Business

McDonald’s, PepsiCo urged to cease Russia operations by NY pension fund

March 8, 2022

Hermitage Capital Management CEO Bill Browder argues that ‘by the time the West is done, we will have totally blockaded Russia economically.’

New York State’s Common Retirement Fund, one of the largest public pension funds in the US, is urging McDonald’s, PepsiCo and others to consider pausing or ending business operations in Russia amid the country’s ongoing invasion of Ukraine.

Ticker	Security	Last	Exchange	Change %
MCD	MCDONALD’S CORP.	224.29	-11.47	-4.87%
PEP	PEPSICO INC.	162.45	-3.30	-1.99%

The fund’s trustee, New York State Comptroller Thomas DiNapoli, warned in a series of letters that companies who continue to operate in Russia and invest in Russian assets “face significant and growing legal, compliance, operational, human rights and personnel, and reputational risks. ”

“Pausing or ending McDonald’s business operations in Russia would address various investment risks associated with the Russian market and play an important role in condemning Russia’s role in fundamentally undermining the international order that is vital to a strong and healthy global economy,” DiNapoli wrote in a letter addressed to McDonald’s CEO Chris Kempczinski reviewed by FOX Business.

New York State’s Common Retirement Fund, one of the largest public pension funds in the US, is urging McDonald’s PepsiCo and others to consider pausing or ending business operations in Russia amid the country’s ongoing invasion of Ukraine. | iStock

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The comptroller’s office estimates that the $280 billion fund has about $110.8 million in public equity investments, including direct holdings and co-mingled funds in Russian companies. The New York Common Retirement Fund had stakes in McDonald’s and PepsiCo valued at approximately $410 million and $501 million, respectively, as of the end of 2021, according to its latest 13F filing.

McDonald’s has a total of 847 restaurant locations in Russia and 108 locations in Ukraine. The company owns 84% of its Russia locations and 100% of its Ukraine locations. Russia and Ukraine combined represented approximately 2% of the company’s system-wide sales, roughly 9% of its revenue and less than 3% of its operating income in 2021.

“Companies like McDonald’s and PepsiCo, which have a large footprint in Russia, need to consider whether doing business in Russia is worth the risk during this extraordinarily volatile time,” DiNapoli told FOX Business in a statement. “Russia’s unprovoked invasion of Ukraine and its highly unpredictable foreign policy are a threat to the global economy. We’re encouraging the companies we invest in to do a risk analysis and determine what is in the best interests of their company and their shareholders.”

McDonald’s nor PepsiCo did not immediately return FOX Business’ requests for comment.

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In addition to McDonald’s and PepsiCo, letters have been sent to Estee Lauder, Mondelez International, Fortinet Inc, Kimberly-Clark Corp., Bunge Limited, Coty Inc., Alnylam Pharmaceuticals and Trimble Inc. A spokesperson for the comptroller’s office told FOX Business that it has not heard back from any of the companies as of the time of publication.

Ticker	Security	Last	Exchange	Change %
EL	THE ESTEE LAUDER COMPANIES INC.	264.08	-21.57	-7.55%
MDLZ	MONDELEZ INTERNATIONAL INC.	62.53	-1.30	-2.04%
FTNT	FORTINET INC.	291.37	-44.09	-13.14%
KMB	KIMBERLY-CLARK CORP.	127.94	-1.19	-0.92%
BG	BUNGE LTD	108.71	+0.40	+0.37%
COTY	COTY INC.	7.35	-0.77	-9.48%
ALNY	ALNYLAM PHARMACEUTICALS	163.00	-1.44	-0.88%
TRMB	TRIMBLE INC.	63.54	-2.94	-4.42%

“Alnylam does not have operations in Russia and only a very small, immaterial amount of product sales for our life-saving medicine for an ultra-rare genetic condition afflicting pediatric patients come from Russia. These medicines are exempt from sanctions and we plan to continue to provide patient access” the company said in a statement to FOX Business.

Elsewhere, Fortinet has ceased its Russian operations and suspended sales, support and professional services in the country, while Trimble has stopped selling its products and services to Russia and Belarus.

Mondelez International, Kimberly-Clark Corp., Bunge Limited and Coty Inc., did not immediately return FOX Business’ requests for comment.