Almost every firm in the western world has been talking about ESG, sustainability and business purpose in recent years. But the invasion of Ukraine and appalling Russian brutality will lead to some difficult ethical, moral and practical decisions for firms to make in the coming weeks and months.
Sanctions will bite quickly, so in many cases, the route that firms need to take will be obvious and defined by the law. But there will be many areas which are not so clear cut and will cause debate and soul-searching at senior levels.
What about law firms, accountants and even estate agents working for Russian oligarchs in London? Is that acceptable – and if your favourite client oligarch makes a statement saying, “end the war”, does that make everything OK? Should large firms that buy professional services be asking questions of those firms and putting pressure on lawyers and accountants to walk away from everything Russian? (Particularly those firms that have participated in libel actions against writers who have tried to expose crooks and cronies)? Should private schools kick out their Russian pupils? I’d say “no” on that one – sins of the father and all that.
And what about the many western firms that have offices, factories and staff in Russia (and of course in the Ukraine)? IKEA made a big announcement today about pulling out of Russia, but many firms have been silent so far. And of course, they have a duty of care to staff, and not every Russian supports Putin’s actions. Firms also have a duty to shareholders, so writing off investments (selling factories or stakes in Russian businesses, as BP and Shell have said they will do) might be the right thing to do morally. But it would be ironic if it means Russian gangsters pick up further assets on the cheap at the expense of British pension funds and ISA holders.
We will also no doubt have the geo-political equivalent of the “greenwashing” we see in the environmental space – firms making pious statements about the war whilst avoiding any real action that might be effective but hurt the business. We’ll need to look out for that and call out those who don’t show a genuine desire to do what feels like the right thing.
I assume public sector buyers will start to add new clauses to supplier qualification documents. “Have you ever supported an invasion of another sovereign nation – tick box Yes /No”, as it were. (That sounds flippant, but there are already similar questions in public sector tenders covering areas such as corruption or tax evasion. Hard to see that anyone is ever going to say “yes” of course). There is already a controversy brewing about NHS contracts held with Gazprom for gas supplies. More examples will emerge, I suspect.
There will also be all the other operational problems and issues that I covered briefly here, such as shortages of certain materials or products, and disruption to shipping routes. But as well as those practical challenges, these moral and ethical issues are going to be tricky for many. I can’t offer any easy solutions, and can only suggest organisations are proactive and address issues as quickly as they can.
What is clear is that where the decisions involve procurement, then procurement leaders need to engage quickly with their top management. It’s no good the Board making some bold statement about stopping all trade only to be informed by a junior buyer that the entire business will come to a grinding halt if a particular Russian supplier is ejected. Procurement must have that mythical “seat at the top table” when it comes to these debates.
In the meantime, Sammeli Sammalkorpi, CEO and co-founder of procurement tech firm Sievo, based in Finland, has created procure4peace.org . It is “a movement to mobilize and coordinate global procurement community's energy towards helping Ukraine. And, at the same go, provide information and best practice sharing for procurement organisations addressing challenges in Ukraine”.
There is a kick-off webinar tomorrow, Friday March 4th, at 1pm UK time, 3pm EET, and you can sign up for that here. I’ll be there; do join in if you can. Otherwise, we can only hope for the best, donate to Ukraine relief efforts and other appropriate causes, and hope someone on the inside has the opportunity and the courage to put a bullet through Putin’s head.