Evans on Marketing has presented about 75 posts on social responsibility. However, none are as important as today’s topic. Business social responsibility and Ukraine. In other words, what moral and ethical decisions should companies make in response to this terrible situation? Is doing nothing a socially responsible position to take in 2022?
Does this New York Times opinion piece from economist Milton Friedman, written in 1970, apply to matters such as the Ukraine situation? To EOM, the answer is a resounding no:
[In a free society,] there is one and only one social responsibility of business. To use its resources and engage in activities designed to increase its profits. So long as it stays within the rules of the game. Which is to say, engages in open and free competition without deception fraud.
The previous quote reflects the view that “the business of business is business.”
We divide this post into two main sections. The parameters of social responsibility in 2022. And then social responsibility as it relates to business responses to the Ukraine situation.
Parameters of Social Responsibility in 2022
Unlike the Friedman “doctrine,” written more then fifty years ago, most businesses now believe that social responsibility has a role in their operations. Consider the following vantage point, as written by Akhilesh Ganti for Investopedia:
Social responsibility means that businesses, in addition to maximizing shareholder value, must act in a manner that benefits society. Social responsibility has become increasingly important to investors and consumers who seek investments that are not just profitable but also contribute to the welfare of society and the environment. However, critics argue that the basic nature of business does not consider society as a stakeholder.
- Social responsibility means that businesses, in addition to maximizing shareholder value, should act in a manner that benefits society.
- Socially responsible companies should adopt policies that promote the well-being of society and the environment while lessening negative impacts on them.
- Companies can act responsibly in many ways, such as by promoting volunteering, making changes that benefit the environment, and engaging in charitable giving.
- Consumers are more actively looking to buy goods and services from socially responsible companies, hence impacting their profitability.
- Critics assert that practicing social responsibility is the opposite of why businesses exist.
Decisions to Make: Business Social Responsibility and Ukraine
Here, we turn specifically to Ukraine.
Overview
To begin, consider these observations by Jill Goldenziel, writing for Forbes:
Corporate leaders have entered the war against Russia. Since Russia invaded Ukraine on February 24, a cascade of global corporations have suspended operations in Russia. Or exited entirely. ExxonMobil, BP, and Shell are rapidly exiting investments. Apple, Google, and Meta have restricted their services in Russia. Automakers like Toyota, Volkswagen, and Mercedes-Benz have suspended deliveries and operations. A domino effect among B2B corporations has occurred. As some will be unable to do business profitably without shipping giants like Maersk, UPS, and FedEx.
Three major factors have played into the desire of corporations to exit Russia. One, the desire to keep their hands clean of war crimes. Two, the broad reach of Western sanctions. And three, the demand for global corporate citizenship from consumers worldwide. Today’s corporations do not want the moral stain of the World War II-era German companies who tacitly supported the Nazis. Instead, they are stepping into the role of socially responsible corporate leaders that the modern era demands.
Furthermore, severe sanctions launched in tandem by the U.S., U.K., and E.U. make it challenging for many corporations to do business within Russia.
Examples of Company Actions
- Several sites provide lists of firms suspending business with or fully exiting Russia. One good list, with a detailed discussion for each firm, is from Business Insider. “Major companies are ending decades of business with Russia following Putin’s invasion of Ukraine.”
- CNN’s list is divided into industry groups.
- The Recursive talked to companies “about why they felt it important to get active. As the concept of social responsibility of businesses is moving into uncharted new territory. You will also read advice from a communication expert on how business owners should adjust their communication to reflect the changed context.“
- Besides the companies withdrawing, others are continuing to do business in Russia. They are widely criticized. Zaborona highlights some of these companies.
To Make a Donation to an Organization Recommended by Ukraine
If, as an individual, you want to make a contribution to Ukraine, click on the image. The many and diverse recommendations come from the non-profit U.S. Ukraine Foundation.
In 1970, “social responsibility” entered into business thinking in a different way, as the concept of “political risk.” While political risk was company-centered, it deterred investment in places in which government could not be trusted. Arguably, the end result of a social responsibility analysis and a political risk analysis would be rather similar.