Hein Schumacher has been the chief executive of Unilever for two months now, which ought to be enough time to form an opinion on the issue that continues to generate more headlines about the consumer goods titan company than any other: its continued operating presence in Russia and its willingness to keep paying taxes to the Russian state.
Schumacher arrived promising to look with “fresh eyes”, which offered a grain of hope to Ukraine campaigners urging a rapid exit. So far, though, his inspection – which, in reality, wasn’t a huge leap from the company’s previous stance of keeping its Russia presence under “close review” – has yielded no update. It’s time to say something. If the current dance lasts much longer, Schumacher will look like he’s playing for time and hoping, against all evidence, that the noise will go away.
The fury won’t subside, one suspects, because Unilever’s argument that it should keep doing business under Putin’s murderous regime since the alternatives are worse just looks wrong-headed. It is also, needless to say, hard to square with those corporate boasts about having a “global purpose” and creating “a lasting positive impact on the world”.
Unilever’s elaborate argument runs like this: abandoning its business and brands in Russia would leave them to be “appropriated – and then operated – by the Russian state”. In addition, it says, “we do not think it is right to abandon our people in Russia”. It goes on to argue that it hasn’t been able to find a disposal solution that wouldn’t also benefit the Russian state. Thus it has opted to retain an operation with 3,000 employees and four major manufacturing sites. The only major difference is that imports and exports of the ice-creams, detergents, shampoos and so on have been stopped and local advertising halted.
One obvious problem with this “it’s complicated” refrain is that the claim to be protecting staff sounds delusional when Unilever has already conceded that it would allow its employees to be conscripted to fight in Ukraine. Unilever should not fool itself that it can exist in Russia in a vacuum.
The idea that the Russian state would gain by grabbing Unilever’s factories is, at face value, a more persuasive pitch since something of the same sort has already happened to the Danish brewer Carlsberg and the French yoghurt maker Danone. But, come on, the calculations here aren’t just about asset values. There is also a propaganda advantage to the Kremlin in having western brands stay put. While it is probably true that appropriated Unilever factories would be able to produce Cornettos that look like the real thing, they wouldn’t carry a real Unilever branding.
Then, of course, there’s the money. Unilever’s Russian operations paid 3.8bn roubles, or about £30m, in corporate taxes in 2022, which is partly why the Ukrainian government has called the parent company a “sponsor” of war. It’s a label that, you would think, would cause Unilever’s board to worry about the effects on the much-prized corporate values and long-term goodwill. There aren’t many big international names on the same list – Procter & Gamble of the US and Leroy Merlin from France are two others. But it’s a small club.
Schumacher’s appointment, and the arrival of Ian Meakins as its new chair this week, may mark the last point at which Unilever could credibly change course and announce an exit from Russia. It should take the accidental opportunity for a U-turn. But it does need to get on with it.
