Beyond MIRVs and SCUDs, the Newest Global Weapon Is ESG


In the weapons world––loaded with the likes of Multiple Independent Reentry Vehicles (MIRVs), Intercontinental Ballistic Missiles (ICBMs), and SCUDs––an emerging global weapon is Environmental, Social, and Governance (ESG).

        The current ESG target is Russia, and the payload is an economic siege designed to isolate and strangle the Russian economy. Driving that siege are global corporations and the world’s leading economic powers uniting against Russia for invading Ukraine. The history of Russian regional invasions is old, but the retribution is new and exacting massive costs––billions in lost revenue in the energy sector alone.[1],[2] Retribution that Veracity Worldwide CEO Steven Fox calls, “the first European war in the ESG age.”[3]

        This Russian attack is different. More than a military invasion, Vladimir Putin has launched a social assault. More than a land grab, Russia is violating the Governance principle of national sovereignty that rejects an externally imposed dictatorship. In short, Russia is paying the price for violating principles that define Social and Governance in ESG. The G7 is now codifying many of these principles, declaring for example that it will reject any territorial gains by Russia in Ukraine. “We will never recognize borders that Russia has attempted to change by military aggression.”[4]

        Among the most powerful sanctions is the boycott of Russia’s leading exports, oil and gas, driven by shareholders and governments. According to London-based Energy Intelligence analyst Gary Peach, shareholders fear a reputational “black-eye” if their companies trade with Russia. “These companies do not want to be hit…for buying oil that will essentially go to Moscow and help finance the war effort.”[5]

        In “ESG Goes to War,” former Goldman Sachs investment banker and Bloomberg columnist Matt Levine argues that our expanded view of ESG is compelling many private sector companies to help defend Ukraine and the world against the Russian invasion.[6] This marks a stark turn in shareholder thinking and corporate behavior. Principles once used as guidelines for corporate behavior have grown to become rules of international conduct that now carry an obligation to punish violators. Enforcing this obligation are shareholders, consumers, and governments.

        With Russia’s invasion of Ukraine emerging as an early global test-case, one approaching question asks if ESG principles will come to divide nation-blocs that endorse them from those that do not.

ESG and Its Strategic Future

Details defining ESG continue to evolve. But at the most basic level, it refers to principles that promote environmental sustainability, protect minority rights, and favor popularly elected governments. The other side of ESG is environmental disregard, minority persecution, and dictatorial governments.

        From the Helsinki Accords and the Geneva Convention to the Law of Moses and the Code of Hammurabi, civilizations have long written rules designed to ward off threats ranging from next door predators to regional tyrants. The evolving principles underpinning what we now call ESG represent the latest iteration of that rule-writing history.

        Until this year, increasing concerns over climate change elevated the Environmental segment of ESG to dominate international attention. Now Russia’s Ukraine invasion is focusing on the Governance and, especially, the Social components of ESG.

        Punitive sanctions are ancient weapons. Variations of the divestment campaigns aimed at fossil fuels over the last decade, for example, were used decades earlier against targets like South African Apartheid. New here is the scale—a near global siege—described as “a divestment wave,” by Cornell historian and sanctions expert Nicolas Mulder,[7] that unites leading governments with multi-national corporations to weaponize finance against a single nation-state.

A New Global Response Towards Russia

While US Defense Secretary Lloyd Austin has referred to the Ukraine invasion as the largest conventional military attack since World War II,[8] regional Russian invasions   have a long post-war history. During the Cold War, the Soviet Union launched murderous military invasions and occupations into Hungary in 1956, into what was then Czechoslovakia in 1968, and into Afghanistan in 1979.

        As the new Prime Minister of Russia in 1999, Vladimir Putin extended earlier Russian attacks on Chechnya, using tanks and missiles to destroy Grozny and crush Chechen independence. In 2008, Putin similarly used ground troops and bombers to carve out independence from Georgia for Abkhazia and South Ossetia in a war that included allegations of ethnic cleansing.[9] In 2014, Putin sent troops to annex Ukraine’s Crimean Peninsula. Consistent with his current justification for invading Ukraine,[10] Putin argued he had attacked Chechnya, Georgia, and Crimea to protect ethnic Russians from persecution.[11]

        During the 2014 Crimean invasion, the international response was limited and divisive, with the Obama administration pushing for sanctions while a number of EU ministers preferred further mediation.[12] From 1990 to 2020, despite Russian attacks against Chechnya, Georgia and Crimea, the International Energy Agency (IEA) reports Germany steeply increased Russian oil, gas, and coal imports by more than 20 percent.[13] After Russia annexed Crimea, Germany allowed Russian state-owned Gazprom to buy Western Europe’s largest gas storage facility, Rehden in 2015. Just last year, Germany allowed the Moscow-based Rosneft Oil Company––chaired by former German Chancellor Gerhard Schröder since 2017––to buy Germany’s PCK oil refinery.[14] The result has been a massive escalation in German dependence on Russian energy. The repeated message to Putin was tacit acceptance of his regional invasions.

        The Ukraine invasion, by contrast, is triggering remarkably unified economic retaliation unimaginable just six months ago. Germany has already cut Russian coal imports by more than half.[15] In addition, the EU plans to cut Russian gas imports by two-thirds before the end of 2022 and stop all Russian fossil fuel imports by 2030 in what Dutch Foreign Minister Wopke Hoekstra calls, “a path to zero, making sure that we become independent of Russian gas and oil.”[16]

        “We’re in totally new territory,” says sanctions historian Nicholas Mulder. “The speed, the sweep, and the size of the sanctions, or the size of the targets of the sanctions––those three factors make them extraordinary.”[17] Driving these “extraordinary” sanctions is the new ESG focus beyond Environmental––elevating Social and Governance principles to international rules.

        Long considered the neglected middle-child of ESG, the S has recently grown in impact, catalyzed by domestic phenomena like the Me Too movement establishing new boundaries for appropriate workplace behavior. That growing domestic impact is becoming global.

        Veracity Worldwide CEO Steven Fox believes companies, like Levi Strauss & Co., are joining the Russian lockout because, “it’s going to be difficult to sit on the sidelines.”[18]This marks a radical turn as sitting on the sidelines is precisely how global companies traditionally handled international conflicts. Levi-Strauss & Co., for example, had no difficulty sitting on the sidelines during previous Russian invasions as recently as Crimea. That was before the Social and Governance side of ESG became powerful enough to push the company to suspend its commercial operations in Russia.

        Along with Levi-Strauss & Co., the growing list of consumer multi-nationals suspending Russian business include Coke and Pepsi, two of history’s greatest corporate rivals, uniting despite the cost to fight a despot violating Social and Governance principles. Other historic corporate rivals agreeing to stop operating in Russia include Goldman Sachs and JPMorgan Chase, H&M Group, and Uniqlo.[19] In announcing that after thirty-two years, McDonald’s will sell its entire Russian restaurant portfolio—an unprecedented move described as “de-Arching”—CEO Chris Kempczinski said, “It is impossible to ignore the humanitarian crisis caused by the war in Ukraine.”[20]

        This corporate retaliation against Russia reflects a shift in corporate thinking that complicates Milton Friedman’s landmark doctrine, “there is only one social responsibility of business: to increase its profits.”[21] The complication here is that the current corporate response to Ukraine is deliberately costing profits.

        In examining this complication, a common explanation is short-term pain for long-term gain. In this calculated trade-off, consumers and investors eventually reward these corporations for sacrificing short-term revenue in the interest of higher principles like ESG. This argument would help confirm that Social and Governance principles have become so powerful in the minds of consumers and investors that they now require corporations to retaliate against violators––in this case, Russia––in return for long-term rewards.

        Statistics already reinforce this mindset shift at the domestic level. In 2021, PwC reported that 76 percent of consumers surveyed agreed they would “discontinue [their] relationship with companies that treat the environment, employees, or the community in which they operate poorly.”[22] The Ukraine invasion is an extension of this domestic mindset, where treating, “the community in which they operate poorly” would now include conducting business with invaders. McDonald’s CEO summarized this new corporate mindset when he concluded that Russia has become bad for business and no longer “brand-enhancing,” adding, “and I don’t see that changing for the foreseeable future.”[23]

        In short, corporations are as committed to profits as ever. The Friedman doctrine lives on. But the minds of consumers and investors have changed; once indifferent to corporate behavior, consumers now threaten to shun corporations that violate designated principles. In name or in kind, these include principles basic to ESG. Global corporations are shunning Russia, fearing if they do not, consumers and investors will shun them.

From SRI to ESG

The 1990s offer insight into the roots of this Social and Governance-driven retaliation against Vladimir Putin and Russia today, when scandals implicating US television host Kathie Lee Gifford and Walmart as well as Chicago Bulls basketball star Michael Jordan and Nike prompted domestic debate about labor laws beyond the United States.

        In 1996, years before Kofi Annan made ESG a name in a letter urging global CEOs to follow ESG principles,[24]investigators learned that 13- and 14-year-old children worked 20-hour days in Honduran sweat shops to make the Walmart clothing line carrying Gifford’s name. While Gifford personally denied her knowing who made her clothing or how they worked, she quickly pulled her name from the line and helped New York State and the US Department of Labor to raise public awareness of sweatshop labor.[25]

        That same year, basketball star Michael Jordan sidestepped revelations that Indonesian sweatshop workers who made his Nike line of Air Jordans were underpaid and working in poor conditions. Jordan reportedly told the Associated Press, “I don’t know the complete situation,” adding, “Why should I? I’m trying to do my job. Hopefully Nike will do the right thing.”[26]

        Walmart and Nike eventually paid moderate fines for violating child labor laws.[27] However, fallout from these revelations and the celebrities they soiled helped plant the seeds that would grow what we then called SRI (Socially Responsible Investing) into what we now call ESG.

        Today, Gifford and Jordan would ignore who made their clothing at their peril. To avoid that hazard, investors now want to know much more than simply how a business can make them money. They increasingly ask about non-financial metrics, such as a company’s ESG score and commitment to DEI (Diversity, Equity, and Inclusion) initiatives.

        The result has been a surge in ESG investing. Arabesque Group Chairman George Kell estimates global ESG investment to exceed $20 trillion in Assets Under Management (AUM), adding up to about a quarter of all professionally managed assets worldwide.[28] That is just the beginning. According to Deloitte Insights, “ESG-mandated assets in the United States could grow almost three times as fast as non-ESG-mandated assets to comprise half of all professionally managed investments by 2025.”[29]

        ESG investment growth has also spawned specialties at fund services like the CITCO Group, selling their expertise in the arcana required to define and measure corporate ESG and DEI profiles. Other global companies offering ESG consulting and monitoring include Morgan Stanley, PWC, and Ernst & Young. The increasing power of ESG in global business is advancing ideas Friedman once called “pure and unadulterated socialism,” driven by “unwitting puppets…undermining free society.”[30]

        In the past, “big public companies were essentially in the business of maximizing cash flows for shareholders,” writes Bloomberg contributor Matt Levine. “In the new world of ESG investing, companies are expected to be moral actors.”[31]To Levine’s point, showing how far it has come from its sweatshop shrug in the 1990s, Nike is participating in the Russian lockout, too.

        A celebrity, chief executive, or elected leader today takes a great risk by ignoring this new reality. Suddenly now, it seems, so does a dictator.

ESG as a Global Weapon

The ever-growing list of nations and corporations stepping up to push Russia back marks a sea-change, especially in the energy sector. The world’s biggest oil importer—the United States—and two of the world’s biggest oil companies British Petroleum and Shell are shutting out the world’s third biggest oil producer, Russia.[32] The impact is extreme. Losing the European Union alone will cost Russia its leading buyers of its top export, adding up to more than $215 billion in lost annual Russian revenue, according to MIT-based Observatory of Economic Complexity (OEC).[33]

        Combined with the US and UK oil import bans, the effect is crippling, projected to contract the Russian economy by estimates ranging from 15 percent to more than 20 percent.[34] After his recent visit to Kyiv, US Defense Secretary Lloyd Austin declared: “We want to see Russia weakened to the degree that it can’t do the kinds of things that it has done in invading Ukraine.”[35] Addressing the European Parliament in Strasbourg, EU Commissioner Ursula von der Leyen reinforced the Defense Secretary’s comment: “Putin must pay a price, a high price, for his brutal aggression,” promising to, “hit banks that are systemically critical to the Russian financial system and Putin’s ability to wage destruction.”[36]

        This represents a first: an erstwhile unheard-of goal, conspicuously absent from responses to any earlier Russian aggression. Far beyond simply demanding Russian withdrawal, the declared goal here is damage so great it incapacitates further aggression. “Democratic nations and people are sending a united message to Putin that democracy matters, and authoritarians cannot act with impunity, and that’s powerful.”[37] Without citing ESG by name, Freedom House President Michael Abramowitz refers to it in-kind, effectively saying the sanctions are the price for violating the ideas and the principles that define the S and the G.

ESG in Practice

How to comprehensively apply ESG principles as practical rules of behavior remain in question, partly because many ESG rules remain undecided, especially at the global level. For example, how will industries like arms manufacturing and fossil fuel production fit into emerging ESG guidelines?

        Founded in 1999 by the Coalition for Environmentally Responsible Economies (CERES), the Amsterdam-based United Nations Global Reporting Initiative (GRI)–– originally focused on gathering and monitoring sustainability standards––remains the only international body governing the framework that now defines ESG. Companies that operate within this framework can become GRI signatories. After a slow start, the prestige of becoming a signatory has grown rapidly. It took until 2007 to reach just one thousand GRI reports. In 2012, GRI reports worldwide had climbed to 4,637.[38] Today, with more than ten thousand GRI reporters in one hundred different countries,[39] risk and compliance management firm Perillon reports nine out of ten publicly traded companies worldwide are adopting ESG measures, making it “one of the biggest trends in the business world today.”[40]

        Individual nations are progressing at different rates, but leading ESG specialists in the United States, like CITCO Head of Business Development Claudia Bertolino, expect new federal ESG regulations soon.[41] After launching an ESG advisory committee in 2021, the US Securities and Exchange Commission, for example, plans to start issuing ESG recommendations this year that will include new rules requiring publicly traded companies to report their ESG impact.[42]

The Emerging Cold War

“This is one of those moments in European history,” said former Finland Prime Minister Alexander Stubb, in reference to Finland asking to join NATO. “What we are looking at is the semi-permanent division of Europe into two.”[43] Among the growing questions is whether this security division in Europe will become a division of principles beyond Europe.

        Governments and corporations, especially in North America and Western Europe, are increasingly codifying ESG principles as standards of behavior. At issue is how far these rules will extend, which countries will reject or ignore them, and whether an ESG divide expands into a new Cold War.

        Referring to Russia “violating” the principle of state sovereignty in Ukraine, for example, US Department of State Spokesperson Ned Price sees an approaching divide between countries that follow or reject that principle. “Countries around the world will have to determine for themselves where they want to be when the history books are written, whether they want to be on the side of these very principles or whether they want to be on the side of naked aggression, of violence, of destruction.”[44] While rivalries and battle lines will always focus on financial gains and military advantage, the divide Price refers to could set up competing global blocs pitting countries that endorse ESG principles against countries that don’t.

        Bloomberg’s John Micklethwait and The Economist’s Adrian Wooldridge project a growing culture clash, where geopolitics move, “toward a world dominated by two or three great trading blocs: an Asian one with China at its heart and perhaps Russia as its energy supplier; an American-led bloc; and perhaps a third centered on the European Union.”[45]

        Complicating these regional projections, countries that currently lag in ESG adherence span from Russia and China to Brazil and Iran, cutting across regions, religions, and ideologies. Western Europe and North America, by contrast, continue to promote adherence, leaving many countries, like India, yet to decide where to publicly align.

        In name or in-kind, as ESG principles continue to evolve and as different countries decide on which principles to adapt, big questions remain. Among them, would governments and corporations financially attack a larger economy, like China, and incur much greater financial costs to punish for example an invasion against Taiwan.

        Regardless of the answers, the sanctions fire a global warning-shot well beyond Russia, that the risk of territorial expansion might be crippling retribution. Japanese Defense Minister Kishi Nobuo cites China by name. “China has been carefully observing the current situation of Russia’s aggression against Ukraine and they are paying particularly close attention to what kind of reactions the international community has been taking.”[46] The extended argument here is that failure to continue punishing Russia could encourage China’s regional aggression.


The threats are old but the response is new. Penalties and resolve are replacing decades of winks and shrugs. The growing consensus that governments and corporations must now move off the sidelines as a moral obligation makes the ESG principles driving that obligation an emerging global weapon.

        Evident in this counterstrike against Russia is that the payload can be calibrated to financially destroy a target found violating principles like ESG. Instead of blasting buildings and leveling cities, this weapon closes credits and blocks imports. Inflicting damage that might compare with an economic neutron bomb, this weapon lets buildings and cities stand while killing the activity inside them, leaving a hollowed economy, stripped of purchasing power and shattered as a global force.

        How far will it go and will it work? Putin says this “economic blitzkrieg” has already failed.[47] The radical turn is that this massive retaliation has even started.

[1] BP, Q1 2022 Results (BP, 2022),

[2] Shell, Q1 2022 Results (Shell, 2022),

[3] Steven Fox, “Denial of Denim: Levi’s Russia Pullback Sparks Memories of Soviet Era,” Financial Times, March 8, 2022,

[4] Antonia Zimmermann, “G7 ‘will never recognize’ redrawn borders in Ukraine,” POLITICO, May 14, 2022,

[5] Gary Peach, “The European Union is Taking Aim at Russia’s Main Source of Revenue: Oil,” NPR, May 6, 2022,

[6] Matt Levine, “ESG Goes to War,Bloomberg, March 9, 2022,

[7] Annie Lowery and Nicolas Mulder, “Can Sanctions Stop Russia?,” The Atlantic, March 10, 2022,

[8] Barbara Starr and Ellie Kaufman, “US Orders 7,000 More Troops to Europe Following Russia’s Invasion of Ukraine,” CBS, February 24, 2022,

[9] Human Rights Watch, Up in Flames: Humanitarian Law Violations and Civilian Victims in the Conflict over South Ossetia (New York: Human Rights Watch, 2009), 3, 10, 125, 131.

[10] Anton Troianovski, “Putin announces a ‘military operation’ in Ukraine as the U.N. Security Council pleads with him to pull back,” The New York Times, February 23, 2022,

[11] Liam Collins, “Russia’s invasions of Ukraine and Georgia offer clues to what Putin might be thinking now,The Conversation, January 26, 2022,

[12] Ian Traynor, et, al., “Ukraine crisis: US-Europe rifts surfacing as Putin tightens Crimea grip,The Guardian, March 4, 2014,

[13] Guy Chasen, et. al., “Worst crisis since the second world war; Germany prepares for a Russian gas embargo,Financial Times, April 20, 2022,

[14] Chasen, et. al., “Worst crisis since the second world war.

[15] Chasen, et. al., “Worst crisis since the second world war.

[16] Karen DeYoung and Michael Birnbaum, “U.S., allies plan for long-term isolation of Russia,The Washington Post, April 16, 2022,

[17] Lowery and Mulder, “Can Sanctions Stop Russia?.”

[18] Fox, “Denial of Denim.”

[19] Jeffrey Sonnenfeld, Almost 500 Companies Have Withdrawn from Russia (New Haven: Yale School of Management, 2022).

[20] “A Message from Chris Kempczinski: An Update On Our Operations in Russia,” McDonald’s, last updated May 16, 2022,

[21] Milton Friedman, “A Friedman Doctrine – The Social Responsibility of Business Is to Increase Its Profits,” New York Times, September 13, 1970, 8.

[22] PwC, Beyond compliance: Consumers and employees want business to do more on ESG. How business can close the expectations gap (PwC Consumer Intelligence Series, June 2021).

[23] McDonald’s, “A Message from Chris Kempczinski.”.

[24] United Nations, “Secretary General Launches Principals for Responsible Investment,” news release, April 27, 2006,

[25] Stephanie Strom, “A Sweetheart Becomes Suspect; Looking Behind Those Kathie Lee Label,” New York Times, June 27, 1996,

[26] Strom, “A Sweetheart Becomes Suspect.”

[27] Lisa Girion, “Nike Settles Lawsuit Over Labor Claims,” Los Angeles Times, September 13, 2003,

[28] George Kell,“The Remarkable Rise of ESG,” Forbes, July 11, 2018,

[29] Sean Collins and Kristen Sullivan, Advancing environmental, social, and governance investing: A holistic approach for investment management firms (Deloitte Insights, February 2022).

[30] Friedman, “A Friedman Doctrine.”

[31] Levine, “ESG Goes to War.”

[32] The Investopedia Team, The World’s Top Oil Producers (Investopedia, March 2022).

[33] The Observatory of Economic Complexity, Petroleum Gas in Russia (OEC, 2022).

[34] Benjamin Hilgenstock and Elina Ribakova, “Sanctions hit Russian economy, although Putin says otherwise,” Associated Press, April 23, 2022,

[35] US Department of Defense, “Secretary of State Antony J. Blinken and Secretary of Defense Lloyd J. Austin III Remarks to Traveling Press,” news release, April 25, 2022,

[36] Francesco Guarascio and John Chalmers, “EU’s Toughest Russia sanctions yet snag on worries over oil ban,” Reuters, May 4, 2022,

[37] German Lopez, “Europe Awakens,” The New York Times, March 13, 2022,

[38] GRI, GRI Sustainability Disclosure Database, 2018.

[39] GRI, We’re GRI, Global Reporting.

[40] ESG Statistics You Need to Know in 2022 (Perillon, January 2022).

[41] Alexander Kippen, Phone Interview With Claudia Bertolino, CITCO Head of Business Development, January 31, 2022.

[42] Securities and Exchange Commission, Asset Management Advisory Committee – AMAC (SEC, July 2021).

[43] Emily Rauhala, “How Putin’s brutal war in Ukraine pushed Finland toward NATO,Washington Post, April 30, 2022,

[44] Ned Price, “Department Press Briefing,” US Department of State, news release, March 21, 2022.

[45] John Micklethwait and Adrian Wooldridge, “Putin and Xi Exposed the Great Illusion of Capitalism,” Bloomberg, March 24, 2022,

[46] John Hudson, “Confronting Russia will deter China, says Japanese defense minister,” Washington Post, May 6, 2022,

[47] Anton Troianovski and Patricia Cohen, “Bleak assessments of the Russian economy clash with Putin’s rosy claims,” New York Times, April 18, 2022,

Alexander Kippen
Alexander Kippen

Alexander Kippen earned his Master of International Public Policy degree from the Paul H. Nitze School of Advanced International Studies (SAIS) at Johns Hopkins University and is a graduate of the Elliott School of International Affairs at George Washington University. He covered the Bush and Clinton administrations as a Capitol Hill and White House reporter, then became a speech and corporate ghost writer in New York where his current focus is ESG’s growing impact on global corporate culture.