When Russia’s full-scale invasion of Ukraine started in 2022, it justifiably caused anger across the United States. Americans put up Ukrainian flags in a show of solidarity and members of Congress waved them during that year’s State of the Union address. Russia was sanctioned by the democratic world and expelled from polite society in international sporting events and political conferences. American corporations joined this popular movement and made public declarations about permanently leaving Russia to make sure their taxes were not funding its war machine.
But did these supposed corporate exits from Russia happen? The truth is shocking. Recent reporting indicates that hundreds of American companies have quietly continued operating in Russia, and one of the most egregious offenders is Chicago-based Mondelez International, the manufacturer of Oreo cookies and other snack food products. Mondelez’s Russian sales last year accounted for about $1 billion, or 2.9% of overall net revenue, with record profitability. The company paid more than $61 million in taxes to the Kremlin’s war time budget, according to Ukraine’s National Agency on Corruption Prevention.
By continuing its operations in Russia, Mondelez not only mocks U.S. efforts to curb Vladimir Putin’s expansion into Europe and aggression against Ukraine but also indirectly supports the very weaponry used in these conflicts. While American taxpayers extend lifesaving aid to Ukraine, funds from an American corporation in the heartland are effectively channeled into the killing of innocent Ukrainian civilians.
This means that the North Korean rockets raining down on Ukrainian cities and the Iranian kamikaze drones crashing into residential buildings are partly funded by American companies — a deeply troubling reality. Russia’s regime murders its domestic opponents and is trying to swallow up a sovereign democratic neighbor the size of California. These actions should not be sponsored by American firms.
Mondelez also demonstrates contempt for its local community. Chicago, where the company is headquartered, is home to one of the largest Ukrainian diasporas in the world. This population has been here for more than a century and has continued to grow as roughly half a million Ukrainian refugees have arrived in the U.S. since February 2022. Ukrainians in Chicago and across America are taxpayers, voters and investors. They will not soon forget that a domestic company enthusiastically continued to do business with a dictatorship brutalizing their ancestral home.
In an increasingly dangerous world, it simply cannot be the case that corporations get a free pass from basic laws of decency and morality. These companies do not exist apart from the rest of us. They are made up of people who work there, invest in them and ensure that we live in a free, democratic and capitalist system where everyone plays by the rules.
Mondelez CEO Dirk Van de Put said recently that his shareholders do not “morally care” whether the company stays in Russia. That is quite a claim on behalf of a varied and diverse group of people. If true, this indifference speaks volumes about the kind of corporate culture the company embraces. However, it is not at all clear that shareholders are fully aware or enthusiastic about their contributions to Putin’s finances.
Mondelez shareholders gathered last week to vote on a proposal focused on the company’s human rights policy in Russia and Ukraine. It called for greater transparency of company finances and an independent study into the consequences of Mondelez doing business in Russia. The proposal was put forward by investors who, unlike Van de Put, seem to understand that shareholders are made of flesh and blood, each of them with a conscience and bearing personal responsibility for their actions.
The proposal did not pass, but the support roughly 30% of shareholders showed “adds more scrutiny to Mondelez’s continued presence in Russia after the withdrawal of many other Western companies,” Bloomberg reported.
I hope that Mondelez will listen and take steps to right its historic mistakes.
Marko Supronyuk is an MBA student at the University of Chicago Booth School of Business.
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