An Easy Call (Lance Turner Editor’s Note)

In January, I wrote about the growing expectation that businesses and business leaders must lead and engage on societal issues.

That expectation, as tracked by surveys including the annual Edelman Trust Barometer, has increased as people’s trust in other institutions — including government and media — has eroded. And it has businesses engaging in topics that many CEOs would have actively avoided 25 years ago, things like climate change, social justice and LGBTQ issues.

World affairs is on that list too. We’ve seen global giants like Apple Inc., Amazon.com Inc. and Nike Inc., as well as Hollywood and the NBA, take heat for continuing to do business with China, where an authoritarian regime cultivates an appalling record of human rights abuses. Activists and some shareholders, customers and employees want executives to use their corporate strength to take a stand and effect change. Complicating matters are China’s unmatched manufacturing power, massive consumer market and economic might — factors that keep American companies of all sizes doing business there despite public outcry or their own misgivings.

But cutting ties with Russia after its unprovoked invasion of Ukraine has been an easier call for business, even those that might be excused for a moment of hesitation. Last week, energy giants BP PLC, Shell PLC and Exxon Mobil Corp. announced they were halting projects in Russia — the world’s third-largest producer of oil — and getting out of deals with Russian companies. Ford Motor Co. scuttled its van manufacturing joint venture in Russia. Apple and Dell Technologies Inc. stopped selling products there. WarnerMedia won’t show its new blockbuster “The Batman” in Russian movie theaters.

Just ahead of those announcements last week was a very good conversation between Politico reporter Maura Reynolds and Russia expert Fiona Hill, who said the sanctions that so far had been leveled at Vladimir Putin’s government were not enough. Hill, a former senior director of the U.S. National Security Council during the Trump administration, said business must also take a stand. Any business involved with Russia right now is “fueling the invasion of Ukraine,” she said.

Hill explicitly tied businesses’ moral responsibility to shun Russia to one of the new ways investors evaluate U.S. businesses: by measuring their environmental, social and corporate governance, or ESG.

“Ordinary companies should make a decision,” she said. “This is the epitome of ‘ESG’ that companies are saying is their priority right now … . Just like people didn’t want their money invested in South Africa during apartheid, do you really want to have your money invested in Russia during Russia’s brutal invasion and subjugation and carving up of Ukraine?”

That’s the question just about every business, big and small, was asking itself last week. In Arkansas, it was easy to answer. Alcoholic beverage distributors agreed to no longer buy Russian spirits, but companies interviewed by the Arkansas Democrat-Gazette seemed to think those products account for almost none of their business. In fact, Arkansas imported only $8.1 million in goods from Russia in 2021, down from $24.9 million in 2020 (our need for Russian fertilizer apparently on the wane).

Meanwhile, if Arkansas companies completely stopped selling goods to Russia, they’d miss out on only about $64.1 million in 2021 export value — an annual figure that was actually lower in 2019 ($10.4 million) and 2020 ($7.5 million). Russia is ranked 19th among Arkansas’ export customers, according to the Arkansas Economic Development Commission.

Also notable: Walmart Inc. of Bentonville has no stores in Russia.

It’s a good thing that Arkansas and Arkansas businesses have joined with the Western world in taking a stand for Ukraine. The right answer can sometimes be easy. But for all businesses, these questions around corporate leadership, societal issues and world affairs will only get harder. China, after all, has its eyes on Taiwan.

One of the best books I’ve read recently is “The World: A Brief Introduction,” by Richard Haass, president of the Council on Foreign Relations and a George W. Bush-era diplomat. Published in 2020, it provides a concise, 400-page overview of the world and why it works the way it does. Haass’ brisk, 30,000-foot summaries examine the major periods of modern global history and the key events and alliances that shape every region of the world, giving readers a general understanding of, for example, how NATO came to be and why a united Europe is important.

Lance Turner is the editor of Arkansas Business.