Mondelez International, the manufacturer of Cadbury and Toblerone, continues to operate in Russia despite pressure to exit the market following the 2022 invasion of Ukraine. Chief Executive Dirk Van de Put stated the company remains in the country to protect its local employees and prevent the Kremlin from seizing its manufacturing assets, though he acknowledged that the firm’s tax contributions indirectly support Russia’s war efforts.
Why do some multinational corporations remain in Russia?
The decision to maintain operations in Russia rests on two primary concerns: the risk of asset seizure and the welfare of local staff. According to CEO Dirk Van de Put, exiting the market would likely lead to the Russian government confiscating the company’s plants. Van de Put argued that such a seizure would provide the Kremlin with a larger, state-controlled revenue stream to fund the conflict, rather than removing the business entirely. While companies like McDonald’s chose to divest, Mondelez opted to suspend new investments and advertising spending while keeping production lines running.
Mondelez International generated between $1 billion and $1.4 billion in annual sales from its Russian operations since the full-scale invasion began, according to company data reported by the BBC.
How are stakeholders pressuring companies to leave?
Pressure from political and advocacy groups has intensified for firms with remaining Russian ties. Last year, more than 70 members of the UK Parliament, organized by the All Party Parliamentary Group on Ukraine, signed a letter urging Mondelez to cease business in the country. Alex Sobel, the group’s chair, stated that continued operations in a nation responsible for civilian deaths and the abduction of children cannot be justified as “business as usual.” These efforts reflect a broader trend where institutional investors and government bodies track “exit lists” to hold multinational corporations accountable for their geopolitical footprint.
What are the risks of maintaining operations in conflict zones?
Operating in a war-torn region presents significant financial and safety challenges. Mondelez maintains two manufacturing plants in Ukraine, located in Trostyanets and Vyshhorod. According to Van de Put, the Trostyanets facility has been hit twice during the conflict, requiring tens of millions of dollars in reconstruction costs. Despite the physical danger to staff, the company has doubled salaries for its Ukrainian employees and pledged to rebuild the site each time it is damaged. This strategy contrasts with the company’s approach in Russia, where it prioritizes “neutrality” to avoid total asset loss.
Comparison: Corporate Responses to the Conflict
| Company Strategy | Primary Rationale |
|---|---|
| Full Exit (e.g., McDonald’s) | Prioritizing reputation and ethical alignment over regional revenue. |
| Limited Operation (e.g., Mondelez) | Preventing state seizure of assets and protecting local employee livelihoods. |
Investors often monitor companies’ “Exit Lists,” provided by organizations like the Yale School of Management, to evaluate the ESG (Environmental, Social, and Governance) risks associated with international supply chains.
Frequently Asked Questions
- Why hasn’t Mondelez exited Russia like other brands?
CEO Dirk Van de Put states that leaving would risk the confiscation of their plants by the Kremlin, potentially giving the Russian government a new source of income to fund the war. - Does Mondelez still invest in Russia?
No. According to the company, it has discontinued all new investments and suspended advertising spending in the Russian market. - How does the conflict affect Mondelez employees in Ukraine?
The company has doubled salaries for its Ukrainian staff and continues to invest in rebuilding manufacturing plants that have been hit during the conflict.
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