Opinion – Responsible Business Conduct in Wartime

Russia’s invasion of Ukraine led not only to an exodus of civilians, but also to the departure and withdrawal of hundreds of companies fearing the potential financial, reputational, and legal consequences of remaining active in a war zone. Other companies stayed, citing a number of valid or less convincing reasons. While the effects of leaving and staying are still felt, one thing was clear from the start: most companies were caught off guard. This unpreparedness is worrying. In conflict-affected areas, business is never neutral, and doing business—including staying or leaving decisions—always affects the dynamics of the conflict. They affect the everyday lives of ordinary people caught up in the war. In these contexts, the risk of companies becoming involved in serious human rights violations is therefore exceptionally high and acute.

Since Russia invaded Ukraine, responsible business conduct in conflict situations has received particular attention. However, the actual and potential adverse effects of doing business in conflict situations are not new. Corporate involvement in conflicts from Colombia to Syria is well documented in civil society research.

In some cases, corporate involvement in conflicts has led to prosecutions of individuals or companies for complicity in gross human rights violations or international humanitarian law. Some of the first economic and human rights lawsuits against those responsible dated back to the gruesome business activities of some companies during World War II. Currently, the former CEO and chairman of the Lundin oil company is on trial for aiding and abetting war crimes during Sudan’s civil war; French cement company Lafarge was recently accused of contributing to crimes against humanity during the war in Syria. These examples show the risks of corporate involvement in conflicts most clearly.

However, many other companies are at high risk of contributing to or aggravating conflicts and negatively impacting human rights in conflict-affected areas. Examples are companies that import minerals from conflict regions in DR Congo, companies that supply materials to build houses in the illegal settlements in the occupied Palestinian territories, or companies that supply arms to Saudi Arabia. In order to avoid and mitigate risks like these, companies must exercise extra caution and apply “enhanced due diligence” in all their activities and business dealings in conflict-affected areas.

Acting responsibly in conflict zones requires increased diligence on the part of companies, as their behavior affects the human dignity of rights holders and the dynamics of the conflict. The UN Guiding Principles (UNGP) recognize in Principle 7 that “…the risk of gross human rights violations is increased in conflict zones”. They call on States to “… help ensure that business entities operating in these contexts do not become involved in such abuses”.

Businesses should therefore be more conscientious and diligent in respecting human rights in their operations in conflict zones by applying enhanced human rights due diligence. The UNGPs thus set out clear and direct behavioral expectations for home states and companies to ensure they comply with international human rights and international humanitarian law in conflict zones. Radu Mares has convincingly argued that “contrary to its title, Principle 7 is about (high risk of) gross abuses requiring exceptional action on the part of home states, and not strictly conflict-affected areas” (p. 38 ).

The UN Working Group on Business and Human Rights clarified in its October 2020 report “Business, Human Rights and Conflict-Affected Regions: Towards Enhanced Action” that “in conflict situations, complexity is increased by the operational context, where government structures are weak or unavailable; Business relationships, as some actors may be active conflict participants, ex-combatants or perpetrators; and the seriousness of potential human rights violations” (paragraph 41). UNDP published in June 2022 detailed guidance on enhanced human rights due diligence for companies in conflict-affected contexts, which also includes annexes with practical questions, capacity assessment and a checklist for companies doing business in conflict-affected areas. The Guide defines conflict-affected zones where heightened human rights due diligence is required as situations of “conventional armed conflict”, “military occupation”, “mass atrocity” and “widespread violence” (p. 53). It uses the useful concept of “red flags” which should encourage companies to perform enhanced due diligence. These include: Reports on violations of international human rights and international humanitarian law as well as risks in supply chains.

Enhanced human rights due diligence encourages companies to identify actual and potential risks to human rights, society and the environment, and their existing and potential contribution to the conflict. More specifically, companies operating in conflict-affected areas are expected to identify hazards, manage them in their operations, measure their impact, take countermeasures and ensure that they themselves are conflict-sensitive (i.e. not creating new ones or contributing to existing tensions). and grievances). States and companies are also expected to provide legal remedies and compensation for rights holders.

The same week after the Russian invasion of Ukraine, the European Commission published its long-awaited proposal for binding legislation on human rights due diligence. Once in force that Corporate Sustainability Due Diligence Policy will require companies to identify and mitigate human rights risks related to their global operations and business relationships. Although the current draft represents, in theory, a significant and significant step forward in improving responsible business conduct and corporate accountability, it has serious flaws and departs from the UNGPs and the OECD Guidelines on many fundamental points. A critical gap is the lack of any reference to conflict areas and what the heightened risks in these areas should mean for corporate due diligence efforts.

Currently, the Council of the European Union and the European Parliament are discussing the text of the draft directive and drafting their positions, with trilateral negotiations expected to start in summer 2023. EU politicians now have a chance to ensure that the directive truly lives up to its stated aims and aligns closely with the UN Guiding Principles and the OECD guidelines, including the requirements of these standards for companies operating in conflict zones.

First of all, the directive should point out that in situations of armed conflict not only human rights and environmental law but also international humanitarian law must be respected. Second, the policy should require all companies – regardless of industry or size – with activities or upstream or downstream business relationships in conflict-affected or high-risk areas to undertake enhanced, conflict-sensitive due diligence with reference to existing guidelines developed by the UN Working Group on Business and Human Rights and the International Red Cross Committee.

The Guiding Principles were drafted as the world became aware of corporate involvement in violent conflicts in Colombia, the Democratic Republic of the Congo, Liberia and Sierra Leone. The current war in Ukraine has shown that most companies still have a long way to go to ensure their due diligence efforts, particularly in these contexts, adequately consider these impacts. In most cases, they need to go beyond simply complying with imposed sanctions and design and implement their enhanced due diligence policy for doing business in conflict-affected areas. It is now up to EU member states to take responsibility by ensuring that mandatory due diligence legislation is effective in areas of the world where the risks of human rights abuses are greatest, where the scale of corporate abuses is highest and where people live are most vulnerable.

In August 2022, a group of 51 civil society organizations and academics working on business, conflict and human rights, including PAX and International Alert, released a joint statement calling on EU leaders to adopt specific provisions on responsible business conduct in Include conflict-affected areas in the Corporate Sustainability Due Diligence Policy. The joint declaration with further recommendations can be found here.

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