Ukraine dubs Unilever an “international sponsor of war” over Russia presence

Netherlands | Unilever is the latest company to be added by Ukraine’s National Agency for the Prevention of Corruption (NACP) to its list of “international sponsors of war”.

The NACP said on 3 July that the UK-headquartered consumer-goods giant has been added to the list because of its “on-going presence in the Russian Federation and its significant taxes to the Russian state budget, thereby supporting the aggressor’s economy and contributing to the continuation of Russia’s war against Ukraine”.

Besides, Unilever would have been singled out because its new CEO, Hein Schumacher, took over at the beginning of this month.

The agency made a number of allegations against the maker of Dove soap, Knorr soups and Ben & Jerry’s ice creams.

Unilever’s Russian profits doubled in 2022

“With more than 3,000 employees in Russia [Unilever] runs a significant operation that has increased its revenue and profit since the full-scale invasion of Ukraine,” NACP claimed.

It added that Unilever’s profits in Russia nearly doubled from 2021 to 2022 – from EUR 56 million in 2021 to more than EUR 108 million last year - and that its Russian unit, Unilever Rus, paid around USD 50 million in taxes to the Russian Federation last year. Neither of those claims have been confirmed by Unilever and it is understood the profit figure is disputed.

According to Unilever’s 2022 annual report, its Russian business accounted for 1.4 percent of turnover and 2 percent of its net profit last year.

Same old justifications

When Unilever was approached by the BBC, it referred to its most recent statement in February, saying: "We understand why there are calls for Unilever to leave Russia. We also want to be clear that we are not trying to protect or manage our business in Russia. However, for companies like Unilever, which have a significant physical presence in the country, exiting is not straightforward."

If it were to abandon its brands in Russia, "they would be appropriated - and then operated - by the Russian state".

The consumer goods giant said it had been unable to find a way to sell the business that "avoids the Russian state potentially gaining further benefit, and which safeguards our people".

It said there were no "desirable" options, but that continuing to run the business with "strict constraints" was the best way forward in the circumstances.

Western firms are digging in

According to data from the Kyiv School of Economics (July 2023), out of 1,361 Western companies with Russian subsidiaries at the start of the full-scale invasion, only 241 (17 percent) have completely exited Russia. The remaining Western companies generated USD 214 billion in revenues during 2022. On estimated profits of USD 14 billion, they would have paid USD 3.5 billion in income tax, thus helping the Kremlin to finance the war in Ukraine.

If these firms now become the target of activist NGOs, they should not complain when their Western reputational capital melts faster than their ruble profits build up.