When the first airstrikes fell on Ukraine in February 2022, corporate executives with operations or holdings in Russia were forced to pick a side. This decision had significant implications. Russia remains a major business market, with a population of 145 million; its 2022 GDP was a staggering $2.24tn (£1.81tn), right behind France. Fleeing companies would leave a lot of revenue on the table.
Yet amid a gruelling war, with tens of thousands of civilian casualties and widespread international condemnation of Russia, companies risked severe reputational damage by staying put. Plus, a mix of international pressure, sanctions and risks of Russian government interference offered strong reasons for companies to leave when the conflict began.
"Some decided to stay, some decided to go very quickly, and some dragged their feet," says Roman Sidortsov, an associate professor of energy policy at Michigan Technological University, US, who practised corporate law and taught in Russia.
One of the biggest companies to pull out almost immediately was British Petroleum, which exited just three days after the conflict began. By 1 March, BMW also announced it would halt Russian production and imports. And after first announcing a plan to leave Russia in March 2022, Heineken sold off its Russian business to Russian packaging firm Arnest for a single euro this August, taking a €300m ($319m; £257m) loss on the division.
Experts disagree on exactly how many companies have left Russia – and what constitutes a 'full departure'. The Kyiv School of Economics Institute, which tracks the status of foreign companies selling or operating in Russia through its Leave Russia project, estimates around 300 have left.
According to a similar list compiled by the Yale School of Management's Chief Executive Leadership Institute (CELI), roughly a thousand companies have exited.
However, hundreds of foreign companies continue to operate in, or sell to, Russia. The KSE Institute claims 1,400 companies are still conducting business in some form within the country; by the CELI’s count, around 500 companies are doing so.
A recognisable name on the KSE list is PepsiCo. In early September, Ukraine's National Agency on Corruption Prevention accused the multinational soft-drink giant of continuing to produce food products in Russia despite it discontinuing Pepsi-Cola, 7Up and Miranda production.
Tech and finance giants, including Chinese firm Alibaba, also continue to conduct business there, as does British-Swedish pharmaceutical firm AstraZeneca. Airlines including Emirates, China Eastern and Air Serbia still openly advertise flights to Russia on their websites. Other businesses, like Indian refiner Chennai Petroleum, are gearing up instead of exiting: the company is expanding its services to Russia because of the invasion.
Critics of companies that have remained in Russia, including Yale Chief Executive Leadership Institute founder Jeffrey Sonnenfeld, denounce these businesses as greedy, or even complicit in Russia's invasion. But ceasing operations in a country with such major business implications isn't simple. Some businesses remain because of a lack of pressure on them to leave, or due to an existential threat. Others believe staying is the most humane option for their consumers.
PepsiCo no longer produces Pepsi-Cola, 7Up and Miranda in Russia, but have faced accusations of continuing to produce food products (Credit: Alamy)
Companies choose to continue operations in Russia for all sorts of reasons, despite immense public pressure from both consumers and governments.
The simplest is financial solvency. Growing revenue and maintaining market share is critical for any firm, especially one dependent on Russian consumers. Andreas Rasche, a professor of business in society at the Copenhagen Business School's Centre for Sustainability, offers the example of family-owned German chocolate brand Ritter Sport, which pledged to stop investing and advertising in Russia, but still sells its products in the country. "They get 7% of their overall revenue out of Russia," he says. "They don't simply leave the market because, for them, it would potentially hurt a lot."
Sidortsov says other companies may simply not fear the optics of operating in Russia, especially if these firms are small or not publicly well known, or if business interests are simply too great.
He points to US oilfield-services giant SLB, which, along with fellow firms Halliburton and Baker Hughes, continued to supply Russia with imports after the war began. Although Halliburton and Baker Hughes wound down their operations less than six months into the conflict, SLB only stopped in July 2023. Russia is a major oil producer, and Sidortsov says there was a compelling business reason to stay. SLB even grew its fortunes slightly before departing.
"The reputational risk was not that high, and the dependence on these companies was really, really high, so it was just worth it," he says.
In many cases, management might be able or willing to leave Russia, but aren't keen on selling factories, warehouses, storefronts or other assets in the country. This is especially true considering Russian legislation that complicates foreign corporate withdrawals.
They don't simply leave the market because, for them, it would potentially hurt a lot – Andreas Rasche
Rasche cites a law, passed by the Kremlin in late 2022, which essentially requires all foreign companies wishing to sell assets be assessed by a Russian government agency, then sold at half the agency's valuation. Some companies, like Heineken, have been willing to sell their Russian assets at a steep discount. But Rasche says other businesses are not as eager to take a massive financial hit.
Plus, he adds, many of these asset sales are done with Russian oligarchs. "Quite a lot of companies struggle with that," he says.
Even companies that stay risk the possibility of seizure by the Kremlin. In July, this happened to Carlsberg, a Danish competitor to Heineken; Russian President Vladimir Putin seized its assets in retaliation for Western governments taking control of Russian assets abroad. While Carlsberg still owns Baltika, it no longer has any jurisdiction over it.
Sidortsov, who grew up in the former Soviet Union, says this could be a case of the Russian government deliberately seizing assets to enrich itself or its supporters. This practice, known in Russia as "otzhim", derived from the Russian word for "to squeeze", is not unusual in Russia's business environment.
In other cases, firms providing essential food or medicine, like AstraZeneca, have argued staying in Russia is worth it on moral grounds. In a statement last August, the British-Swedish pharmaceutical giant said it had signed the Ukraine Business Compact in support of Ukraine's recovery, and had paused investments, but would continue to sell medication in Russia.
"Patients rely on our essential and live-saving medicines, and it is vital that medical supply chains continue to operate, enabling health systems and workers to deliver essential care," the statement reads. It added it would not start global clinical trials in the country.
Some airlines, including China Eastern, still advertise flights to Russia on their websites (Credit: Alamy)
Jeffrey Sonnenfeld, the founder of Yale's Chief Executive Leadership Institute, believes companies choosing to stay in Russia amid the ongoing invasion of Ukraine will not be viewed kindly by the public.
He compares it to the PR disaster faced by companies that ran German operations during the Third Reich. "When the war ends, they're going to be seen as Nazi collaborators were seen," he says.
He argues the decisions to continue German operations by companies including Woolworth, Royal Dutch Shell and Texaco did not benefit their bottom lines in the end. All three were forced into stopping their activities in Nazi Germany due to pressure, adds Sonnenfeld. Texaco’s chairman, Torkild Rieber, was forced to resign in 1940 due to public outcry over his pro-fascist sympathies and dealings with Gerhard Westrick, a Nazi official who represented US companies operating in Germany.
However, not every business in this position sustained harm: IBM, which currently has a market cap of $134bn, supplied technology to the Nazi regime itself; while Volkswagen, the original producer of Hitler's so-called 'people's car', is currently the largest automotive group in the world.
As for the current conflict, Rasche believes the long-term consequences for companies choosing to stay in Russia depend on investors' appetite for risk. After all, he says, companies in Russia could have their assets seized, as was the case with Carlsberg, or kicked out of the country. If the war escalates further into Russia itself, workers, factories and other assets might be caught in the crossfire.
Businesses may also face blowback from consumers around the globe. Myriad boycotts aim to galvanise foreign companies into leaving Russia, including the KSE Institute's Leave Russia project, which tracks the company exits. These campaigns often produce negative attention for lingering firms, yet some businesses may be fine weathering the storm – Rasche says the financial implications for companies caught in scandals are usually short-lived.
"Nike had all these sweatshop scandals in the 1990s," he points out. "Nowadays, people still buy their products. So, I think there is a tendency for people to forget and maybe just keep on going and revert to business as usual."
The ongoing deterioration of Russia's economy, in the face of international sanctions and condemnation, may still give remaining companies increasing reason to bail. While the Russian economy is large, it still underperforms the US, China and the European Union. Ultimately, Sidortsov expects the country's business environment will eventually look like North Korea's: very isolated, with only a handful of business links to the outside world through staunch allies like China.
"I think there will be a point in time," he says, "when there will be very, very few foreign companies left."