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14 Feb 2024

Ella Skybenko, BHRRC

Two years of Russian aggression: Decisive action by Western states urgently needed to ensure responsible business conduct

Sandor Szmutko, Shutterstock

It’s been almost two years since the start of Russia’s war of aggression against Ukraine, yet many companies continue to play a critical role in enabling the aggression that brings endless human suffering. The Kyiv School of Economics reports that over 800 international companies have withdrawn or exited completely from Russia. However, over 1,615 companies are still conducting business in the country. Many of those justify their continued presence by pointing to potential human rights impacts of leaving, including disruptions in access to essential goods and employee welfare. Oddly, they do so without undertaking the heightened human rights due diligence (hHRDD) necessary to support these claims. A study by B4Ukraine members, co-authored by BHRRC, assessed some of the most common justifications used by companies, drawing on engagement with over 120 companies, and concluded that despite challenges, a responsible exit from Russia is possible. Some companies showed this in practice, including Clifford Chance, McDonald’s, Michelin and Heineken.

Still, many international companies are helping Russia wage the war either through operations in the country or by supplying products critical for the Russian war machine. Although tireless efforts of civil society organisations to block access to resources enabling the aggression have brought some tangible results, a more sustainable impact can only be achieved through decisive intervention from governments.

In response to Russia’s invasion, the US, the EU and other Western countries have imposed unprecedented sanctions as they seek to undermine Russia’s ability to continue its aggression. This is the first crucial step that needs to be enhanced by further guidelines and enforcement mechanisms. But businesses must do more than simply comply with sanctions to ensure human rights protection in conflict-affected areas. They need clear guidance from home governments on what they must do to meet their human rights obligations. This hasn’t been the case so far. When an EU Member State conditions its approval of the next EU sanctions package on Russia on removal of its company from the Ukraine’s list of international war sponsors, it sends the wrong signal. When three EU member states (Greece, Hungary and Austria) do this, it can have disastrous consequences. It becomes even more alarming when you learn that one of the companies the Ukrainian Government had to take off the list is Austrian Raiffeisen Bank, which in addition to continuing operations in the aggressor state, works with the sanctioned state-owned Sberbank, has recognised the occupied Donetsk and Luhansk territories through its representative office in Russia, invests heavily in Russian oil and gas assets, and grants loan deferrals to Russian soldiers.

Austria is not the only EU country reluctant to end commercial relations with Russia. For instance, the EU purchased €13.7 billion worth of critical raw materials from Russia following the invasion of Ukraine to July 2023. Even though the EU imports fund Russia's war economy, these minerals are not banned because they are considered critical for the EU. It is impossible to see how this practice can align with the EU’s role as “a leader in the universal promotion and protection of human rights at multilateral level”. According to data from the German statistics office, in the first 3 months of 2023, Germany’s exports to Russia have dropped by more than 47%, but Germany’s exports to Kyrgyzstan over the same period of time have jumped by nearly 1,000%. Similarly, German exports to Georgia rose by 92%, those to Kazakhstan - 136%, to Armenia - 172% and to Tajikistan - 154%; information which fuels concerns re-exportation of products from neighbouring countries is helping Russia circumvent sanctions.

Despite supply restrictions, Russia continues to import large amounts of goods manufactured by Western companies needed for military production. In March 2023, we approached 23 companies mentioned in Enabling war crimes? Western-made components in Russia's war against Ukraine. We asked companies to respond to allegations their products were found in weapons used in suspected war crimes committed by the Russian army in Ukraine. We received only nine responses. The companies said they complied with applicable laws and regulations, did not sell products to Russia and did not know how they ended up in Russian weapons. Still, their products support an army accused of committing war crimes in Ukraine. At the time of writing, more than 104,000 war crimes committed by the Russian army in Ukraine have been documented by the Prosecutor General’s Office of Ukraine since the start of the invasion. Numerous investigations conducted by civil society organisations and journalists over the last year show that Russia is still receiving Western products critical for its military production.

Decisive action by governments is urgently needed if we are to see more responsible conduct by companies. Western governments must look beyond sanctions compliance and issue guidance on expected standard of corporate conduct in conflict-affected areas. This can be further enhanced by introducing deterrent measures, including financial penalties or restriction of access to public procurement for companies continuing operations in the aggressor state without undertaking heightened human rights due diligence. Governments should also ensure they address and prevent Russia’s efforts to circumvent export controls. At the very least, they should mandate hHRDD in supply chains to establish the intermediaries, customers, and end-users of the products they export. But it’s vital they act swiftly.

By Ella Skybenko Eastern Europe/Central Asia Senior Researcher & Representative, BHRRC

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Bennett Freeman, Associate Fellow at Chatham House and Steering Committee member of B4Ukraine 20 Feb 2023


Not all parties are equal: understanding the responsibility for reparations in conflict-affected areas

Tara Van Ho, co-director, Essex Business & Human Rights Project 20 Feb 2023

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