Yahoo Finance Diane Francis: Corporate Canada gets good grades for exiting Russia
Bravo to Ottawa for imposing sanctions on a famous Russian hockey star, Vladislav Tretiak, the first Soviet player inducted into the Hockey Hall of Fame, and two female cosmonauts. All three serve as members of Russia’s parliament and support President Vladimir Putin’s war against Ukraine. A total of 129 individuals and 63 organizations were sanctioned.
But the mass exodus of corporations from the Russian market — led by McDonald’s — is also important. Canadian companies are among the more than 1,000 multinationals that have left the country or scaled back operations, according to a Yale University database.
“Since the invasion began, we have been tracking the responses of well over 1,200 companies, and counting. Over 1,000 companies have publicly announced they are voluntarily curtailing operations in Russia to some degree beyond the bare minimum legally required by international sanctions — but some companies have continued to operate in Russia undeterred,” wrote Prof. Jeffrey Sonnenfeld and his team at Yale’s business school.
A number of Canadian corporations are on the list. Those that have made a “clean break” include the Canadian Broadcasting Corporation, Colliers, Gowling, IMAX, Kinross Gold, McCain Foods, Spin Master and Volaris Group. Those curtailing operations but “keeping options open” include Alimentation Couche-Tard Inc., Blackberry Ltd., Bombardier Inc., Canada Goose Holdings Inc., Canadian Tire Corp., Liquor Control Board of Ontario, Magna International Inc. and OpenText. Oilfield services company Calfrac Well Services Ltd. is still operating but “holding off new investments/development.”
Last March, The Canadian Press also published a list of smaller Canadian companies and investment entities that have left. They include: the Alberta Investment Management Corp., Arc’teryx and its parent company Amer Sports, British Columbia Investment Management Corp., BRP Inc., CAE Inc., Caisse de depot et placement du Quebec, Norton Rose Fulbright, Public Sector Pension Investment Board, Restaurant Brands International Inc., Rio Tinto PLC, Shopify Inc. and WSP Global.
Sonnenfeld said the negative impact of exits, coupled with crippling sanctions, has impaired Russia’s economy. He estimates that businesses that have left so far had in-country revenues equivalent to 35 per cent of Russia’s GDP and employed 12 per cent of its workforce. “The great Russian retreat (of multinationals) is still holding strong and still eroding Vladimir Putin’s war machine finances,” he said in an interview earlier this month with Investment Monitor.
Sonnenfeld also pointed out on CNBC last week that a few large Chinese enterprises pulled out after the war started, including: Sinochem, a state-owned chemical, fertilizer and oil conglomerate; Sinopec, a Chinese oil and gas enterprise; and one of its biggest financial groups, the Industrial and Commercial Bank of China.
“At this point, there is no excuse for any western company to remain in Russia from either a financial, economic, political, social or moral standpoint,” stated a Yale-led research paper. “Advocates should continue to direct their attention towards the companies that bewilderingly refuse to exit despite the courageous stands of 1,000-plus of their global peers as well as those who show no actual progress towards divesting from Russia.”
Sanctions banning goods and services, thus depriving Russian manufacturers and consumers from purchasing western imports, have also damaged Russia’s economy.
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Also effective has been the G7’s oil price caps. In the months following the invasion, Putin’s energy earnings soared but caps were introduced because Europe chose not to ban oil imports altogether. Deutsche Bank economists recently estimated that the caps are costing Russia US$500 million a day in oil and gas export revenues compared with earnings before the war.
Yale’s lists has garnered world headlines, helping grow the exodus by shining a light on companies that leave and also by shaming those that have remained. So far, corporate Canada gets good grades for leaving the country.
Now the Canadian government must pressure any companies that remain in Russia to leave and should also demand that Russian and Belarusian athletes be banned from the 2024 Olympics. This would represent another high-profile blow to a rogue regime that exploits athletes and artists as propaganda tools, is looking to destroy a peaceful neighbour and has upended geopolitics and the global economy.
Financial Post
Editor’s Note: An earlier version of this article cited incorrect information listed in a Yale University database about Spin Master Ltd.’s involvement in the Russian market. The company confirms it ceased operations in Russia in March 2022 and closed its office there in June.
