CEP Magazine – May 2022

Global trade professionals often find themselves to be the busiest when the world is at its worst. That was the case for myself and my team during late February and March this year as the Russian invasion of Ukraine began—reading and responding to lengthy and complex global sanctions as Ukrainian towns were being bombed and its civilians killed.

The compliance, logistics, and supply chain decisions that had to be made during this time related to ongoing business transactions, sales, and exports to Russia and neighboring Belarus (its partner in facilitating the invasion). These decisions, for the most part, were dictated by the sanctions packages and export controls that were coming down the pike every day. The decisions were based on questions of “can”: Can our company continue to invest in Russia? Can our company still sell to our Russian business partners? Can our company still operate offices in Russia? But the larger question for many compliance and ethics professionals during this time was a question of “should”: Even if we can…should we?

At the time of this article’s writing, more than 300 companies have withdrawn from Russia (undoubtedly more at the time of this article’s publication).^[1] They have canceled joint ventures, pulled their sales, refused to release their movies, and have shut down all operations and offices in a matter of days. To be clear, many if not all these companies are not required by international law or applicable sanctions to take such actions. Russia has become the “world’s most sanctioned nation”;^[2] however, the sanctions have allowed room for companies in the West to continue limited business with the country. US and European businesses can still operate in Russia, they can still employ Russian citizens, and they can still provide many of their goods and services to Russians. But companies in the United States, European Union, United Kingdom, and their global allies now have difficult questions to ask themselves—questions that have less to do with compliance and more to do with ethics—questions of “Should we?”

While the multitude of sanctions packages is complex and often difficult to interpret and apply (trust me!), ultimately, the compliance decisions are relatively easy decisions to make: Don’t do anything that is noncompliant. The harder questions are the ethical ones: Should we continue to operate business in Russia? Should we balance the financial impacts of pulling out against the optics of staying in? Should we attempt to further isolate Russia and, in turn, isolate our Russian customers and employees who, through no fault of their own, are facing the consequences of an authoritarian leader?

These decisions will be made by the CEOs and boards of directors in companies and countries around the world that, at least in theory, stand for freedom and democratic principles. These decisions are not likely to be made by compliance and ethics professionals. Nonetheless, they are relevant for compliance and ethics professionals to consider as much as, if not more so, any other corporate function. After all, what is the purpose of a company implementing environmental, social, and governance initiatives while they reap financial benefits in a region of the world that oppresses its own people and kills its neighbor without provocation. Aren’t company’s diversity, equity, and inclusion trainings and statistics diluted when the same company invests in and benefits from a country that has so little value for diversity of thought and opinion that it disappears those who would speak out against it? Will a company’s compliance handbooks, mission statements, and codes of conduct still carry value when they are used to train employees who operate in countries with rampant cronyism, corruption, and political violence? Few industrialized countries are without flaws or atrocities committed in the past, but can companies who champion the idea of a “corporate conscience” acquiesce to Russia’s modern pattern of unprovoked aggression and arguable war crimes (Georgia in 2008, Crimea in 2014, Syria in 2015, and Ukraine in 2022)?

Keep in mind, the ethical decisions that are made by CEOs and boards are not made in a vacuum. Even decisions that are seemingly based on the right thing to do, regardless of financial impact, still must account for the fact that loss in revenue or drop in stock price can have real impact on people’s lives and livelihoods, whether in Minneapolis or Moscow. And even if a company today allows ethics to guide its business decisions regarding Russia, what of its business with China, Saudi Arabia, and other culprits of authoritarianism and oppression on the world stage whose markets remain open to the West?

The answers aren’t easy. But for the compliance and ethics professional: Don’t be afraid to ask the questions. Consider the ethics, optics, and implications, and ask others (even your C-suite) to consider them as well. I saw an internet post in recent days by a young attorney in the US who claimed to have quit his job because of his firm’s continued Russian involvement. Heroic? Maybe, but you shouldn’t have to sacrifice your livelihood in order to take a moral stance. You can and should let your voice be known, especially to those in your company whose decisions, ultimately, carry the day.

Takeaways

• Global trade professionals often find themselves to be the busiest when the world is at its worst.

• Considering recent events and the sanctions on Russia, companies have both compliance and ethical decisions to make about their continued involvement in the region.

• Compliance and ethics professionals should consider their companies’ business decisions, as such decisions can reflect on the overall compliance and ethical culture of the organization.

• Business decisions that are guided by ethical considerations over financial considerations can have measurable impacts on peoples’ livelihoods and lives.

• Compliance and ethics professionals should share their thoughts on the ethics and optics of potential business decisions with their C-suite.

1 “Over 300 Companies Have Withdrawn from Russia - But Some Remain,” Yale School of Management, March 11, 2022, https://som.yale.edu/story/2022/over-200-companies-have-withdrawn-russia-some-remain.
2 Nick Wadhams, “Russia Is Now the World's Most-Sanctioned Nation,” Bloomberg, March 7, 2022, https://www.bloomberg.com/news/articles/2022-03-07/russia-surges-past-iran-to-become-world-s-most-sanctioned-nation.

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