Brand Watch: Faced with climate change and war, brands must both act and defend

April 11 – Brands have always been political players, though most historically refuse to admit it. Companies obviously benefit from political decisions (tax cuts, infrastructure investments, labor laws, etc.), just as they obviously seek to influence those decisions (through lobbying, political donations, etc.).

The Ukrainian crisis has highlighted this masquerade of political detachment. When a key market becomes a political pariah, as Russia did when President Putin launched a full-scale invasion of its neighbor (which it describes as a special military operation), international brands have no choice but to react.

At the start of the conflict, a large number of well-known Western brands announced their intention to suspend their operations in Russia. From luxury brands like Hermès and Cartier to oil giants like Shell and BP, the message seemed clear and unambiguous.

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Yet subsequent analysis suggests otherwise. It turns out that not all outcomes are the same. Some brands have chosen to take an explicitly political stance, although fervent denunciations are rare. Typical is US tech giant Apple, which said it had suspended all product sales to Russia over its “deep concern” about the invasion, while announcing humanitarian aid for Ukrainians. Tesla CEO Elon Musk put it more clearly. In a tweet to his 79 million followers, he said, “Keep Ukraine strong.” Its SpaceX space project has also responded to requests from the Ukrainian government to send Starlink internet terminals.

Most brands are taking a more cautious path, saying they are pulling out due to logistical complications or legal hurdles following international sanctions. Such actions make sense, suggests Luc Jones, a Moscow-based labor market expert. Foreign brands want to keep the door open if “the situation returns to some normality”.

A visitor drinks champagne during a press preview at the Hermes store at Russia’s famous GUM shopping center on Red Square in Moscow, Russia, December 9, 2015. REUTERS/Sergei Karpukhin

But that doesn’t sit well with many who would like to see Western brands join in what The New York Times has described as the “surge of moral outrage” at Russia’s actions. Among them, Cvete Koneska, head of consulting at the intelligence firm Dragonfly. With sanctions, she argues, acting from compliance is clearer. With war, on the other hand, explicit moral connotations demand an explicit moral response.

“Whatever the evolution of the war (in Ukraine), it shows that companies are increasingly being treated as ethical agents, as they should be. And they will be judged on their answer to these questions, not just on their compliance with legal standards,” Koneska says.

Of course, there’s what brands choose to say and what they actually do. On a humanitarian level, the latter can often bear more fruit. Think of the Airbnb booking service, which encourages customers to rent rooms in Ukraine, as a nifty way of financial aid. Or consider the providers of medicine, food and other vital services, who have kept a toe in Russia to avoid undue harm to ordinary citizens.

Solitaire Townsend, founder of communications agency Futerra, believes brands need to be ready to both act and defend. What is true for the conflict in Ukraine is also true for climate change, human rights and the range of other political issues facing brands, she says. These “nasty issues” of the 21st century overlap, she adds, and “every brand needs to be familiar with the position.”

It’s still early to draw definitive lessons from how Russia’s attack on its neighbor confirmed the political status of brands, but at least three initial implications seem indisputable.

Obviously, brands need to familiarize themselves with the geopolitical environments in which they are embroiled. As Hugo Brennan, head of EMEA research at risk intelligence firm Verisk Maplecroft, puts it: “No multinational can afford not to continuously monitor and analyze its exposure to political risk these days.”

Solitaire Townsend, co-founder of advertising company Futerra, stands for a portrait with the City of London’s business district seen behind in Britain December 11, 2020. Picture taken December 11. REUTERS/Toby Melville

What’s unclear, Brennan says, is whether investor and consumer demand for brands to act will expand from military conflict to other areas of political activity. Government failure to meet carbon targets could be an example, as could human rights abuses by state agents. His advice to brands? “Keep an eye open.”

A second point to remember is that brands explain the “why” as well as the “what” of any political action. Ethical decisions are rarely black and white. Western companies may want to retire their brands, for example, but they find their hands are tied by franchising rules, as in the case of Burger King. Other brands, like Zara, have pulled out but continue to support their Russian staff.

At a minimum, full transparency can prevent misinterpretations. A telling example is Facebook’s apparent permission (since rescinded by its parent company Meta) for its customers to call for Putin’s death. More positively, explanations can offer brands an opportunity to reinforce their values. Thus notes Giles Gibbons, founder of the consulting firm in sustainable development Good Business, who declares that “companies must say what they think and defend what they believe”.

Finally, brands must familiarize themselves with their role as political actors. Not in the narrow sense of government relations and responsible lobbying, important as they are. But in the broad sense of “corporate citizens”, with all the rights and duties that the term implies.

It’s a lesson Britain’s HSBC bank has recently learned the hard way, given the flurry of negative publicity sparked by the Financial Times revelations that its analysts doctored research publications to remove references to a “war ” in Ukraine.

In today’s era, remaining politically detached is not an option for brands, not least because such denial is itself a political act.

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The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias by principles of trust. Sustainable Business Review, part of Reuters Professional, is owned by Thomson Reuters and operates independently of Reuters News.

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