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Mondelēz's CEO says investors don't care “morally” about whether a company continues to operate in Russia, and the company's shareholders are still pushing the chocolate maker to pull out of Russia after the invasion of Ukraine He said he was under no pressure to do so.
“I do not think so [investors] Moral considerations. . . In an interview with the Financial Times, Dirk van de Put said: “If you have significant business in Russia, the damage to your company will be significant, and that's a topic for another discussion.'' “It will be,” he added.
Mondelez's Russian operations will account for 2.8% of the company's global revenue in 2023, down from 4% in 2022. “There was no pressure from shareholders at all,” Van de Putt said, adding that there were some questions from a small number of European funds. “However, there has been no request from any of our investors to withdraw from Russia.”
Mondelez's largest shareholders include Vanguard, BlackRock, and Capital Group. All three declined to comment.
Under U.S. law, asset managers must prioritize investors' financial outcomes over moral concerns, and stewardship experts say Mondelēz's Russia earnings are the benchmark for material issues. This is well below 5%.
Mondelez, like other companies that continue to operate in Russia, such as Nestlé and Unilever, has drawn criticism from consumers and Ukrainian organizations, arguing that Western companies that continue to operate in the country financed the invasion and They claim that it has contributed to the number of human deaths.
Van de Putte supported the company's decision to continue operating in the country, saying those who left had left assets with “friends” of Russian President Vladimir Putin. These are likely to generate more cash for Putin's war effort than Mondelēz pays in domestic taxes, he argued.
“I wonder what happened to the companies that were sold, who bought them, and what they do with the cash they generated. They all went to friends of President Putin,” Van said.・Mr. De Putte said. “And the cash they generate is definitely [that] Going to war is much more expensive than the taxes we pay. ”
Mondelez employs 2,700 people across its three factories in Russia and indirectly employs 10,000 farmers. Van de Putte said the Russian business is now being run as an independent division. He added that in 2023, the company sold fewer products, but profits increased due to lower investments.
His comments reflect a shift in the way consumer companies talk about their Russian subsidiaries. After the full-scale invasion of Ukraine, many Western companies announced that they would withdraw from the country, but in reality, very few succeeded in doing so completely.
Currently, the majority are still in business and there is little chance of exit, especially since the Russian subsidiaries of Danone and Carlsberg were taken over by the Kremlin and placed under “temporary administration” last summer. Those in charge are starting to be more transparent about their reasons for staying in Russia. ”.
Van de Putte's comments come just days after the FT reported that French food giant Danone plans to sell its Russian operations to a member of the Kremlin-installed management team linked to the nephew of Chechen strongman Ramzan Kadyrov. It was served in
Unilever Chief Executive Hein Schumacher said in a trading update late last year that steps the company had taken to “contain” its Russian operations had succeeded in reducing its funding to Moscow. .
“We understand why there are calls for deportation, and we will continue to consider our options,” he said. Unilever employs 3,000 people in Russia, and the business accounted for about 1% of group sales in 2023.
Van de Putt said it was clear that Russian authorities were trying to prevent Western companies from leaving. “We try not to be confrontational or make big statements and just go about our business,” he said.
“In both cases [Danone and Carlsberg], they announced that they would be selling the business. . . “He said, “If you quit, you'll be punished. That's clear.''
Additional reporting by Brooke Masters in New York
