In conflict-affected areas, implementing a human rights due diligence (HRDD) process as standardised in the UN Guiding Principles on Business and Human Rights produces added complexity for businesses. UN bodies, including the UN Working Group on business and human rights and the UNDP, have released guidance that recommend a heightened HRDD standard. This heightened process expands the business responsibility to respect human rights, from identifying and mitigating the human rights impact, to the impact of business operations within the context of the conflict. It puts forward that a responsible business must be able to demonstrate more than its efforts to ‘do no harm’ – it must demonstrate efforts to do no harm within the specific context. This requires businesses to consider its very presence in conflict-affected areas. It entails an expansion of stakeholders consulted, and more detailed analysis of business relationships in a challenging environment where ongoing consultation may not be possible. Moreover, it requires businesses to reconsider conflict sensitive leverage, its use of grievance mechanisms and to formulate a public policy on benchmarked, responsible exits. Accordingly, heightened HRDD is not a response to a crisis – it is a preventative mechanism.
Since October 2021, Sudan’s military forces have violently cracked down on peaceful demonstrations, killing protesters, suppressing the media, and arbitrarily arresting civil society organisation representatives. Businesses operating in Sudan risk being involved in serious human rights abuses, especially if their activities are linked with state-owned enterprises (SOE) or military-controlled companies, which play an unusually large role in the Sudanese economy – including in natural gas projects, infrastructure, textiles, and food industries. The US Government has advised businesses operating in Sudan to undertake ‘increased due diligence related to human rights issues’ and be aware of the potential reputational risks of conducting business activities with SOEs and military-controlled companies. Investors have stressed that in such a crisis situation it becomes even more important for businesses to consider any ways that they can assist and not worsen the humanitarian situation.
Myanmar is another example of a conflict-affected area characterised by ongoing gross human rights violations, alleged international crimes, numerous conflicts, and an absence of remedy, where even the most responsible investors struggled to fulfil the responsibility to respect. The military coup in February 2021 caused prominent businesses to leave the country. Several companies that chose to divest cited human rights concerns as the reason. Generally, those companies conducted some forms of human rights impact assessment, but not the heightened HRDD process outlined by the UN. Some of those companies were then subject to criticism from civil society as well as complaints and legal cases filed against them. Would a heightened HRDD process have identified additional risks and discouraged initial investment, depriving Myanmar of vital infrastructure and responsible investors? Or would it have improved business operations, legitimising investment with a public rights-based, conflict sensitive heightened HRDD process that included a clear, benchmarked exit strategy?
Immediately after the February 2021 invasion of Ukraine, hundreds of companies announced leaving Russia or suspending operations there. Many did so because of economic sanctions; others suspended operations voluntarily because of legal, reputational, or financial risks, or because of ethical and human rights considerations. There is no evidence that any of these companies had conducted proper heightened HRDD or had previously planned a responsible exit strategy despite the problematic human rights record of Russia way before the 2021 invasion. Previous illegal acts of aggression, including Russia’s invasion of Crimea, did result in divestment. However, almost two years after the start of the war a vast number of Western companies continue to operate and invest in Russia. Often divestment happens for business reasons, rather than human rights concerns. Many companies divesting from Russia continue to operate in other countries accused of human rights violations. China is accused of committing genocide against the Uyghur population, but it does not warrant waves of voluntary divestment. What is the threshold for divestment?
In these high-risk situations, an ongoing heightened HRDD process must identify and mitigate these systemic violations. The possibility of divestment should not come us a surprise. If so, responsible companies should have a public, benchmarked, rights-based exit strategy. Businesses would need to show that they have taken action to prevent, mitigate, and remedy potential negative impacts on the conflict and on human rights. Ideally, this would result in responsible companies in a high-risk area using leverage to improve the situation. Given the ongoing, heightened risk of severe human rights violations in Sudan, it is critical that companies undertake heightened HRDD. This process will assist companies to ensure their operations or business relationships do not cause or contribute to violations of human rights law and international humanitarian law, nor exacerbate the conflict even further. Similarly, other unstable contexts should also be evaluated under the same glances. Heightened due diligence is, after all, not a response to a crisis, but a preventative mechanism – it needs to be developed and put into place before a crisis or war comes, not when.
This text was written by one of our extended team members, Irene Pietropaoli.