By Ambassador Stuart Holliday, CEO of Meridian International Center
Today, companies are the new diplomatic actors central to addressing the world’s shared challenges.
A solemn anniversary. February 24th marked one year since the unprovoked, full-scale Russian invasion of Ukraine. Throughout the past twelve months, the response by the Ukrainian forces in effectively driving back the Russian advances has surprised leaders across the globe, none more so than Russian President Vladimir Putin.
However, the effectiveness of the Ukrainian military’s answer to the invasion is not the only response Putin may have miscalculated. The solidarity of the allied nations in standing behind Ukraine and punishing the Russian regime has been exceptionally united and potent. Perhaps more impressive, though, has been the decisiveness of some private sector members in exiting Russia.
The Russian invasion of Ukraine marked a watershed moment for corporate diplomacy. In crises past, private companies abandoning opportunities in aggressor nations or cutting ties with regimes guilty of human rights violations has been limited. While Western companies still maintain relationships with some authoritarian nations, the private sector exodus from Russia stands as an example of corporations’ role in advancing their nation’s foreign policy goals and expanding the world of corporate diplomacy.
Corporate diplomacy, the advancement of global collaboration through effective leadership and engagement of the private sector, continues to be a vital skill for global business leaders, who have emerged as critical partners in combating some of the top issues that threaten economic security worldwide. Today, companies are the new diplomatic actors central to addressing the world’s shared challenges.
International sanctions had already hampered Western companies’ ability to conduct business in Russia. Still, hundreds of corporations have cut ties with the nation entirely, while others have significantly scaled back their activity and investments in the country beyond what sanctions necessitated. Conversely, the private sector must be involved in finding solutions to the issues that arise in times of crisis. A perfect example is the Black Sea Grain Initiative deal brokered by the United Nations, Turkey and the International Chamber of Commerce, allowing the grain and other agricultural products to move from the Port of Odesa despite the ongoing war. The unprecedented agreement allowed grain to be shipped unimpeded, critical in restoring shipments of Ukrainian grains and vegetable oils, averting a severe cost-of-living – and potentially hunger – crisis in the developing world. Through embracing and investing in corporate diplomacy initiatives like these, nations can increase their diplomatic toolbox, broadening the scope of their options beyond just sanctions and divesting to a more proactive approach leveraging their corporate actors to build relationships further and establish allies.
The benefits of the private sector’s advanced diplomatic role are more comprehensive than direct war efforts. Taking a firm stance on the issue benefits companies in the eyes of the consumer. According to the 2022 Edelman Trust Barometer Special Report, corporations that responded swiftly and decisively to Russia’s invasion saw increased public trust in their business. The report states, “Nearly half of those surveyed (47 percent) said they have bought or boycotted a brand or company based on their response to Russia’s invasion of Ukraine.” 95% of respondents said they expect “a strong business response to repressive governments and abusive work practices in countries where they do business.”
Businesses that stay silent on key geopolitical issues that impact the regions in which they operate can be accused of complicity by their customers. While most individuals still want corporations to focus on wealth creation, a growing majority also want them to play a part in tackling pressing global challenges. Put most plainly, companies can no longer afford to stay silent. Business is shaping how the world works through their decisions on supply chains and investments, innovations and stances on environmental and social issues. Companies have the power – and responsibility – to add value to society, in addition to their shareholders and customers.
Under Secretary Jose Fernandez at the U.S. Department of State echoed this at his private sector meeting at Meridian International Center, “Continued engagement between my team and your firms will help us better understand our shared challenges, while the innovation and efficiency of the private sector are essential to achieving our economic goals. By partnering with the private sector, we will be able to meet these challenges, prevail and prosper.”
Companies have the power to play a decisive role in ending Putin’s unjust and inhumane war in Ukraine. While divesting from Russia may negatively impact the bottom line in the short term, a Ukrainian victory will result in a freer and more prosperous world and, thus, a better world in which to conduct business.
But the private sector needs support and resources to take on this new role successfully. The future of diplomacy depends on greater cooperation between the private sector, government and civil society. The world needs business leaders to have deeper geopolitical insights, more robust networks, more diplomatic resources and a platform to bridge the gaps between business, government and diplomatic leaders to make stronger corporate diplomacy decisions.
Ambassador Stuart W. Holliday is the CEO of Meridian International Center, a nonpartisan, nonprofit diplomacy center. He served as U.S. Ambassador for Special Political Affairs at the United Nations (2003-2005). Prior to serving at the UN, Ambassador Holliday was Assistant-Secretary of the U.S. Department of State’s Bureau of International Information Programs and Principal Deputy Assistant Secretary for Public Affairs. From 2000-2001, he was Special Assistant to the President and Associate Director of Presidential Personnel at the White House.