Human Rights Due Diligence in Wartime

On June 25 UN Global Compact Network Ukraine together with UNDP in Ukraine held a workshop “Human Rights Due Diligence in Wartime” for Ukrainian companies interested in doing business responsibly and seeking to incorporate human rights into their corporate policies.

The event was opened by Tetiana Sakharuk, Executive Director of the UN Global Compact Ukraine:

 

“For modern businesses, supporting human rights is no longer a noble gesture; it is a necessity. European legislation is changing. New EU directives have recently been adopted, obliging companies to report on non-financial activities, which will become mandatory in 2025. This means that no company will be able to enter the European market if it does not comply with this legislation. Over the past two years, the approach to reporting for companies participating in the UN Global Compact has also changed. Whereas this progress report was previously voluntary, it must now be submitted by all companies that are members of the UN Global Compact.”

Olena Uvarovа, Head of the International Lab for Business and Human Rights, Co-President of the Global Business and Human Rights Research Association and UNDP International Expert on Business and Human Rights, started the workshop with an overview of in-depth due diligence in the context of war. Olena also spoke about the key trends in responsible business conduct that businesses can use:

• UN Guiding Principles on Business and Human Rights and OECD Guiding Principles;
• the report “Business, Human Rights and Conflict-Affected Regions: Towards Heightened Action” published by the UN Working Group in 2020;
• Guidance on “Heightened Human Rights Due Diligence for Business in Conflict-Affected Contexts” developed by UNDP and the UN Working Group in 2020;
• Considerations for Remaining and Exiting Challenging Contexts, published by the UN High Commissioner for Human Rights in August 2023.

Olena also highlighted the difference between due diligence in peacetime and heightened Human Rights Due Diligence during wartime.

Corporate human rights abuses in complex contexts, such as during conflicts, can involve land grabs, forced displacement, loss of jobs, environmental pollution, health impacts, as well as restrictions on freedom of speech and privacy.

Olena Uvarova emphasized that in such scenarios, companies must analyze not only the conflict itself but also its impact on it, whether direct or through supply chains and partners. Often, parties to the conflict have connections to or are employed by and invested in the business. Therefore, understanding these connections is crucial to assess risks accurately.

Conflicts also affect people, and companies should make every effort to minimize its negative impact on human rights. For more information on in-depth due diligence, please refer to the guide.

Also, in situations of armed conflict, businesses must take into account at least International Human Rights Law and International Humanitarian Law. 

The former applies both in times of peace and war, while International Humanitarian Law applies only in times of war. International humanitarian law provides protection to people who are not (or no longer) involved in hostilities. These include, for example, civilians, wounded soldiers, and prisoners of war. 

“It is important to look at the Ukrainian context through the eyes of investors who are considering cooperation and investment in Ukrainian businesses and projects, including reconstruction projects, because we are increasingly facing questions from international partners about how to conduct Human Rights Due Diligence in Ukraine, given that we are living in a full-scale war. One of the tasks of Ukrainian business today is to be prepared for these questions from European partners,” the expert emphasized.

The next topic of the workshop was the human rights due diligence procedure in accordance with OECD standards. Maryna Kupchuk, Deputy Head of the International Investment Cooperation Division of the Investment Department of the Ministry of Economy, Secretary of the OECD National Contact Point.

The expert spoke in detail about what the Guidelines of the Organization for Economic Cooperation and Development (OECD), which have already been joined by 51 countries, including Ukraine, provide to business.

“The OECD Guidelines are a set of recommendations for responsible business conduct aimed at ensuring an open and transparent international investment environment and encouraging the positive contribution of multinational companies to economic and social progress”

The OECD Guidelines were first adopted in 1976 and are now regularly reviewed: they were updated in 2023 to address issues and new challenges. The Guidelines are based on a risk assessment framework for business due diligence and include the following steps:

1) incorporating responsible business practices into their policies;

2) identification and assessment of risks;

3) avoiding or mitigating these risks;

4) tracking the results;

5) communication on decision-making;

6) ensuring access to legal protection.

“Due diligence is an ongoing, proactive and reactive process by which companies can ensure that they respect human rights and do not contribute to conflict. Due diligence can also help companies to ensure that they comply with international law and national legislation.”

Vladyslava Kaplina, Eastern Europe/Central Asia Research Assistant at the Business and Human Rights Resource Center, spoke about how international companies conduct their due diligence.

Vladyslava spoke about the results of a survey conducted by the Business and Human Rights Resource Center among 400 companies operating and/or investing in Ukraine and/or Russia to understand whether companies are implementing advanced due diligence. The results of the survey showed that companies lack an understanding and implementation of advanced due diligence. In addition, none of the companies indicated that they have implemented an analysis of Russia’s military aggression in their activities. 

At the same time, there are some positive aspects: some companies have implemented a risk-based approach system that allows the company to check business partners and prevent potential misuse of their technologies. On the other hand, there is a distinction between companies’ statements and their actions. For example, some companies have been unable to fulfill their promise to leave the Russian market for more than a year after the full-scale invasion began.

In January 2024, Kyiv School of Economics, together with the Yermak-McFaul Sanctions Group, published a report “Challenges of Export Controls Enforcement: How Russia Continues to Import Components for Its Military Production“. The authors analyzed how Russia continues to import products critical to weapons production despite export controls. 

The report analyzed nearly 2,800 foreign components found on the battlefield in Ukraine and named more than 250 manufacturing companies. The Resource Center contacted 225 of the companies mentioned in the report. Based on the survey results, 50 companies provided feedback that they comply with the restrictions imposed and have ceased any cooperation with Russia after February 2024.

“The conclusion we can draw from these surveys and studies is that the existing measures in place are insufficient and the overall picture once again shows a lack of due diligence in supply chains,” summarized Vladyslava Kaplina. 

At the end of the workshop, Irena Fedorovych, an advocate at Fight for Right, an expert at the Ukrainian Corporate Equality Index, a trainer and consultant on respect for diversity, worked in groups with the participants of the event – representatives of Ukrainian business. The groups learned how to use a due diligence checklist to assess their own company’s performance both before and during the war, selecting issues that are already being addressed and those that still need to be addressed. 

“Ukrainian companies are already taking many steps towards implementing business and human rights approaches, but they still do not use the appropriate terminology and do not always put on the “human rights” lens. Even this exercise showed that the question “who implements due diligence” does not have positive answers, but the group work with the checklist and the subsequent discussion on what elements of assessment and planning are built into business processes show that many companies have considerable experience and best practices. The business and human rights approach and the very “human rights lens” is about learning to look at your business processes through the lens of human rights and analyze possible risks.”

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This event was organized by a team of experts from the UN Global Compact in Ukraine, the Social Action Center in partnership with the Ministry of Economy of Ukraine and the United Nations Development Program (UNDP) in Ukraine within the framework of the Business and Human Rights Accelerator and the project “Human Rights Due Diligence in Global Supply Chains: Implementing the UN Guiding Principles on Business and Human Rights for Just Recovery”, which is being implemented with the financial support of the Government of Japan.

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