26 July 2023

Since the start of Russia’s full-scale invasion of Ukraine, B4Ukraine - a global coalition of civil society organisations united to block the financial and material resources fuelling Russia’s war - has engaged with over 120 multinational companies to call for a responsible business exit from Russia and ask them to meet their obligations under the international business and human rights framework...

Multinationals doing business in Russia may be compliant with sanctions, but they are failing to meet their obligations to protect human rights.

Despite Russia’s annexation of Crimea in 2014, the majority of companies we have engaged were unprepared to handle the heightened risk of operating in the Russian Federation. They were largely unaware of their “obligations'' under the international humanitarian, human rights, and business and human rights frameworks, as well as their potential contributions to the suffering of the Ukrainian people. This indicates that companies are not observing heightened human rights due diligence and are not applying a conflict-sensitive approach...

Companies cite three main reasons to remain. The most common justification for continuing operations in Russia is the ‘essentiality argument’. Notably, companies in the pharmaceutical, fast moving consumer goods (FMCG),  and food and beverage sectors, which make up a significant part of those still operating in Russia, exploit the essentiality argument to justify their position. Companies who do not have an option of using this argument as their operations cannot even remotely be considered essential, opt for the ‘employee obligations’ and other arguments...

Recommendations:

State action is needed. The G7 and allied countries urgently need to address the role that unsanctioned business sectors are playing in Russia today. They should look beyond sanctions compliance to better define and regulate the expected standard of corporate conduct, encourage responsible disengagement from Russia, and promote ethical business practices that align with internationally accepted and endorsed human rights principles. This includes, but is not limited to, issuing business advisories, further reinforcement and implementation of existing regulations, and additional guidance and regulations. Further legislation with regards to business operations in aggressor states and obligatory implementation of heightened human rights due diligence must be introduced.

Wider transparency and accountability must be imposed to compel companies to implement heightened human rights due diligence when operating in conflictaffected and high-risk areas (CAHRA), as well as in overall operations. Mechanisms of assessment and monitoring of business activities in CAHRA (and particularly aggressor states) must be implemented, which includes regular and mandatory reporting.

Governments are encouraged to introduce deterrent measures such as financial penalties, restriction of access to public procurement opportunities, exclusion from state-owned investment funds and greater disclosure for companies continuing to operate in aggressor states...