posts detailing the impact and fallout from the Ukraine crisis for innovation leaders and businesses. Missed the previous post? Click here to read about the long-term shift to localization and resilience. Missed the series? Click here to start at the beginning with our post on Germany’s foreign policy response.