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2022 in review – how business responded to the war in Ukraine

Russia’s invasion of its neighbour has had a devastating impact on the people of Ukraine, but it has also had global ramifications for businesses and economies
2022 In Review 3

Russia’s invasion of Ukraine on 20 February is, first and foremost, a humanitarian and social disaster. Millions have been displaced and thousands lost their lives, cities have been razed to the ground and communities cut off.

Almost 10 months on, the outlook looks no better for the Ukrainian people. After some signs of progress on the battlefield with the bombing of a bridge in Crimea and Russia’s retreat from Kherson, the tide has turned again. The country has been subject to a series of aerial strikes targeted at civilian infrastructure that has left many areas without access to electricity and water, and forced the shutdown of nuclear power plants, as the country heads into winter.

The response to crisis

For business, the initial reaction to the invasion was to show solidarity with the people of Ukraine. As part of the corporate backlash, almost all Western companies have pulled out of Russia, with Apple suspending sales, Ford and Jaguar Land Rover pausing activities, and Nike and H&M stopping exports. 

Other businesses had staff to think of. PwC, for example, had offices in Dnipro, Lviv and Kyiv and therefore its first priority was for the safety of its people. It provided transportation, advice, and legal and financial support for employees and their families attempting to leave the country, as well as accommodation for those fleeing.

Allianz, meanwhile, set up a free telephone hotline and provided transport, accommodation and financial assistance for Ukrainian colleagues – on top of a €12.5m (£10.8m) donation to humanitarian aid causes. 

Russia is the 16th largest exporter globally, so anything that impacts trade with the country impacts the global economy

Beyond the immediate aftermath, the war has impacted businesses in myriad ways. Economic sanctions placed on Russia and choices made by companies to shut down operations in the country have hit the bottom line – although most would say this is a price worth paying.

The current energy price rises are also caused by the war. The reduction in available power supplies, as well as a reluctance to fund Russia’s war indirectly by buying its gas, have increased prices. There have also been issues with supplies coming from Russia following the closure of the Nord Stream 1 gas pipeline following leads that many suspect were created deliberately – although Russia has not officially or publicly been blamed.

The UK government has set up a six-month scheme to offer businesses support in paying bills. The scheme provides some energy bill relief for companies, initially between October 2022 and March 2023. But still leaves many with record high energy bills.

Supply chain struggles

The conflict has also impacted the flow of other critical resources around the world. Russia is the 16th largest exporter globally, according to the World Trade Organization, so anything that impacts trade with the country impacts the global economy. 

That has led to rising costs of raw materials such as aluminium, nickel and copper. Plus, because Russia is a major player in the mining of palladium and platinum, two key metals.

Both Ukraine and Russia are top exporters of corn and wheat, impacting supplies and prices of these core grains as well. Other affected commodities include sunflower oil and neon gas – which is used to make semiconductors and adding to shortages.

Finding alternatives has not been easy or cheap. For example, exporting commodities from Canada is possible but takes longer and is more expensive. Sourcing from Africa is also an option, but here there are also issues around geopolitical stability.

Business is likely going to need to get used to global economic difficulties and leaders to building up companies despite crises. From Brexit to Covid to, now, war, so-called black-swan events appear to be happening more often. Building in resilience and understanding risk is key. After all, the changes business has had to make are nothing compared to what Ukrainians are living through.