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### Unilever Agrees to Comply with Russian Conscription Legislation
Consumer goods giant Unilever has confirmed that it will comply with a Russian law that could require its employees in Russia to be conscripted into the war in Ukraine. In a letter to the campaign group B4Ukraine, Unilever's Chief Business Operations and Supply Chain Officer, Reginaldo Ecclissato, stated that the company will always adhere to the laws of the countries in which it operates. The legislation applies to individuals holding Russian citizenship.
Unilever, known for its popular brands such as Ben & Jerry's, Dove, Knorr, and Vaseline, has faced criticism for its decision to continue operating in Russia despite international sanctions and the withdrawal of many companies following the invasion of Ukraine in 2022. Ecclissato outlined three options that Unilever considered for its Russia operations: closing all operations, selling the business (which would likely benefit the state), or continuing to run the business with constraints that have been in place since March. Unilever chose the latter option to avoid the risk of its business falling into the hands of the Russian state and to protect its employees.
Since the invasion, Unilever has halted capital flows into and out of the country, suspended imports and exports of its products, and stopped media and advertising spend. Despite a 15% decline in sales volumes in Russia last year, the company saw an increase in turnover due to price rises and a stronger currency. Unilever paid 3.8 billion roubles ($42.06 million) in taxes in 2022.
The letter, in response to questions from the B4Ukraine Coalition, did not address whether any Unilever employees had been conscripted or contacted about conscription. However, a Unilever spokesperson informed the BBC that any employee who is called up for conscription would not continue to be paid by the company. Unilever's decision to comply with the conscription legislation will likely have a significant impact on its operations in Russia and the well-being of its employees.
Conclusion: The Impact on New Businesses
Unilever's decision to comply with the Russian conscription legislation could have significant implications for new businesses considering entering the Russian market. The consumer goods giant's stance highlights the complex challenges and risks that companies face when operating in politically unstable regions.
1. Compliance with local laws
One key takeaway for new businesses is the importance of understanding and adhering to the laws and regulations of the countries in which they operate. Unilever's commitment to following Russian legislation, even in a contentious situation, demonstrates the need for businesses to carefully evaluate legal frameworks and anticipate potential risks before establishing operations.
2. Balancing ethical considerations
Unilever's decision to continue operating in Russia despite international sanctions raises ethical questions for new businesses. Companies entering a market must carefully consider their stance on geopolitical conflicts and whether they are willing to bear the associated reputational risks. This case may serve as a reminder for new businesses to align their values and decision-making processes with potential geopolitical challenges.
3. Evaluating risk and mitigation strategies
Unilever's choice to maintain its operations in Russia with constraints showcases the importance of evaluating risks and implementing mitigation strategies. New businesses must thoroughly assess the potential impacts of political unrest or conflicts on their operations and establish plans to safeguard their interests, employees, and reputation.
In summary, Unilever's compliance with the Russian conscription legislation offers valuable lessons for new businesses entering politically unstable markets. It highlights the need for diligent legal compliance, thoughtful ethical considerations, and comprehensive risk assessment and mitigation strategies. By learning from Unilever's experience, new businesses can better navigate complex geopolitical landscapes and make informed decisions to protect their interests and stakeholders.
Article First Published at: https://www.cnbc.com/2023/07/24/dove-owner-unilever-says-it-will-permit-conscription-of-russia-staff.html.svg)
