Brand Watch: Brands need to act and advocate in the face of war and climate change.

April 11 – Brands are always political actors, even though most have refused to admit it. Corporations clearly benefit from political decisions (tax cuts, infrastructure investment and labour laws), as well as their manifest desire to influence such decisions (through lobbying and political donations).

This charade of political separation has been exposed by the Ukraine crisis. International brands cannot ignore a political pariah when a key market is engulfed in chaos, as Russia did when it invaded its neighbor (which it described as a special military operation).

Several well-known Western brands declared their intention to suspend Russian operations during the conflict’s early days. The message was clear and unambiguous. It included luxury brands like Hermes, Cartier, and oil giants Shell and BP.

However, subsequent analysis shows otherwise. It turns out that exits are not all the same. While some brands choose to be explicitly political, it is not common for them to make passionate denunciations. Typical is U.S. tech giant Apple, which said it had paused all product sales in Russia out of its “deep concern” about the invasion, while announcing humanitarian aid for Ukrainians. Elon Musk, Tesla’s chief executive, stated it clearly. In a tweet to his 79 million followers, he declared, “Hold strong Ukraine”. His SpaceX space project also responded in kind to requests from the Ukrainian government to send Starlink Internet terminals.

Many brands are treading more cautiously, stating they are retreating from logistical problems or legal obstacles as a result international sanctions. Luc Jones, a Moscow-based specialist on the labour market, thinks such actions are logical. Foreign brands want to keep the door open should “the situation get back to some sphere of normality”.

But it sits ill with many who would like to see Western brands join what the New York Times described as the “surge of moral outrage” towards Russia’s actions. CveteKoneska, head advisory at Dragonfly’s specialist intelligence company Dragonfly is one of them. She argues that acting from compliance with sanctions is easier. Contrary to sanctions, war requires an explicit moral response.

“Whichever way the war (in Ukraine) goes, it shows that companies are increasingly being treated as ethical agents, as they should be. And they’ll be judged on their response to these issues, not just on whether they comply with legal norms,” Koneska states.

There are two sides to the story: what brands say and what they do. The latter can often yield more results in humanitarian terms. Airbnb is a booking site that encourages people to rent rooms in Ukraine. This is a great way to get financial help. You can also think about the providers for medicines, food and other vital services who have kept a vigil in Russia to avoid unduly affecting everyday citizens.

Futerra founder Solitaire Townsend believes that brands should be ready to advocate and act. She states that the same principle applies to the Ukraine conflict as it does for climate change, human right, and all other political issues facing brands. These “wicked problems” of the twenty-first century are layering up, she adds, and “every brand needs to become familiar with taking a stand”.

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

Brands must be more aware of the geopolitical environment in which they find themselves. As Hugo Brennan, head of EMEA research at risk intelligence company Verisk Maplecroft puts it: “No multinational can afford not to constantly monitor and analyse their political risk exposure in this day and age.”

What isn’t clear, Brennan says, is whether the demand by investors and consumers on brands to act will expand from military conflict to other areas of political activity. Failure of the government to meet carbon targets could be an example, as could domestic violations of human rights by state agents. His advice for brands? “Keep an eye out.”

A second takeaway is for brands to explain the “why” as well as the “what” of any political action. Ethical decisions are not always straightforward. While Western companies may be tempted to withdraw their brands, they often find that franchising rules – such as the Burger King case – make it difficult. Zara and other brands have pulled out, but they continue to support their Russian staff.

Full transparency is a good minimum to avoid misinterpretation. A telling example is Facebook’s apparent permission (since rescinded by its parent company Meta) for its customers to call for Putin’s death. Positively, explanations can give brands a chance to reinforce their values. So notes Giles Gibbons, founder of the sustainability advisory firm Good Business, who states that “businesses should say what they think, and stand up for what they believe”.

Finally, brands must become more aware of their role as political actors. This is not the narrow meaning of government relations and responsible advocacy, as important as those are. But in the broader sense of “corporate citizens”, with all the rights and responsibilities that the term implies.

It is a lesson the UK bank HSBC has recently learned to its cost, given the wave of negative publicity garnered after revelations in the Financial Times that its analysts had doctored research publications to remove references to a “war” in Ukraine.

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

Opinions expressed are the author’s. These opinions do NOT reflect those of Reuters News. Reuters News, according to the Trust Principles is committed integrity, independence, freedom from bias. Thomson Reuters owns Sustainable Business Review and operates independently from Reuters News.