Deciding to sever business links with Russia

Western advisers have spent the past three decades tapping ever-growing opportunity in countries like Russia and China as they open up to international trade. Now they are in a quandary.

As the world looks on in revulsion at the brutality of the invasion of an independent neighbour, Ukraine, should they stay or should they go? There is no comfort in the old adage that politics and business are separate.

The Big Four accountants – Deloitte, EY, KPMG and PwC – in classic Big Four fashion have decided thus far to sit on the fence. Employing more than 13,000 people in Russia, according the numbers quoted by the Financial Times, Russian operations account for roughly 1.1 per cent of their global headcount. While they have condemned the war, they have, as yet, given few details on how it will affect their work in the country or with Russian clients.

Staff laid-off

Others have been more decisive. Advisory group Accenture took the nuclear option and made its entire Russian workforce redundant – all 2,300 of them – in one fell swoop on Thursday.

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Rivals McKinsey and the Boston Consulting Group suspended all work with Russian clients after earlier commitments not to work with state bodies were deemed not to go far enough.

It was never likely to be a realistic option anyway. As the Financial Times reported earlier this week, quietly refusing to work for Russia’s state-owned companies also exposes firms to the risk of being barred from the country. This work is “part and parcel of doing business in Russia”, said a staffer at one of the professional services firms.

Legacy of distrust

But the war with Ukraine will not last forever. And, at some point, sanctions will end and these same companies will be looking once again to tap business opportunity in Russia – under Putin or someone else. It remains to be seen whether the flight of western business will be seen in Russia as an inevitable exercise in pragmatism or whether it will leave a legacy of distrust. This is the delicate balance chief executives are weighing.

Perhaps they might have opted for the “simpler” approach taken by luxury goods groups that have continued to operate in what is among their most valuable markets.

Chanel announced on Friday that it was donating €2 million to groups helping refugees fleeing Ukraine. For them, that appears to be the price of a clean conscience . . . or maybe just of continuing business access.