Some Irish companies are staying put in Russia for now

The staggering scale of the stampede of western consumer brands from the Russian market is a sight to behold. Yum Brands, the owner of KFC and Pizza Hut, is among the latest to, at least temporarily, pause its operations there. Imperial Brands, the maker of Gauloises cigarettes, is another.

McDonald's, Coca-Cola, Pepsi, Starbucks. all titans of western capitalism, all swept along in the irresistible force that is the tide of public anger over Russia's invasion of Ukraine. The threat of a consumer boycott makes it dangerous for any consumer brand to attempt to hold out.

However, several Irish listed businesses appear to be hanging on for now. Building materials giant CRH is walking away from its Russian operations, but paper group Smurfit Kappa, food group Kerry and insulation giant Kingspan have so far not announced any change to their significant Russian operations.

Smurfit Kappa and Kingspan

Certainly in the case of Smurfit Kappa and Kingspan, neither has a major consumer brand profile and this fact may, so far, have spared them the sort of public anger that was directed towards brands such as McDonald’s over the weekend. The opprobrium surely helped to speed up McDonald’s decision to shutter its Russian restaurants this week.

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Kerry Group, which opened a factory near Moscow in 2018, has also stood firm since the invasion. But it is facing the first rumblings of popular discontent: Cathal Foley, a local Sinn Féin councillor, told Radio Kerry this week that the company should suspend its operations in Russia.

ESG standards

It might not be enough to worry Kerry’s boardroom, but that doesn’t mean it won’t be the start of something.

The lack of a consumer profile might help some Irish companies avoid the worst of public anger over doing business in Vladimir Putin’s Russia. But if institutional shareholders start to kick up over it, it is likely to be a different story.

Investors these days love to vaunt their environmental, social and governance standards. ESG is the acronym du jour for image-conscious institutions. How will ESG policies square with continuing to hold shares in businesses that stay the course in a country run by an aggressive regime that appears to threaten the future of Europe?