Russia sanctions directly apply to more than 16,500 companies worldwide
Rotterdam, March 8, 2022 The sanctions declared by the Office of Foreign Assets Control against Russia initially affect some 16,500 companies worldwide, spread across 21 countries. That's according to business data specialist Altares Dun & Bradstreet after analyzing the corporate structures of Russia's largest companies and holding companies. These companies all sail under the flags of the seven largest Russian financial institutions and the 13 Russian companies at which the sanctions were initially aimed. Of those thousands of companies, 22 are home to the Netherlands and are mainly active in the energy and logistics sectors.
According to David Verheecke, Managing Director Benelux at Altares Dun & Bradstreet, the volume shows the enormous impact of the various sanctions on other international companies: "First of all, it is of course terrible what is happening in Ukraine and our first thoughts are with all those involved there. However, the consequences also affect the entire world trade; more than 7.5 million direct and indirect supplier relationships with these companies are visible worldwide. Thus, we see that as many as 374,000 companies worldwide depend on Russian suppliers in the first or second line of logistics. For Ukraine, this is about 241,000 companies."
Dutch dependency
When Altares Dun & Bradstreet zooms in on the numbers, it sees the impact on Dutch trade: 1918 companies trade directly or through-via with Russia and Ukraine, with the vast majority (1607 companies) having relationships in Russia. Five Dutch companies even have crucial suppliers in Russia, meaning that business operations depend on supplies from those companies.
Altares Dun & Bradstreet figures say that 25 countries worldwide depend "to a large extent" on wheat and meslin from Russia and Ukraine. Many nations also depend on the two superpowers for coal (24 countries) and gas (16 countries). In addition, there are other general impacts that organizations will experience in their business operations, customer relationships and supply chain because of the economic sanctions:
Expensive (raw) materials
If the conflict continues for a long time or escalates, raw materials such as gas, oil and metal in particular will become much more expensive. Europe will then have to get these from elsewhere. This brings with it additional costs, which companies have to pass on to their end customers. So prices rise everywhere in the supply chain, further increasing inflation. Incidentally, the Netherlands buys about 25 percent of its oil and gas from Russia. For Belgium, it is about 20 percent.
More need for research
Companies need to look at who their customers and suppliers are and whether future payments will be more difficult. If the conflict escalates further, it is conceivable that trade with Russia will be completely impossible: organizations must then have a plan B in order to obtain their raw materials (quickly). This applies not only to direct suppliers, so companies would do well to know whether their suppliers are directly or indirectly dependent on Russia or Ukraine.
Slowing economic recovery
Worldwide organizations are doing their best to recover after more than two years of corona. The conflict in Ukraine is slowing this recovery. Delayed or changed trade routes and inflation can put organizations in trouble and shrink the GDP of many countries. Again, this makes exploring alternatives more important for organizations: they need to look at how they can be more flexible now and in the future, in order to minimize the impact of a possible future crisis like this.
David Verheecke: "It is crucial that organizations understand the family trees of their customers and suppliers. Doing business with organizations involved in this conflict is a sensitive issue but also a practical dilemma. As a company you therefore cannot escape doing research into where your products and raw materials come from and where your money goes. Only in this way can you find alternatives that will help your organization recover after this crisis."
