Threat of Annexation should Spur Corporate Human Rights Due Diligence Across Occupied Territories
With a newly formed Israeli government that has restated its intention to annex parts of the West Bank, issues surrounding the prolonged occupation of Palestinian territory are once again in the headlines. European and other States have reportedly begun strategizing on responses to what would constitute violations of international law, including prohibitions on the acquisition of territory through threat or use of force under the Charter of the United Nations. While States consider their options, businesses should also take heed that their operations in and relationships to the occupied Palestinian territory (OPT) and Israel, the Occupying Power, will come under greater scrutiny and expose them to further legal, financial, and reputational risks.
As in all other contexts, businesses can play a positive role in the development of an occupied territory and the overall well-being of its population. They also, however, may feed into and profit from an unjust administration of the territory, including via structures established and maintained by an Occupying Power that perpetuate oppression, systemic discrimination, and the unlawful exploitation of natural resources. These latter policies may aim at permanently transforming an occupied territory, including physically, economically, and demographically, in contravention of international humanitarian and human rights law.
For example, physical transformations - which seek to sow the occupied territory into that of the occupier through highways, appended residential settlements, or intertwined infrastructure - create opportunities for businesses in the extractives and construction sectors to profit from a range of illicit activities. Businesses can also contribute to and profit from an economy transformed and controlled as a captive market by the Occupying Power, as well as from a context which facilitates citizens of the Occupying Power to work and live in the occupied territory, in contravention to prohibitions against the transfer of populations.
Irrespective of the ultimate aim of an Occupying Power, situations of occupation, like other conflict-affected areas, present complex environments where businesses are at risk of causing, contributing, or being linked to gross human rights impacts and violations of international humanitarian law. Accordingly, the UN Working Group on Business and Human Rights has underscored the need for ongoing and enhanced human rights due diligence by businesses in situations of occupation, and for “home” States to protect and ensure respect for human rights in line with their obligations under international law. This reflects State obligations, including extraterritorial, and business responsibilities more generally. As affirmed by the UN Committee on Economic, Social and Cultural rights, “The obligation to protect entails a positive duty to adopt a legal framework requiring business entities to exercise human rights due diligence in order to identify, prevent and mitigate the risks of violations of Covenant rights, to avoid such rights being abused, and to account for the negative impacts caused or contributed to by their decisions and operations and those of entities they control on the enjoyment of Covenant rights.” 
In practice, what is often seen instead are incoherent and politicized third-State policies that send mixed messages to businesses, and insufficient, inconsistent, or even absent human rights due diligence processes by businesses themselves.
For example, in relation to a database report published by the United Nations in February 2020 which lists business enterprises involved in activities linked to unlawful Israeli settlements in the OPT, U.S. Secretary of State Michael Pompeo stated his outrage over the report and underscored “support for U.S. companies referenced.” Importantly, the UN report neither called for sanctions nor can the report be considered a sanction; rather, an earlier update underscored State obligations under the UN Guiding Principles on Business and Human Rights. It is also worth noting that, following Russia’s annexation of Crimea in 2014 and continuing until today, the United States prohibits “U.S. business, trade, or investment in occupied Crimea,” and has issued sectoral sanctions related to particular Russian entities.
Member States of the European Union have similarly manifested disparate policies to businesses domiciled in their territory - issuing guidance that notes the non-recognition of Israeli settlements in the OPT, and issuing restrictive measures in line with their policy of non-recognition in the case of Crimea. These examples highlight important structural differences in how States responded to the case of Crimea and other situations of occupation and annexation - and how these different responses have served as cues for businesses.
This has resulted in businesses often failing to implement enhanced due diligence processes that are consistent and fully respect human rights. While this was notoriously highlighted in the case of AirBnb’s quickly abandoned “Framework for Evaluating Listings in Disputed Areas,” business enterprises more regularly demonstrate a misunderstanding of their responsibilities and the specific adverse impacts of their activities. This has been frequently demonstrated by businesses noting their employment of protected persons, while disregarding the broader illegal environment they may contribute to and profit from that severely impacts these same individuals. In certain contexts, mitigation of adverse impacts may be impossible; rather than provide pretexts of ‘positive impacts’, businesses should terminate their operations.
While such red lines may not be apparent in all situations of occupation, what is clear is that both States and businesses must do more to fulfill their respective obligation to protect and responsibility to respect the human rights of protected persons in occupied territory.
For more information, see Al-Haq and Global Legal Action Network’s report “Business and Human Rights in Occupied Territory: Guidance for Upholding Human Rights”
General comment No. 24 (2017) on State obligations under the International Covenant on Economic, Social and Cultural Rights in the context of business activities, 10 August 2017, paras. 25 & 50.