More than four years have passed since Russia illegally invaded Ukraine, and a coalition of Western and allied countries introduced the first major sanctions in response. Despite the volume and scope of these measures, the pressure campaign has largely failed to achieve its primary goal: imposing debilitating economic hardship on Moscow and constraining its warfighting capabilities.
At the same time, the expanding and increasingly complex sanctions regime continues to affect legitimate businesses across several industries, from banking, energy, and shipping to consumer goods, retail, technology, and aviation services. European enterprises such as Raiffeisen Bank and Siemens Energy, technology firms like SAP and Cloudfare, and even regional players like Aerospace Technical Services (ATS) have all faced operational, compliance, or reputational challenges linked to the sanctions environment. These structural gaps between policy intent and practical application have not yet been meaningfully addressed by amendments to the existing framework.
In April, the European Union adopted its 20th sanctions package against Russia, introducing further amendments to the framework. Combined with coordination between the EU, the United Kingdom, the United States, Canada, Australia, Japan, and other allied countries, many of which impose partial trade bans, export controls, and banking restrictions, the sanctions regime against Russia has become one of the largest in modern history.
The private sector has sustained significant losses as a direct result of the compliance burden created by this regime. Importantly, this damage has not been confined to the energy, shipping, and financial sectors, which remain at the top of policymakers' agenda. Due to forced exits from Russia, asset writedowns, supply chain disruption, and reputational risk, Western and international companies doing business with the West have lost billions of euros.
McDonald's lost more than a billion dollars when it exited one of its largest international markets, while France's Danone was unable to recover its assets before its Russian subsidiary was seized by the Russian government. Coca-Cola, PepsiCo, and Starbucks suspended operations. Sweden's IKEA was hit because Russia had served both as a consumer market and a sourcing base. Large consumer brands such as Disney, Spotify, Apple, Warner Bros., and Netflix also exited the market. None of these firms sells products or services that can meaningfully be used in Russia's war effort.
As Western firms withdrew en masse, whether voluntarily or under political and public pressure, a new category of reputational risk emerged for companies that continued operating in Russia or were merely suspected of maintaining commercial links there. Maersk received criticism for continuing to transport goods to Russia, even though in several cases the shipments involved legally permitted categories not covered by sanctions. Consumer firms Auchan and Unilever faced reputational damage and scrutiny as a result of public perception and disputed claims rather than proven illegal conduct. German technology firm SAP experienced similar pressure and was accused of sanctions evasion because some Russian clients still had access to certain software environments.
A more recent case involves Aerospace Technical Services, an aviation parts and services company with its head office in Amman, Jordan, that operates within the supply chain for Western-made aircraft parts and components. ATS has faced a disinformation campaign attempting to publicly tarnish its brand name. Despite ATS complying with all relevant sanctions frameworks, unscrupulous competitors forged documents and circulated them in an attempt to falsely incriminate ATS. The case illustrates how companies operating in sensitive sectors can face significant reputational exposure even when they adhere carefully to all lawful requirements.
Notwithstanding the sheer number of sanctions, participating countries and international authorities involved, Russia has responded with considerable flexibility. It has even managed to register positive growth rates since the war began. After years of drafting, expanding, and refining sanctions, some cracks have begun to appear in the Russian economy, according to EU decision-makers. Even so, Russia's economy remains far from collapse, while its war in Ukraine continues.
In the meantime, the vast sanctions ecosystem created by the EU and its partners has produced a business climate in which legitimate commercial activity, or even alleged ties to Russia, can be enough to inflict serious reputational damage on a company. In many of the cases above, including shipping and retail, the companies in question did not necessarily fall within the scope of sanctions. Still, they found themselves forced either to exit the Russian market or significantly reduce their activities.
In genuinely sensitive sectors, such as aviation and propulsion, cloud services, and industrial software, the risk of dual use is real. Yet precisely because of the nature of these sectors, firms like Aerospace Technical Services and SAP are disproportionately exposed to reputational concerns linked to Russia sanctions, even when they comply with the legal framework.
These reputational spillover effects continue to unfairly damage companies' standing and undermine their profit margins in an already difficult global economic climate. Despite several rounds of revision, the structural gaps affecting legitimate businesses have not been adequately addressed. The next round of sanctions reviews in the EU and elsewhere in the West should take this problem seriously if policymakers want to avoid undermining the competitiveness of their own companies and partner enterprises.
