Why Firms That Choose to Return to Russia Will Lose Their Money and Reputations

Since the full-scale invasion in 2022, more than 1,300 foreign companies have already scaled back or ceased operations in Russia, while nearly 500 have fully exited through sale or liquidation, according to the KSE Institute. These companies have recognized the immense risks of operating in a lawless, unpredictable environment. Now the Kremlin is desperate to attract international businesses to stave off its economic collapse, promoting a narrative that Western companies are eager to re-enter. In reality, this is a dangerous illusion. Every sector in Russia has seen declines ranging from 60% to 95%. Labor shortages are mounting, consumer purchasing power is plummeting, and the country’s middle class is shrinking. The infrastructure that once supported international trade and investment is crumbling. Foreign direct investment in Russia has hit a 15-year low, and it’s increasingly difficult to see how any company could successfully regain a foothold in such a volatile, deteriorating market. Few of the companies seem eager to come back.

The risks don’t stop at economic downfall. Companies must contend with the looming threat of nationalization, as Putin has explicitly acknowledged his plans to intensify the expropriation of private enterprises, including the assets of Western companies. Foreign firms have already suffered more than $170 billion in direct losses since Russia’s invasion of Ukraine in 2022, with over $57 billion of that total tied to forced asset seizures. At least 30 companies, including giants like Carlsberg, Danone, ExxonMobil, and Uniper, have fallen victim to this aggressive asset grab. As Russia’s domestic case law supporting expropriation continues to evolve, businesses considering a return should be prepared for the possibility that their assets could meet a similar fate. Recently, the Kremlin has intensified efforts to expropriate Russian-owned businesses as well.

Russia’s leadership has also made it clear that returning businesses should not expect equal treatment with domestic firms. As Vladimir Putin himself confirmed, foreign companies seeking re-entry will face disadvantages designed to safeguard the competitiveness of local businesses. For any company hoping to rebuild operations, this would require substantial financial investment with little promise of return—a red flag for investors.

Beyond the bottom line, Russia’s legislative framework poses an escalating risk of complicity in the ongoing war. Companies operating in Russia indirectly support the war effort through taxes, supply chains, and technology. Under the Kremlin’s Partial Mobilization Order, businesses, including international companies, are mandated to aid the state’s conscription efforts and provide goods and services for its military. These very forces are responsible for nearly 160,000 documented war crimes in Ukraine. By compelling corporate support for the invasion and occupation, Russia’s mobilization decree forces companies into a direct conflict with international law, the United Nations Guiding Principles on Business and Human Rights, and Western sanctions regimes. The result is a near-impossibility of reconciling compliance with both Russian law and international standards.

The reputational risks of operating in Russia are even more severe. Any company returning to Russia will be seen as disregarding the human toll of Russia’s unprovoked aggression. Some Russian propagandists have even suggested that businesses seeking to return should financially support the Russian military or establish operations in occupied Ukrainian territories. These actions would directly associate a company’s name with a regime engaged in an ongoing conflict, condemned worldwide for violating international law. Worse yet, they could make the company complicit in those very violations.

Given that there are numerous alternative markets offering greater stability and growth potential, the case for re-entering Russia is profoundly unconvincing. The financial, legal, and reputational risks far outweigh any fleeting short-term benefits. Operating in Russia is not only reckless—it will remain so, regardless of whether a ceasefire is achieved.

Western companies must stay out of Russia until Ukraine’s sovereignty and territorial integrity are fully restored, reparations are made, and accountability for war crimes and crimes against humanity is enforced. Any company remaining in or choosing to return to Russia would be complicit in enabling an illegal war and occupation. There is no ethical way to operate in a country that is waging a genocidal war against its neighbor.