Ukrainian companies and human rights during the war
Since Russia launched its invasion of Ukraine, the business and human rights (BHR) community, along with the rest of the world, has been focused on the actions of multinational corporations and their business operations with and in Russia. Even in Ukraine, the same focus has been seen at the highest political level, with the Prime Minister of Ukraine, Denys Shmyhal, denouncing Nestlé’s decision to continue operating in Russia.
Although this focus on business in Russia is important, the daily lives of Ukrainians during the war are much more dependent on Ukrainian business conduct – and the BHR community must now shift its focus to ensuring Ukrainian businesses are operating responsibly and in a way which does not increase suffering for the country’s citizens.
Although detailed research is yet to be done on the issue, some trends and challenges are already clear:
1. Human rights capacities: build in peacetime, act in wartime
Companies were not ready for armed conflict. Both at state level and at the corporate level, there is no regulation outlining responsible company conduct during hostilities’ in a situation of temporary occupation; or in other difficult circumstances arising due to Russia’s invasion. However, companies which built their human rights capacities during times of peace have demonstrated much more responsible business conduct since the war began. This has included:
- Evacuation of employees: We have seen examples of companies organising the evacuation of employees from active war zones.
- Relocation support: Some companies have provided financial support to employees for relocation, both within the country and abroad.
- Payment of salaries: This has included payment of salaries several months in advance.
- Flexible working: Employees have greatly benefited from a flexible work schedule, as well as being provided additional days of paid leave.
Although some companies have demonstrated best practice, the general trend has been companies putting financial survival first. Their fears are not unfounded – according to a study conducted a few weeks into the conflict, 79% of SMEs have completely or partially stopped their activities and 8% of companies have relocated significant parts of their business outside Ukraine. According to the Deputy Chairman of the National Bank of Ukraine, Serhiy Nikolaychuk, roughly 30% of enterprises have completely stopped activities and 45% have reduced production. But business responsibility towards workers does not end when operations are stopped or reduced – especially in conflict-affected areas. The identification, assessment and minimisation of risks to workers should be an integral part of the decision to terminate or reduce business operations.
Current examples of best practices have been demonstrated mainly by the multinational corporations and large Ukrainian companies, which have a certain margin of financial strength, or in sectors where staff retention is critical at the moment – such as IT and agriculture. However, greater guidance is needed to embed a human rights based approach to decision-making, as some sectors, for example where the level of informal employment is high (e.g. retail, construction companies), have been forced to halt operations – and have mostly passed on the negative consequences to their employees. The Ukrainian Ombudsman's office reported construction companies were stopping operations and not paying wages for work already done.
2. State obligation to protect: (de)regulation test
According to the BHR framework, active conflict is a time “...when States should require more from business than just ‘respect for human rights’ as in an ordinary setting”. And “responsible businesses increasingly seek guidance from States on how to avoid contributing to human rights harm in these difficult contexts”.
While the UN Guiding Principles on Business and Human Rights are global standards, Ukraine has not translated these into state-level regulations for companies. Instead the peacetime mantra of ‘economy goes first’ appears to have remained the guiding principle for the government and companies operating in this time of conflict.
A vivid example of this is legislative changes to the labour law which were adopted this week by the Ukrainian Parliament. Changes included the introduction of a 60-hour work week, instead of a 40-hour one. It also stated in cases where it was impossible to pay wages due to hostilities, payment of wages may be suspended until the enterprise is able to carry out its main activities. Reimbursement of wages and compensation payments to employees for the period of suspension is fully entrusted to the state which has carried out the military aggression – a move it is impossible for the Ukrainian Government to control in practice.
The Prime Minister of Ukraine said businesses will get maximum freedom from state control. President Zelensky went further and announced the complete deregulation of business and the full abolition of all inspections for business. Unfortunately, there is no push from the state to maintain human rights standards, nor for human rights risks to be identified, mitigated and addressed by Ukrainian companies.
3. Balancing safety and critical needs
The most complex challenges are faced by companies part of the critical infrastructure – because they run the risk of being used as a weapon of war. Companies in this category should balance the safety of their employees and needs of local communities who might be dependent on their business during the conflict. Such necessities include heating, water supply, waste collection, electricity transmission and distribution, food and pharmacy stores, banks and public transport. These businesses must consider the importance of people's access – due diligence in balancing the greatest possible safety of employees and ensuring access should be guaranteed. This is because in the occupied territories and a number of Ukrainian cities, the Russian military has threatened these services to break the resistance of the local population.
While Ukraine remains under attack, companies must recognise their human rights responsibilities and ensure they are taking action to support and protect their workers and residents of the territories where companies operate.
The state and municipalities are urging businesses to work to allow the economy to survive, yet there are no complementary calls for responsible business conduct. Among the first things that should be done in cooperation by the state and municipal authorities, companies and business associations, BHR experts, CSOs, human rights defenders and trade unions:
- call on companies to make human rights based business decisions and provide them with recommendations on responsible business conduct during the war with explanation of key human rights risks;
- monitor gaps in the provision of essential goods and services, and communicate with companies to find ways to provide them (for instance, food stores, pharmacies etc.);
- in situations of deregulation of business and liberalisation of labour legislation, provide additional effective remedies to protect against business-related human rights abuse;
- ensure state support (aid) is provided only to companies undertaking responsible business conduct during conflict;
- the state to communicate closely with civil society organisations, human rights defenders and trade unions to respond promptly on cases of human rights abuses related to business conduct;
- create channels/ platforms to coordinate efforts by companies, state and municipal authorities, CSOs, human rights defenders and trade unions to ensure responsible business conduct during the conflict (identify human rights risks, share good practices, signal promptly of emerging, collect toolkit and guidelines, combine efforts to solve current problems);
- develop regulation on corporate responsibility to respect human rights in times of conflict by state-owned and municipally-owned companies with special focus on companies providing critical infrastructure.
Сorporate respect for human rights is imperative in peacetime. In times of conflict, it becomes vital. The companies’ strategy to survive should be human rights based. The desire to maximise profits should not work in a critical situation. Humaneness should.
Olena Uvarova, PhD, Associate Professor, and since 2018 Chair of the International Lab on Business and Human Rights at Yaroslav Mudryi National Law University (Kharkiv, Ukraine). She is the national and international consultant in the UN Women in Ukraine, Council of Europe, OSCE, USAID projects. and co-founded the CEE BHR Association.