The event discussed ways to strengthen the responsibility of Western companies operating in Russia
At the roundtable ‘Information Disclosure and the Impact of Sanctions on Western Companies Operating in Russia’, international experts and civil society leaders presented proposals to strengthen the responsibility of businesses that continue to operate in the Russian market. Participants considered tools to increase the transparency of companies, as well as new economic mechanisms aimed at supporting Ukraine. Leading analysts, lawyers and diplomats joined the event, which was organised by the Institute of Legislative Ideas think tank. Thanks to the joint initiative of international and Ukrainian organisations, united by the desire to promote transparency and increase economic pressure on the aggressor state, important steps have been taken towards a common goal.
The problematic issue is that Western companies that continue to operate in Russia paid about $27 billion in taxes to the aggressor country's budget in 2023. These funds directly or indirectly support the Russian military machine. This situation undermines the international community's efforts to finance Ukraine's defence and humanitarian needs. At the same time, the transparency of companies in Russia remains low, making it difficult to assess their contribution to the financing of the Russian economy.
At the event, participants discussed a number of important issues, including ways to attract financial resources from companies that continue to operate in Russia, as well as possible consequences for the international economy and diplomacy in case of the introduction of the ‘Sanctions Charge for Continued Operations’ (COST) mechanism. Participants analysed how to reconcile the new requirements with existing sanctions and national legislation, what mechanisms for monitoring and distributing funds received under the COST could be effective, and how mandatory financial disclosure could affect business decisions of companies remaining in the Russian market. The experts outlined a two-stage solution to the problem.
"Hybrid warfare requires hybrid solutions. We propose a two-stage approach: first, soft measures that will motivate companies to disclose information about business ties with Russia, and then hard measures - the introduction of COST (sanctions fee for continuing operations) to increase the cost of operating in Russia." - Tetyana Khutor, Head of the Institute of Legislative Ideas.
- The first stage involves the introduction of mandatory disclosure of financial information by companies with business ties to Russia. Such reporting should include revenues, taxes, assets and liabilities of companies in Russia, which will allow investors, shareholders and the public to better understand the risks and consequences of such activities.
- The second stage is the introduction of COST. Its goal is to partially shift the financial burden of supporting Ukraine to businesses that continue to operate in Russia. Part of the funds raised will be used for defence, reconstruction and humanitarian aid to Ukraine, as well as for the creation of a compensation fund for companies that have already left the Russian market.
The discussion confirmed the importance of a comprehensive approach to solving the problem. The proposed initiatives should contribute to economic pressure on Russia. The introduction of such measures will increase the transparency of companies and promote more responsible business practices.