Business in Conflict-Affected and High-Risk Contexts

Overview

Businesses in conflict-affected and high-risk contexts (“high-risk contexts” in this brief) face heightened risks of involvement in serious human rights violations. This can lead to severe harm—including loss of life, liberty, and livelihoods—to community members, employees, suppliers, contractors, and customers, as well as reputational damage, operational interruptions, legal liability, and financial penalties for the business.

To prevent and mitigate human rights risks in high-risk contexts, companies should conduct “heightened” human rights due diligence. Heightened human rights due diligence goes beyond what is required by the UN Guiding Principles on Business and Human Rights (UNGPs) by accounting for context and the business’s impact on that context. It requires ongoing stakeholder engagement, forward-looking trend analysis, proactive mitigation measures, and localized decision-making.

One of the central concepts we're advancing here is that business does not operate in a vacuum—they are parachuting in to a preexisting context with preexisting power dynamics and tensions, and by virtue of entering that context, they are changing it. Businesses may think that they are "neutral" because they don't take a position on the political situation in that country, but because they bring financial resources and interacting with people, economic systems, and the environment, they are having an impact (either positive or negative) on that context.

Defining High-Risk Contexts

High-risk contexts include situations of armed conflict and mass violence as well as areas with weak governance or rule of law; extensive corruption or criminality; significant social, political, or economic instability; historical conflicts linked to ethnic, religious, or other identities; closure of civic space; and a record of previous violations of international human rights and humanitarian law.¹

No one factor drives the conflict and instability seen in these contexts. Rather, a complex interplay of social, political, environmental, and economic factors fosters an environment where violence, oppression, poverty, human rights abuses, and state failure are more likely to occur. These factors include social divisions; governance grievances like political exclusion, weak state accountability, corruption, and inadequate service provision; economic grievances like limited economic opportunity and economic inequality between groups; and environmental factors, including climatic shocks and stresses as well as natural resource scarcity and degradation.²

Risks of Doing Business in High-Risk Contexts

High-risk contexts are inherently challenging operating environments for business. Businesses typically have low leverage over government actors, lack reliable data to inform decisions, and must deal with significant safety risks for their employees. While companies may face restrictive domestic legislation on some issues, they often operate within regulatory environments that are inconsistent with international human rights standards and provide insufficient guardrails to prevent human rights abuses. High levels of corruption increase the likelihood that businesses may engage in corruption themselves (e.g., payment of bribes, nepotism, money laundering). A country with weak rule of law may also have a low-functioning or corrupt judicial system, undermining the effectiveness of operational grievance mechanisms and blocking affected stakeholders from access to remedy. These challenges expose businesses and their investors to financial and reputational risks while increasing the likelihood of business complicity in human rights abuses.

Business activity in high-risk contexts is more likely to cause or contribute to human rights abuses or enable harm through business relationships.³ Corporate human rights abuses in such contexts may include land grabs and displacement, loss of jobs and livelihoods, environmental pollution and health impacts, excessive use of force by security personnel, and restrictions on speech and privacy. While these human rights impacts may occur at any point in the value chain, including supply chains, direct operations, and the use of products and services, the likelihood and severity of human rights impacts is likely to be greater in high-risk contexts, with many of the most severe impacts felt in the developing world.⁴

Business activity in high-risk contexts may exacerbate conflict, corruption, and instability. Conflict and human rights are closely linked: grievances over human rights violations can drive conflict, while violent conflict creates risks for additional human rights abuses. Business activity can exacerbate preexisting conflict and sociopolitical instability through various pathways, such as business model decisions,⁵ hiring and procurement practices,⁶ and partnerships with local entities. Business corruption may also lead to human rights abuses⁷ while weakening rule of law, enabling kleptocracy, and undermining economic development.

Despite these challenges, private sector investment in high-risk contexts is critical to peace, poverty alleviation, and the achievement of the Sustainable Development Goals,⁸ if done in a way that takes local political and social dynamics into account and respects internationally recognized human rights.⁹ Businesses that integrate human rights management into strategic decision-making and day-to-day operations will be more resilient to today’s global challenges¹⁰ while addressing some of the social, economic, and environmental drivers of conflict. Private sector investment that reinforces “the attitudes, institutions and structures that create and sustain peaceful societies”¹¹ will help to prevent future conflicts and will contribute to an environment that enables both business success and protection of human rights.

What Should Companies Do Differently in High-Risk Contexts?

The UNGPs state that businesses should conduct human rights due diligence in order to “identify, prevent, mitigate, and account for how they address their impacts on human rights.”¹² This responsibility is heightened in high-risk contexts, where human rights impacts are both more likely and more severe and where business activities could drive further conflict or impede peace. Businesses should therefore conduct heightened human rights due diligence in these contexts.

Heightened human rights due diligence incorporates conflict sensitivity, atrocity prevention, transitional justice, and peacebuilding frameworks into due diligence processes, going beyond what is required by the UNGPs by accounting for context and business impact on that context. In practice, this requires ongoing, iterative, and localized due diligence. It also requires additional analysis to understand local social, political, environmental, and economic dynamics and how business activity might exacerbate conflict and tensions.

Companies can meet their human rights obligations in high-risk contexts by implementing the following components of heightened human rights due diligence: