In the early 1980s, Milton Friedman, who was the winner of the Nobel Prize in Economics, asserted “that the only social responsibility of companies was to their shareholders, to maximize their profits.
Based on that, many companies and academia adopted as valid what Friedman said.
In other universities, such as Harvard Business School, they maintained a clear position on the social responsibility of companies: “The company must take into account all the interest groups with which it interacts (stakeholders) and not just the shareholders.”
For some years now, what is called “ESG” Environment, Social and Corporate Governance (ESG) has become more relevant every day, more companies adopt it and announce their commitment to operate with these standards.
There is something that should be made very clear: corporate social responsibility is NOT philanthropy, it is a new way in which companies see their role in society.
But going back to the armed conflict, regardless of the severe economic sanctions that many Western countries have imposed on Russia, and which have greatly affected its economy, we have seen the reaction of international companies that have or had operations in that country.
Nowadays, a lot of companies have left Russia, they have left all their operations and investments:
– From the technology sector, Apple, Microsoft, Alphabet (Google), Intel, SAP.
– From the energy sector: British Petroleum, Shell, ExxonMobil, Eni.
– Apps and social networks: Airbnb, Spotify, Meta (Facebook, Instagram, WhatsApp, Twitter, TikTok (here it is worth saying that they came out before Russia vetoed them and blocked access to the country).
– Banks and payment systems: Visa, MasterCard, American Express, Paypal, BlackRock, Santander, HSBC.
– Food and beverages: Coca Cola, Pepsi, Bimbo, Mc Donalds, Nestlé, among many others.
And if we continue by industry, the list is very long.
The vast majority of these companies are listed on the Stock Exchange, have bonds in the stock markets.
There are still people who think they did it because of government pressure.
I believe that for the first time in history we are seeing that companies, faced with the new vision of ASG, made the decision on their own and under pressure, in any case, from their large investors.
What company wants to be seen making money in the country that is invading Ukraine?
I believe that it is a positive turning point, that there will be no turning back; From now on we will see much more proactive companies in the area of social responsibility.
What consequences have we seen and are yet to see?
The first and most unfortunate: deaths in both countries, destroyed cities, exodus of migrants, etc.
The second, millions of Russian citizens are experiencing unemployment, product shortages, lack of access to their resources, shortages, among others, due to the departure of companies from their country.
The third, which we will be seeing soon, is the economic impact for these companies, reflected in their quarterly reports; Russia was the 12th largest economy in the world before the conflict, which means that a relevant percentage of each company’s income was generated there.
This will surely cause a drop in the shares of each one to a greater or lesser extent, but I believe that we are about to see a bear market.
Significant pension funds invest in these companies, which will also impact pensioners.
In recent years, with the new investment platforms, many young people have entered the stock market to invest, and they will be affected.
But I don’t want to be pessimistic or predict a big crisis, I think that eventually the stocks will return to the upside.