On Doing Business in Conflict and High-Risk Areas: Heightened Human Rights Due Diligence and Leverage is the Key

On Doing Business in Conflict and High-Risk Areas: Heightened Human Rights Due Diligence and Leverage is the Key

Twenty twenty-one has been a watershed moment for the global community. The Covid-19 pandemic has put into stark relief the economic and social inequalities between individuals as well as disparities between nations. Individuals and groups worldwide have demanded from their respective governments equal rights under the law, safe working conditions, access to science and other necessities for living. And in many cases, they do so under violent and repressive circumstances.

Unfortunately, the pandemic is not the only factor companies must account for in their operations worldwide. Armed conflicts such as the 2021 coup d'état in Myanmar have tripled over the last ten years. As a result, companies must navigate complex situations to protect the viability of their business while reviewing and addressing their human rights commitments. There are no black and white answers.

On October 12, 2021, Mr. Marzuki Darusman, a keynote speaker at Sophia University’s UN Weeks Symposium, Business and Human Rights in Conflict and High-Risk Regions, spoke on this tension between the business community and human rights, specifically corporations operating in conflict-affected countries. As a focal point, he discussed the report, “Business and Human Rights in Conflict and High-Risk Countries, A look at Myanmar and Xinjiang Uyghur Autonomous Region of China”, written by FIHRRST under his direct supervision. FIHRRST’s full report is available here.

Mr. Darusman noted that ten years had passed since the Human Rights Council adopted the UNGPs. During that time, corporations continue to be beset by the need to find an acceptable response to crises arising in their areas of operation. He said that the business community is expected to quickly demonstrate their alignment with the international community, particularly as it relates to sudden and gross human rights violations by the government/military of that country. He recognised that corporations are urged to use their leverage to encourage governments that violate human rights to comply with established norms of civilised state behaviour.

In his remarks, Mr. Darusman acknowledged that States must protect human rights under international law. Yet, he identified two main overriding issues. First, he considered how non-state actors such as corporations could be assigned responsibility for human rights. He said the business community’s obligation to respect human rights is independent of State action. If an entity is deemed a “failed State”, companies must still respect human rights. They should be careful not to cause, contribute to and/or become directly involved in adverse human rights impacts. Through a conflict-sensitive lens, corporations must practice heightened human rights due diligence (HRDD). They should Through a conflict-sensitive lens, corporations must practice heightened HRDD. They should:

» Identify the causes of the conflict as well as the triggers.

» Understand the parties in the hostilities and their motives, capabilities and opportunities to inflict violence.

» Identify and anticipate how the company’s own operations, products or services impact the situation.

» Recognise the impact the conflict has on their own staff.

Second, Mr. Darusman discussed the role of leverage. If a party in its business relationship – governmental or otherwise – is implicated in human rights abuse, the company must take appropriate action to address the situation. Appropriate action could depend on its ability to use leverage (influence) to effect change. Companies must consider all factors in the relationship, including potential reputational consequences. If it has influence, the enterprise should use it; if not, it may seek ways to increase its leverage. Should the corporation be unable to do so, it should consider ending the relationship. 

In his closing remarks, Mr. Darusman recognised that divestment was not an easy choice. He noted that divestment should not be the first choice or the first step. It should come after a company has considered and engaged in all other processes, such as heightened HRDD. Nevertheless, in considering divestment, a company must understand the nature of its business relationships and the severity of the human rights abuse(s). If it deems the connection “crucial” to its business purpose, divestment may not be a viable option. The company will need the offending entity to address severe human rights violations quickly. If the offending entity does not respond favourably, the enterprise must seriously consider ending the relationship. In the meantime, it must continue to mitigate the impact of the abuse and be prepared to accept any reputational, financial or legal consequences of continuing the relationship.

         Marzuki Darusman delivered his keynote

Panellists took questions from the audience

Sharing :