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2022年5月24日

Russian invasion of Ukraine: Analysis of companies' human rights due diligence

BHRRC

Global landscape: International/Government sanctions and company actions

Russia’s unprovoked invasion of Ukraine on 24 February has prompted many governments to implement a set of coordinated sanctions covering finance, exports, imports, travel and individuals, including those more used to this approach, like the European and American governments. The response from Asian governments has been more varied. Singapore, which acts as Asia’s financial hub, made an unprecedented decision to impose targeted financial sanctions on Russia, joining the three other Asian countries, namely Japan, South Korea, and Taiwan.

Three months into the invasion, Russia continues its aggressive military assault on Ukraine, prompting concerns over the impact of the sanctions. Designed to target a wide range of sectors key to the Russian economy, sanctions sought to stop the military offensive and de-escalate the invasion. Instead, they have triggered rapid responses from companies operating in Russia and/or Ukraine. As described in an opinion piece published on 18 March, several factors motivated companies to react, including the legally and financially hostile environment created by international sanctions, which was impossible for companies to navigate. Since 24 February, a plethora of companies have announced plans to disinvest or make changes to their business model in Russia. However only a very limited number of companies appear to have taken their human rights obligations into account and shown leadership in ensuring their actions avoid unreasonable harm to workers and communities.

https://www.shutterstock.com/es/image-photo/downing-street-london-uk-202202-ukrainian-2135028235

Sandor Szmutko, Shutterstock

Heightened human rights due diligence: Why is it important?

The risks facing companies which might seek to remain operating in Russia are significant, and this has pressured more companies to make an early exit from Russia, considered less costly. However, little attention has been paid to the heightened human rights due diligence companies are expected to conduct irrespective of whether they decide to leave or stay in Russia or Ukraine. This is extremely concerning.

The international standards for companies are clear. As set out in the United Nations Guiding Principles on Business and Human Rights (UNGPs), in situations of armed conflict business should conduct enhanced human rights due diligence to identify, prevent and mitigate heightened risks and adopt a conflict-sensitive approach. Companies need to do so because of the severe risk of gross human rights abuses and the risk of exacerbating conflict-drivers, in addition to the need to abide by international humanitarian law.

It is crucial for businesses to understand they are not neutral actors even when they do not take sides in a conflict such as Russia’s invasion of Ukraine.

Seneline, Shutterstock

Their operations will have an impact on conflict dynamics whether they stay or choose to exit. French cement company Lafarge maintained its business activities in Syria during the civil war and is currently charged with complicity in international crimes. The company is accused of buying raw material from diverse jihadist groups and negotiating safe passage for its workers and products in exchange for compensations amounting to €13million. In another example, Norway’s Telenor Group – which had received accolades for its due diligence when it entered Myanmar – faced fierce criticism for making a hasty exit from the country following the attempted coup in February 2021. Its decision to sell its operations to M1 Group, a telecoms conglomerate accused of operating without appropriate human rights safeguards, has been widely criticised for potentially strengthening the illegitimate military regime.

UN business standards stress the human rights due diligence companies are expected to conduct on an ongoing basis in peacetime must be complemented by a conflict-sensitive approach when they operate in conflict-affected settings. This approach involves a conflict analysis that will help companies identify additional, conflict-related risks and human rights impacts caused by identified risks in their operations and supply chains. This should include both the underlying drivers of conflict, as well as potential flash-points or triggers of violence, alongside human rights abuse which must be avoided. There are many methodologies on conflict analysis for companies to choose from, but their approach should be ongoing, as conflict dynamics are constantly shifting. Assessing the severity of the human rights risks from a conflict sensitivity lens and developing a clear action plan to mitigate or eliminate them will inform human rights due diligence practice at different stages. It is also imperative to engage stakeholders in due diligence processes, prioritising those whose rights are most likely to be affected, including employees and community members.

Under the forthcoming EU Corporate Sustainability Due Diligence Directive, EU-operating companies will soon be legally required to conduct due diligence on adverse human rights and environmental impacts in which they are implicated through their operations and business relationships. Even though this includes contexts of armed conflict, the proposal does not explicitly mention conflict or list in its annex the international humanitarian law conventions which already apply to all actors in conflict-affected contexts including business). As Johannes Blakenbach, our EU Senior Researcher, said, “The current crisis shows the EU Commission’s legislative proposal still needs to be substantively strengthened. For instance, the draft does not provide any explicit direction on a conflict-sensitive approach which should complement and augment companies’ human rights due diligence. This should change. Also, the broader gaps in the current proposal, such as weak provisions on safe stakeholder engagement, or mere one-off due diligence for financial actors, limit the law’s potential impact in conflict, where risks may evolve quickly, and worker and community feedback is all the more vital.”

Company responses: Key findings

At a glance

Business & Human Rights Resource Centre invited 330 companies operating or investing in Ukraine and/or Russia to respond to questions about the heightened human rights due diligence they are expected to conduct in situations of armed conflict.

330

companies

asked about heightened due diligence

96

companies

responded to our outreach

50

companies

sent general responses expressing their concerns

34

companies

provided full or partial answers to our questions

At the time of writing, we have heard back from 96 companies, 29% of those approached. Fifty companies sent general responses expressing deep concerns, reaffirming their commitment to respect human rights and sharing information about their donations in support of Ukraine. Twelve companies promised to submit a response but have yet to do so. Just 34 companies provided full or partial responses to our survey questions.

Companies invited to respond

The technology sector has been the most responsive so far. Twenty tech companies got back to us, providing nine general comments, seven partial responses to the questionnaire and one full response. The remaining three companies are still working on their responses. Three companies from the oil and gas sector provided full responses to the questionnaire, while two provided partial responses and six provided general comments. Four companies from the food and beverage sector provided general comments and two provided full responses to our questionnaire.

Analysing the geographical distribution of responses, we found companies headquartered in USA were the most likely to respond - 24, followed by companies headquartered in Germany with 13 responses and nine responses from Japanese companies. These include full and partial responses as well as general comments.

The 34 companies which provided full or partial responses to our questions include Accor, BASF, Booking Holdings, Bosch, Carlsberg, CCC, Chevron, Clifford Chance, Credit Suisse, Engie, Eni, Ericsson, Fortum, HeidelbergCement, Hewlett Packard Enterprise, Henkel, Hitachi, illycaffè, LG Electronics, Marks & Spencer, Michelin, Novartis, Novo Nordisk, Pirelli, Raiffeisen Bank, SAP, Shell, Siemens, Twitter, Uber, Unilever, Uniper, Vitol and Wintershall Dea.

What have companies reported?

Most companies that responded said the safety and well-being of their employees is their top priority and described the immediate steps they had taken to ensure this. Yet many companies did not provide any relevant information in response to our questions about their heightened human rights due diligence. While some companies did mention human rights due diligence processes they have in place, including Engie and Fortum, they did not mention any concrete measures taken to enhance existing human rights due diligence in response to the Russian invasion. And even though no company referenced undertaking a conflict analysis, some said they had set up mechanisms to identify, prevent and mitigate heightened risks caused by the conflict in Ukraine. There are some useful lessons to be learned from the better practice of a minority of companies:

Twitter said it had set up a cross-functional team which includes its safety and integrity units and human rights team. This was done prior to the invasion, when the first signs of a potential crisis appeared. The team has since been closely monitoring the situation in Ukraine. According to Twitter: “This team is assessing and responding to risks associated with the conflict and developing a range of mitigation strategies…include identifying and disrupting attempts to amplify false and misleading information...”


Uber reports establishing a steering committee several weeks prior to the invasion to identify risks, take mitigating action, and plan for potential further escalation. According to Uber: “This steering committee meets on at least a daily basis, but also more frequently as necessary. Among the first steps, Uber began regular outreach and consultation with employees, business partners, and both local and national government officials in Ukraine to better understand the fast-evolving situation on the ground in Ukraine and the priority needs of our stakeholders. Uber also… heightened its cyberthreat monitoring to further ensure the protection of users’ data and privacy… [In Russia] Uber holds a minority ownership stake in a joint venture that operates a ride-hailing platform in the country. On 28 February 2022, Uber announced that… the company is pursuing an accelerated divestment of that minority ownership stake…”

Carlsberg has gathered a cross-functional emergency response team which it says is continuously assessing the most pressing issues and “defining appropriate actions to address them, considering their overall impact, and prioritising people's safety". Additionally, the company is “engaging with organisations working on the ground to learn about their assessment of needs and provide support through formal structures with expertise in humanitarian aid, migration, and conflict.”


Ericsson has integrated human rights due diligence into its sales process through the Sensitive Business Framework. This, it says, is to assess, prevent, and mitigate potential misuse of Ericsson’s technology. According to the company: “The Sensitive Business Framework evaluates sales opportunities from a human rights risk perspective. Risks are identified based on the parameters of the Sensitive Business risk methodology (country, customer, product, and purpose). As a result of these due diligence measures, Ericsson decides how to proceed with the opportunity and how to mitigate identified risks. The decision can be to approve, with or without conditions, or to reject the sales engagement.”

Similar cross-functional teams and task forces have been set up by seven companies: Henkel, Hitachi, Novartis, Novo Nordisk, Pirelli, Siemens and Wintershall Dea.

Four companies provided us with updates about further actions taken in response to the invasion after submitting their initial response. Henkel sent an update which outlined the company’s decision to exit business activities in Russia. AbbVie decided to donate all profits from Russia to support direct humanitarian relief efforts in Ukraine. Marubeni said the company will not engage in any new Russia-related business and will negotiate terminations of existing transactions wherever possible. SAP announced further steps toward an orderly exit from Russia that included a focus on responsibly managing the impact on its employees in the country.

The remaining companies, however, simply listed the human rights policies, guidelines and standards they have in place without indicating any specific, concrete measures they are taking in response to the Russian invasion of Ukraine.

Absence of conflict-sensitive human rights due diligence

Human rights due diligence is an ongoing process which enables companies to periodically evaluate new risks as they emerge. Establishing multi-disciplinary teams prior to, or as soon as a conflict situation arises, to deliver more comprehensive due diligence on conflict risks and harms may help companies avoid due diligence policies going rapidly out of date as conflict dynamics shift. According to the ICRC, effective human rights due diligence in complex environments “requires early identification of potential security challenges and their proactive management, in order to prevent impacts such as use of force against community members.” The past few months have revealed companies operating in the region cannot have been undertaking sufficient human rights due diligence in the years and months prior to the invasion of Ukraine.

The concentration of approx. 100,000 Russian troops alongside tanks and weapons on the border with Ukraine in early December 2021 was a clear security risk which should have been considered by all companies operating in Ukraine or Russia. Yet most of the teams and task forces mentioned above were set up either shortly before or after the full-scale invasion on 24 February 2022. This raises even more questions given this is not the first time Russia has attacked Ukraine. Ukraine has been at war with Russia for the last eight years since Russia annexed the Crimean Peninsula in 2014 before invading and partially occupying the Luhansk and Dontesk regions in Eastern Ukraine.

Conclusion

Companies have taken unprecedented action and public announcements in response to both the invasion and the imposition of sanctions on Russia. This response is welcome. But only a small number of companies appear to be taking their obligations under international human rights law and humanitarian law seriously. The conflict may not end quickly.

It is now imperative that companies operating in Russia and Ukraine, and their investors, institute robust human rights due diligence to identify and mitigate the risks they may be creating for workers and communities in the precarious and dangerous conditions of war, and to ensure they are not contributing to the underlying drivers of conflict or triggers for violent episodes.

Without this effort, companies and investors may abuse workers and communities, and are leaving themselves exposed to significant legal and reputational risk.

Bringing together multi-disciplinary teams from across the functions of a company and its supply chain is an important first step to help identify salient risks created by a company’s business model and responses to the invasion, and to create and oversee the implementation of an action plan to eliminate or mitigate these risks and avoid abuse. Companies need to explicitly demonstrate they have incorporated a conflict analysis into their human rights due diligence – which none have so far disclosed.

Recommendations for investors and companies

Investors should:

  • Examine whether investee companies are directly linked and/or have their value chain exposed to individuals or entities that may be causing, contributing to or directly linked to human rights abuses in Ukraine.
  • Verify whether companies in their portfolios have undertaken heightened human rights due diligence, regardless of whether they decide to stay or leave Russia and/or Ukraine.
  • Engage investee companies, should they decide to stay or exit Russia and/or Ukraine, to remediate adverse impacts caused by their decision in accordance with the principles and standards set forth in the UNGPs.

Companies should:

  • Immediately map their business activities relationships and/or investments across their value chain in Russia and/or Ukraine to identify and assess human rights risks and harms to which they may cause, contribute, or be linked with.
  • Conduct heightened human rights due diligence whether the company chooses to stay or exit Russia and/or Ukraine; ensure the integration of a conflict analysis into the process and act upon the findings; including prevention or remedy for human rights harms in accordance with the principles and standards set forth in the UNGPs.
  • Regularly report on their due diligence efforts to prevent and mitigate heightened risks caused by the invasion.

Further reading

Big Issue: Russian invasion of Ukraine

Keep track of the latest news and resources on business and human rights during the Russian invasion of Ukraine

Operating in conflict-affected contexts: An introduction to good practice

How should responsible business assess the situation in Ukraine? An introductory guide to good practices for companies operating in conflict-affected contexts.

Ukraine: Responsible business conduct in a war of aggression

Phil Bloomer & Ella Skybenko set out steps for businesses leaving Russia and Ukraine, not just in response to current Russian aggression in Ukraine, but also to mitigate risk longer term risk.