Tags: Ethical Values
Dr Ian Peters, IBE Director, discusses the corporate response to the invasion of Ukraine.
Four weeks into the invasion of Ukraine and the situation continues to develop, not just from a military perspective but also from an economic one. The response from the West has been to impose economic sanctions, restricting the import and export of goods and services to and from Russia. Business has no choice but to comply with these sanctions and regulatory restrictions on trade. However, the conflict has raised ethical questions for them as well as compliance-related ones.
For many companies, the focus has been on risk mitigation. Regulatory compliance has quickly been overtaken by reputational risk with the pressure of public opinion reflected in negative headlines and investor pressure on those companies who thought that simply halting new investment in Russia would be sufficient to satisfy the calls for action. Gradually more and more companies have closed their Russian operations. Some did u-turns within 24 hours having initially stated they would stay open for business.
Those companies that moved the quickest are likely to have drawn on their companies’ stated purpose and values to reach their decision. These values should provide an ‘ethical compass’ to help companies choose the right path when faced with an ethical dilemma such as this. The decision on whether or not to pull out of Russia also has ethical downsides. Companies have a ‘duty of care’ to their Russian employees not just in their own businesses but often throughout the supply chain. In response to this, we have seen several companies commit to continuing to pay their employees in Russia or provide some other form of compensation.
And some businesses may be supplying essential goods such as medical supplies or pharmaceuticals and feel that they have an ethical duty to continue to supply these products. But ultimately companies will need to consider whether they can justify their claim that their products are ‘essential’ or whether they are just competing in the Russian market with other Russian suppliers.
Will western businesses return to Russia when this is all over? It is difficult to see how things can return to how they were in the short term, especially if Putin’s regime remains in power. Companies’ decisions should ultimately be based on their ethical values but these are not set in isolation; they must reflect their stakeholders’ and society’s values, which is why a return to Russia is not likely any time soon.
Author
Dr Ian Peters MBE
Director
Ian Peters has been Director of the Institute of Business Ethics (IBE) since May 2020. In addition to leading the IBE’s team of researchers and advisers, Ian works with company boards and senior leadership to support them in promoting an ethical culture.
Ian serves on a number of external bodies including: the IoD Commission to develop a Code of Conduct for Directors, the CBI’s Culture Advisory Committee, the Financial Reporting Council Stakeholder Insight Group, the Chartered Institute for Securities and Investment Integrity Committee and the University College London Centre for Ethics and Law Advisory Panel. He also chaired the Chartered Governance Institute’s Board Performance Review Working Group.
Previous appointments include Chair of the Independent Monitoring Panel of the UK Chartered Banker Professional Standards Board, member of the UK Regulatory Policy Committee and its predecessor, the Better Regulation Task Force, and member of the Court of the University of Lancaster.
Ian’s previous executive roles include Chief Executive of the Chartered Institute of Internal Auditors (UK and Ireland,) Director of External Affairs at the Engineering Employers Federation (EEF), Deputy Director General of the British Chambers of Commerce, Head of SME Policy at the Confederation of British Industry, and a period in public relations for PR agency Burson-Marsteller.
He holds a PhD from Southampton University on the role of small businesses in economic growth and a BA in Geography from the University of Lancaster.
In 2015 Ian was awarded an MBE for services to regulatory reform in the UK.