More than 400 companies have withdrawn from Russia since it invaded Ukraine. But what are they hoping to achieve? An end to the war? Clean hands? A brand boost? The companies’ statements aren’t always clear—McDonald’s, for example, said it has always been committed to the principle of “Do the right thing.” That raises as many questions as it answers.
I asked Nien-hê Hsieh, acting director of the Safra Center for Ethics at Harvard and a professor at Harvard Business School, to explain the moral philosophy behind companies’ decision-making. We talked about how he teaches ethics to his students, and how corporate boycotts of Russia could end.
This interview has been edited for length and clarity.
Quartz: Why are so many companies suddenly ceasing doing business in Russia?
Nien-hê Hsieh: It’s hard to know exactly what goes on inside companies. But I think it’s helpful to frame this against three broader trends. One is that companies are increasingly expected to have a position on, or do something about, specific issues in society. The second is there’s a lot of pressure within companies from employees to address issues. We’ve seen this, for example, with Black Lives Matter or other issues. And then the third is that increasingly, I think, companies are thinking about their role in society more generally.
And then I think we should distinguish between three kinds of responses. One would be what you might call “expressive,” meaning that something is so close to the line that companies feel the need to say something, whether in terms of support or solidarity or something at all. The Ukraine war might be an example of what might motivate companies to take an expressive view in their actions by ceasing operations.
You also could have the second kind of response, which is to avoid complicity. Not trying to be complicit in some sense by operating within Russia.
And then the third one would be companies that are actually trying to ameliorate or improve the situation. So, ceasing operations might be a way to put pressure on and improve the situation. If you think about companies that are doing things like offering free housing, canceling balances owed by sellers in the Ukraine, providing free services—those are examples of companies trying to improve the situation as well.
Are these three ways of expressing ethical positions all equally important and valid? And are they the ones you teach to your students?
There are five key values that we work with in our classroom. The first one is rights—are there certain basic rights that either impose constraints on what we are permitted to do to others, or are their basic rights that entitle people to certain claims on us?
The second one is well-being. What is your responsibility to help promote well-being in certain cases? For example, with customers. What is your responsibility to make sure that you’re not harming their well-being with your products or services?
Then, third, we think in terms of fairness: How do we try to manage trade-offs across people when it involves their well-being and interests? For example, in the workplace what is it fair to pay people? When is it fair to treat people in different ways?
Then there are two other important values that come up in the context of a business that are really important, I think, and may get ignored. The first one is trust—whether it’s with regard to customers, with regard to employees, or with regard to society more generally. We try to get students to think about what is involved in earning trust and maintaining trust. And we ask them to consider two conceptions of trust. One idea is trust as reliance: You trust me or we trust the company because it’s reliable, or it says what it will do. Then there’s a deeper kind of trust that’s fundamental to business. You see this in the idea of fiduciary duties, which is the idea that I trust you, for example, if you’re an investment manager, because you have my interests in mind as well. I’m not just a mere counterparty.
Then the last one is autonomy. To what extent are you promoting or enhancing people’s autonomy?
And then there’s another one that I think matters at the corporate level that doesn’t exist at the individual level: The idea of corporate power and the role of business in society. Corporations have a kind of power and impact on society that individuals don’t. And so that adds another level of thinking about the legitimacy of corporate action and the ideal role of business in society.
Do these six ways of thinking about ethics all point to the need for companies to disengage from Russia, or is there tension between them?
I think there is a tension between them, and it really comes up in the question of trying to ameliorate or improve the situation. If you look back at the question of whether to divest from South Africa or not in the 1980s, there was really reasonable disagreement on which was the right approach. Nobody was disagreeing that apartheid was wrong or unjust. The question was what would be the best way to actually try to ameliorate the situation? And by staying in the country were you actually being complicit? Some people argued that you could try to minimize the complicity and that at the end of the day, the best way to ameliorate the situation was to stay in the country. On the other hand, other people argued that staying in the country and paying taxes was a kind of complicity and that it wasn’t clear that staying in the country would actually make things better. So I think that’s where these things come into contention.
And you could ask the same question about pulling out of Russia: Is that a way to avoid complicity because you want to avoid supporting the regime? At the same time, pulling out may have negative consequences for your employees. Or does it make things worse for people in Russia because they lack certain goods or services that could be important to them as a result of your decision?
But then there’s also this question of corporate power that we have to lay over that. And people are asking the question of, well, aren’t these ultimately political decisions? And so should companies be speaking out on these issues or not? I think there’s a legitimate disagreement about that, and about the fine line between “political” issues and issues of human rights.
That goes back to your point about the role of business in society. What should that role be?
Corporations will increasingly need to have a view on which issues to take action on and which issues to speak out on. Here are three ways of thinking about how they should develop one: Think in terms of basic rights, the functioning of institutions, and then, more generally, ask: What are the conditions that we would require for a thriving society?
So, first, you can ask are there significant human rights violations? That was the whole idea of the UN Ruggie Principles—to create this kind of minimal floor. And the second thing to ask is whether corporations are undermining the functioning of the institutions that are needed for society to function well. Official corruption, for example, is related to that exact question. With Russia and Ukraine we hear a lot about money laundering. Money laundering is a kind of activity that undermines the functioning of institutions that are needed for society to function well.
And then the third one is to ask the question of what does it mean to be a member of society as a business? What kind of a society do we want? What kind of society is important for business to flourish and succeed? And how can we help to realize that kind of society?
How should businesses engage on that question of what kind of society we want? And what are the limits on what they ought to do there? If I’m a shoe company, for example, I specialize in making a consumer product—what’s a productive way for an entity like that to engage in these wider political questions?
There are few things that get overlooked on this issue. One is the idea of the common good. The common good is not necessarily about politics—it’s more generally about the idea of contributing to and supporting the overall health of society. I think in discussions of business’s role in society people either jump to political action or think in terms of stakeholders. But there’s really just a basic sense of thinking about what is the common good and what does it mean for a for-profit corporation to participate in it? A lot of the contemporary talk about these issues thinks about, What does it mean to think about take care of all your stakeholders? What does it mean to have a social mission? What does it mean to think about political considerations? But at the end of the day, making shoes, making them well, selling them to people who need them, innovating on design, providing jobs, and increasing wealth—it’s kind of a social function.
But that still leaves this question of where companies can effectively weigh in on some of these issues. And that goes back to questions of whether there are rights violations involved, and whether the company’s actions risk undermining the proper functioning of institutions needed for a well-functioning society.
The war in Ukraine is a war between nation states, but many of the statements from US-based companies, for example, don’t mention the US at all. Are companies picking a side in a dispute between nations or are they standing up for a global order?
In this case, I feel like it’s been seen more as a question of a kind of global order that’s being undermined or overturned in some way. The other thing, to go back to my earlier point, is that there is really this humanitarian aspect that also is prompting a lot of the response and the expectation for a response. I think people feel as though they can try to distinguish between the impact on the Russian people versus impact on decision makers within Russia.
Will these corporate actions be reversed? Should they be? And when?
That actually is the one thing that I don’t know if companies have thought enough about. If Boeing and Airbus are no longer supplying planes and parts to Russia, when does that stop? When do we resume financial services in Russia? And I think that’s really an important part about this kind of corporate response—trying to think about what actually is the goal that we’re seeking here. And when will we know that we’ve met that goal?