A choice for Western multinationals: Corporate due diligence or co-finance a war?

On June 11 Queen Máxima spoke addressing the attendees at the Global Summit of the Consumer Goods Forum. She stressed the link between economic resilience, sustainability and social welfare. She concluded with: “As members of the Consumer Goods Forum, you are in a unique position to influence responsible business practice around the world. Together, you have the capacity to make an immense difference. It will not be ‘business as usual’. It will take determination, creativity and entrepreneurship to reach these goals.” Words that were well-meant but felt wry to those who knew what was going on outside, and those who knew what was not mentioned despite insistence.

After all, what will be left of such pleas if they remain silent about Western multinationals that continue to operate in Russia, circumventing sanctions and co-financing Russia’s war against Ukraine through their tax payments? And what needs to be done to break these funding flows and lack of corporate social responsibility?

The harsh reality: multinationals fund Putin’s war

Also, Follow the Money published an article on this uncomfortable reality last Tuesday. While Western governments provide arms and humanitarian aid to Ukraine, large multinationals from those same countries contribute to Russia’s defence budget through taxes.

B4Ukraine’s research “Corporate Enablers of Russia’s War in Ukraine” exposes that foreign multinationals paid at least $41.6 billion in taxes to Russia in 2022 and 2023 combined. This is expected to increase by another $20 billion in the year 2024. Together, this rises to more than $60 billion, which amounts to almost half of Russia’s 2025 military budget.

Of the 20 largest taxpayers in Russia, as many as 17 are from G7 and EU countries. The Netherlands ranks number 11 among the largest taxpayers. As recently as 2023, 52 Dutch companies paid profit tax in Russia. Dutch companies high on the list are ING with EUR 22 million, followed by Jacobs Douwe Egberts and FCB Holding. In total, they were close to €100 million.

Policy incoherence and tax justice

While large companies highlight their commitment to sustainability, ethics, and human rights at international conferences, such as the recent Consumer Goods Forum Global Summit in Amsterdam, a painful contrast is playing out behind the scenes. Through the activities of companies such as Coca Cola, Mars, Mondelez, Nestle and P&G in Russia, these companies pay billions in taxes to a regime that structurally violates those same rights.

For every $10 of aid that G7 and EU governments pledge to Ukraine, large companies from those same countries pay $1 in taxes to Russia, according to the study. A glaring example of policy incoherence, with corporations undermining the foreign policies of national governments. Governments give arms and money to Ukraine to support Ukraine’s war and protect human rights, while big companies from those same countries perpetuate the war that undermines rights. Where is the fiscal justice?

Corporate due diligence

Many large companies hide behind the argument that they “comply with sanctions legislation”, but as the report sharply states, “compliance without awareness is not enough”. Compliance with these legal rules is just the minimum. Large companies have a duty to include in their due diligence explicitly consider human rights and environmental impacts especially when operating in or around aggressor states, such as Russia.

Yet many multinationals seem to reduce corporate due diligence merely to a reputation management or risk management strategy. Both aimed at limiting profit losses, not protecting human rights. Companies have a choice. They can leave Russia precisely because of that responsibility. The oft-heard argument that some companies provide “essential products” to the Russian people and are therefore not subject to sanctions, such as the supply of food, drink or medicine, should not be an excuse for multinationals to continue indirectly supporting an authoritarian regime.

High time to enforce accountability of multinationals

Consumers, activists, and governments need to hold big companies accountable for this behaviour. Returning to Queen Máxima’s speech: “You are in a unique position to influence responsible business practice around the world.” Western multinationals still operating in Russia are in a position to take responsibility, theyy can get out of Russia and stop funding a war with their taxpaxes. But to this day, these companies seem to be guided not by a moral compass, but by profit. Therefore, political action is needed alongside social pressure. Governments, including the Dutch government, must stop waiting and force due diligence from multinationals.