“There are no good deals in a bad war”

Western companies have recently acted for peace by cutting all commercial ties with Russia, for example. “A moral duty”, say several renowned Swiss and Austrian economic experts.

This content was published on April 12, 2022 – 13:46

Thomas Beschorner’s opinion with Guido Palazzo, Markus Scholz and Peter Seele

Major groups such as Ikea, Apple, Coca-Cola and major credit card issuers have severed business ties with Russia, removed their products from the shelves there or closed their manufacturing sites and subsidiaries. Other companies, on the other hand, such as the multinational agri-food company Nestlé or the largest foreign bank in Russia, Raiffeisen Bank International, have maintained their trading relationships.

Without wanting to pull the cover, some companies claim to have a social responsibility towards their staff in Russia, others claim a responsibility towards the Russian people. A third category of companies is silent about this term ‘responsibility’.

What is reasonable today to demand from an ethical point of view?

American economist Milton Friedman argued fifty years ago that corporate social responsibility consists in maximizing profits by whispering moral discourse. The debate is raging again in business and among experts.

While Friedman assumed that this responsibility was linked to some form of charitable ethics, today it appears to be an essential part of the core business of these companies. Because the question is no longer what they spend their profit on, but above all how they get it.

“While it may still be possible to do business in fractured societies for some time, it is now morally difficult to get out with your head held high.”

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These companies are now fully part of the political game. What was not taken for granted in democracies in the past, when these groups claimed moral neutrality, especially on the principle that it was up to the state to control and punish questionable practices. After the fall of the Berlin Wall in the late 1980s, value creation went global. Business leaders had to justify their decisions, not just to their own public opinion, but worldwide.

The End of Neutrality

When the Abacha regime executed the poet Ken Saro-Wiwa in Nigeria in 1995 for organizing actions against the oil company Shell, the latter reacted relatively little to the reprimands of human rights activists, referring to her neutrality. But since the 1990s, the world has realized that multinational corporations no longer operate solely within the framework of well-regulated democracies. But that they might just as well have to deal with repressive regimes, as the example in Nigeria shows. They then end up in areas where political responsibility is absent, weak or without respect for the law. There are only a few multinationals that want to promote neutrality.

While it may be possible to do business in fractured societies for some time to come, it is now morally difficult to emerge with your head held high.

Businesses are at the heart of society

This observation stands out with the war Russia is currently waging in Ukraine. Our societies now demand clearer positions from the entrepreneurial world. It is no longer about judging the morality of companies by their donations. Their views are now part of a social and political framework. Companies that refuse to leave Russia today risk losing social acceptance.

At the heart of society: demonstration against the war in Ukraine in front of the Swiss Federal Palace. © Keystone / Peter Klaunzer

Like it or not, their activities are intertwined with our societies in general. This forces them into action. Or close your eyes and look away. In this case, this is a “silent complicity”, if a state violates basic human rights.

With this war we are unable to leave this question open. Especially since western society and a large part of these companies have already decided by complying with international law, politics and morality. Moreover, economic sanctions against Russia are proving to be an effective tool.

Ethically, today’s result is that companies must do everything they can to end this war in Ukraine as soon as possible. And thus, from a socio-political point of view, offer an opportunity for future peace negotiations. It is not just a matter of social acceptance, nor is it a basic reflection on costs and benefits or a matter of reputation. Responsible companies work for peace through their concrete actions.

Five points of corporate social responsibility

Complying with the sanctions is a first step. But from the perspective of morality, entrepreneurial responsibility encompasses a total of five points:

  • This involves impose measures and actions that weaken the economy of an aggressor country, in this case Russia.
  • Ideally, every business should break business relationships with and in Russia. For example, by selling interests in Russian companies, closing production locations there or renounce Russian products.
  • Ethically, few exceptions oppose this rule. In this way we can continue to supply medicines and all services that make it possible to protect the population, in particular to ensure the maintenance of the nuclear power plants on site. This list of exceptions may change if the local population also suffers from a lack of food to meet their basic needs. These questions do not arise at this time.
  • Any exception must be justified. The compulsory care that should be provided to the Russian population or the loss of jobs in the subsidiaries of international companies in this country do little to offset fundamental violations of international law and human dignity. We would be tempted to assert our “culture of forgiveness”. But in the end, there are no good deals in a bad war.
  • This responsibility includes not only sanctions, but also a concrete commitment from companies. By taking social support measures for workers made redundant in Russia by Western companies. In summary, the employer’s obligation to provide assistance. Responsibility can also translate into humanitarian aid in Ukraine with the provision of products and services.

In short, the business world is called upon to think about its role as a socio-political actor in our societies and to act accordingly. Also contribute to finding solutions to urgent problems in the light of world events. And thus shape the future.

Director of the Institute of Economic Ethics of the University of Saint-Gall, Thomas Beschorner himself teaches this topic. We owe him several contributions on this theme with his colleagues Guido Palazzo, professor of business ethics at the University of Lausanne; Markus Scholz, professor of business ethics and corporate governance at the University of Applied Sciences in Vienna; and Peter Seele, professor of business ethics in Lugano. This article was first published on Zeit online.External link

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