Have Kremlin-backed companies used the international peace system to launder their reputations? Dimitris Dimitriadis explores

Sanctioned Russian companies are still being listed as participants of a United Nations initiative with an emphasis on human rights and anti-corruption, the Byline Intelligence Team can reveal. 

The United Nations Global Compact (UNGC), which describes itself as the world’s largest corporate sustainability initiative, recently launched a guide to mobilise businesses to “urgently respond to Ukraine’s humanitarian crisis”. The Compact’s CEO has also echoed the remarks of the Secretary General deploring “in the strongest terms the aggression by the Russian Federation against Ukraine”. 

But the UNGC still lists 85 companies from the Russian Federation as participants. Among them are several businesses that are controlled by the Kremlin and are currently under Western sanctions. Those include banks, Sovcombank, Alfa Bank and Sberbank, as well as Russian Railways and the world’s largest diamond producer, Alrosa – all of which have been recently targeted by UK sanctions against the “vital industries fuelling Putin’s war machine”. 

Another participant, which claims to have committed to promoting human rights as part of the Compact’s ‘10 Principles’, is Gazprom. The energy giant’s CEO, Igor Sechin, has been described as “Putin’s right hand man” by Foreign Secretary Liz Truss, and is sanctioned by the UK, the US and the EU.

Even as Russian troops were amassing on the Ukrainian border in early February, Rosneft – another oil and gas behemoth backed by the Kremlin – was celebrating its status as a lead participant of the Compact, a special category reserved for companies “identified annually for their high levels of engagement”. 

In an announcement in September 2021, Sanda Ojiambo, CEO of the Compact, said: “More than ever, the world needs different companies that, like the lead members announced today, are continually working to improve sustainability outcomes and are committed to making the world a better place.”

Even though Rosneft has been suspended from trading its global depository receipts on the London Stock Exchange, while the head and one of its subsidiaries has been subject to UK sanctions, the energy giant still lists itself as a Global Compact lead.

The same applies to PhosAgro, a major fertiliser producer whose CEO was recently targeted by EU sanctions, which claims to be a lead participant on its profile. 

Web archives from March 2021 indicate that Sakhalin Energy Investment Company, a consortium of oil and gas producers including Gazprom, was also a lead participant – though that has now been removed from its profile.

Another Russian oil major still listed as a UNGC participant is Lukoil, which is also under US sanctions. Also listed are EN+ and Rusal, some of whose shareholders have been hit with Western sanctions. 

The Compact says on its website that participation in the initiative does not equate to an endorsement of a company’s credentials. It is down to individual companies to self-report and track their progress against the UNGC’s principles, which include a commitment to human rights, anti-corruption and the environment. 

Where annual revenues exceed $50 million, companies are also required to make a financial contribution which, depending on their status – participant or signatory – ranges from $2,500 to USD $20,000 per year. 

In exchange, they gain a range of benefits including “unprecedented networking access”, “tools, resources and training” and “the moral authority, knowledge and experience of the United Nations”.

Of the Russian companies listed on the Compact’s website, those that have been hit by Western sanctions – or have seen key shareholders affected – they would normally pay the UNGC some $455,000 a year. This does not include any additional voluntary contributions.

With the UK Government facing continuing scrutiny over its normalisation of commercial and political relationships with Russian interests over recent years, it’s also worth considering how the same is true for international organisations.

Indeed, Parliament’s 2020 Intelligence and Security Committee report into Russian interference explains how Russian oligarchs have used the city of London to launder their reputations. The above evidence suggests that the same may be true for otherwise well-meaning corporate ethics initiatives.

The UNGC did not respond to Byline Times’ request for comment.

This article was produced by the Byline Intelligence Team – a collaborative investigative project formed by Byline Times with The Citizens. If you would like to find out more about the Intelligence Team and how to fund its work, click on the button below.

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