The withdrawal of Western companies from Russia is expected to accelerate

More Western corporations and investors are expected to leave Russia on Tuesday, following in the footsteps of energy firms BP and Shell, which abandoned multibillion-dollar positions following the invasion of Ukraine. Leading banks, airlines, automakers, and other companies have reduced shipments, terminated partnerships, and deemed Russia’s actions unacceptable. Many more said they were thinking about taking action.

Following Walt Disney Co’s (DIS.N) announcement that it would pause the release of theatrical films in Russia, Warner Bros. announced late Monday that it would pull this week’s release of ‘The Batman’ from Russian theatres. Meanwhile, Mastercard announced that it had blocked multiple financial institutions from its payment network as a result of Russia sanctions. The West has moved to punish Russia with a slew of sanctions, including the closure of airspace to Russian planes, the exclusion of some Russian banks from the global financial network SWIFT, and restrictions on Moscow’s ability to use its $630 billion in foreign reserves.

“I would expect to see a slew of similar announcements in the coming days,” Sonia Kowal, president of Zevin Asset Management in Boston, said on Monday, adding that divestment by Norway’s large sovereign wealth fund would support the move. Some state-linked investors in the United States have been vocal in setting corporate expectations.”We need to send a very clear and unequivocal response that California will not stand for Russia’s aggression,” California Treasurer Fiona Ma said in a statement on Monday, expressing support for divesting Russian assets from the state’s pension funds, which are among the largest in the country.
Shell (SHEL.L), BP, and Norway’s Equinor (EQNR.OL) have all announced plans to exit positions in energy-rich Russia, putting pressure on other Western companies with stakes in Russian oil and gas projects, including ExxonMobil (XOM.N) and Total Energies (TOT) (TTEF.PA). Many companies are still considering their options, including shipper Maersk, which said on Monday that it was monitoring Russian sanctions and preparing to comply with them. Cargo bookings could be halted in one scenario.

Major auto and truck manufacturers, including Volvo and GM (GM.N), have suspended exports to Russia, despite the fact that the two companies only sell about 12,000 vehicles in Russia each year. Ford Motor (F.N), which owns a 50% stake in three Russian plants, has made no substantive comments on its plans other than to say that it intends to build a new plant in Russia.

Companies and asset managers looking to sell stakes face challenges because many exchanges have halted trading. Some Western companies with significant exposure to Russia have already seen their stock prices fall. Finnair, based in Russia’s neighbour Finland, lost a fifth of its value after withdrawing its forecast for 2022 due to airspace closures. Airlines are bracing for lengthy delays in east-west flight corridors following airspace bans issued by the European Union and Moscow. Senator Dick Durbin, the Senate’s second-highest ranking Democrat, has expressed support for a ban.

“Other European countries have done it, and turning off the lights at the airport on those guys isn’t a bad idea,” he told reporters. Big tech companies are balancing calls to shut down services in Russia with what they see as a mission to give dissent and protest a voice.
The parent company of Facebook, Meta Platforms Inc (FB.O), will restrict access to Russian state media outlets RT and Sputnik on its platforms across the European Union, the company’s head of global affairs said on Monday, echoing similar moves by major U.S. tech companies.

The White House has not made a decision on banning Russian flights, but White House press secretary Jen Psaki told reporters on Monday, “There are a lot of flights that US airlines fly over Russia to go to Asia and other parts of the world, and we factor in a range of factors.”