Businesses cannot operate in isolation and they need to respond appropriately in time of crisis. Beth Gallagher, director of corporate insights at Chief Executives for Corporate Purpose® (CECP), which represents 200 of the world’s largest companies, outlines how events like the war in Ukraine impacts companies and how they should respond.
How do the social and economic consequences of conflict impact companies?
When conflict erupts, such as the war in Ukraine, businesses, global leaders and the international community have a shared responsibility in responding to the global instability that it causes.
Business involvement is not just private sector altruism, but also a key part of corporate purpose. And there is a clear business case for corporate purpose – companies with a strong corporate purpose tend to outperform those
CECP’s research demonstrates that companies with established and articulated purpose – high-purpose companies – show 14% greater revenue growth, 8% higher operating profitability and 6% better return on capital than those companies that focused only on maximising profits. And the gap is increasing.
The beginning of a conflict is not the only time a company should get involved, as conflicts gravely threaten global economic freedom and security over the long term. For example, Russia and Ukraine export nearly one-third of the world’s wheat and barley, and more than 70% of its sunflower oil, and are also major suppliers of corn.
As Russia’s war in Ukraine wears on, the conflict is preventing grain from leaving the ‘breadbasket of the world’.
These shortages are making food more expensive globally and have led to greater hunger and political instability in developing countries.
What should companies do if they are operating in conflict zones (like Ukraine) or in countries that face both economic sanctions and political oppression (like Russia)? Please provide examples of companies that have responded well during the Ukrainian conflict.
Companies and non-profits can ‘do well and do good’ by using existing processes, systems and connections to make real change happen in places where it is needed most. This may include helping to evacuate local employees, making donations to humanitarian organisations, enforcing sanctions, and more.
For example, Cisco Systems Inc supported about a quarter of its employees in Ukraine with relocation assistance. Dell also helped Ukrainian team members relocate to a safe and secure environment, and to address their personal or family situations. In addition, Dell also suspended product sales in Ukraine and Russia. Other companies halted business and financial operations with Russia entirely, such as Alphabet Inc.’s Google ban on Russia’s state-owned media outlet Russia Today (RT) and other channels from collecting money for ads on their
websites, apps and YouTube videos.
It’s also important for a company’s leadership to speak up about their points of view on these critical issues.
For example, Roy Harvey, president and CEO of Alcoa, stated, “We are deeply troubled by the invasion of Ukraine, which has caused devastating loss of life. Our hearts break for all Ukrainians who are suffering from this unprovoked conflict. We hope for a diplomatic solution and a quick end to the hostilities.” Tim Cook, CEO of Apple, tweeted that he was “deeply concerned with the situation in Ukraine. We’re doing all we can for our teams there and will be supporting local humanitarian efforts. I am thinking of the people who are right now in harm’s way
and joining all those calling for peace.” Apple also paused product sales in Russia.
What does the role of employees and workers’ rights play in areas of disaster and conflict?
Conflict can bring more public awareness about the value of human life. Recent crises have challenged leaders to place greater value on treating all people with respect, dignity and equity – starting with their own employees.
Additional CECP research finds businesses that are not working with integrity may lose more than suppliers and customers, but also valuable employees. CECP, with support from the Ford Foundation, found in the Frontline Worker Well-Being in a Time of Crisis report that wage is only one critical factor for workers; stability ofpay, paid time off, safety, shift schedule flexibility, plus a sense of purpose and dignity are also vital. Further, the research
suggests that businesses have been able to leverage lessons learnt, and the policies and systems developed throughout the Covid-19 pandemic to deliver longterm value.
We are at a crucial time in our world when it is important for business leaders to not only serve shareholders, but also to be community leaders, and speak up and speak out for good. A company, its owners, employees, customers, suppliers and communities all stand behind their business workplaces, products and services. Now, too, companies need to stand for what these stakeholders value and believe in.
BETH GALLAGHER – Director of corporate insights at Chief Executives for Corporate Purpose® (CECP) email@example.com www.cecp.co