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20 Feb 2023

Ella Skybenko, Business & Human Rights Resource Centre

Duty failure: Scant evidence of effective due diligence by companies operating in Russia

Nickel Smelters, Norilsk, Siberia, Russia

24 February marks one year since the beginning of Russia’s military aggression against Ukraine. Even though a number of companies took significant steps to either pull out or suspend their operations, under threat from international sanctions, over 1,000 multinational companies continue to operate in Russia.

Those that remain risk being accused of complicity in war crimes, which range from destruction of Ukraine’s critical infrastructure to mass torture and killings of civilians, as since September 2022 they have been obliged to assist the Russian Government with its mobilisation efforts. While the current mobilisation drive is still underway, experts are already mooting the potential for a second wave following Russian Defence Minister Sergei Shoigu’s December announcement the armed forces would be expanded to 1.5 million soldiers. This would mean increasing the Russian army by an additional 400,000 soldiers – likely relying on further assistance from international companies for drafting young men.

Less than two weeks after the Russian invasion of Ukraine on 24 February 2022, the Business & Human Rights Resource Centre initiated a due diligence survey among companies operating or investing in Ukraine and/or Russia. Since then, we have invited 400 companies to respond to questions on the heightened human rights due diligence they are expected to undertake in situations of armed conflict. While 115 replied, only 43 companies provided full or partial responses to our questions, revealing widespread lack of concrete due diligence. As a follow-up to our survey, we have been monitoring public commitments and actions of the 43 companies that provided responses to our survey. We found heightened human rights due diligence related to their operations or investments in Russia or Ukraine is still missing. There is also a gap between companies’ public commitments and their actions.

Following the announcement of partial mobilisation which requires all organisations, including international companies, to assist the government with war efforts, we invited 143 companies which still have presence in Russia to respond to questions regarding actions they have taken or plan to take in response. Only 26 companies provided responses. The replies once again showed lack of understanding by companies of their responsibilities under international law. Some companies even tried to distance themselves from conscripted employees. For example, Auchan stated: “Under Russian law, any employee who is mobilised has their employment contract suspended and is therefore no longer managed or paid by their employer from that time. Auchan Retail Russia therefore no longer has any ties with the very few people mobilised to date.”

Lack of clarity on company responsibilities has been cited as an excuse for inaction. So, a new guide on Heightened Human Rights Due Diligence for Business in Conflict-Affected Contexts developed by UNDP and the UN Working Group on Business and Human Rights has been welcomed by many in the business and human rights community.

The guide says that in wars between two states, companies “need to exercise heightened human rights due diligence with regard to its activities, products and services in BOTH states”. Business should also, at the very least, “assess and avoid or mitigate its connection to the war efforts of the aggressor country to ensure that they do not exacerbate the situation”. The guide further explains that a company considering exiting or suspending its operations in a conflict-affected context should weigh up whether: a) exiting/suspending could exacerbate tensions, and b) whether harms to people outweigh the benefits.

Russia’s mobilisation law demands companies contribute to the draft - a key aspect of the Russian war efforts. This has significant implications in light of their human rights responsibilities. There is already evidence companies are becoming one of the main sources of new recruits in Russia. For example, according to an investigation by Spiegel, the number of employees called up by German companies is estimated at several thousands.

Heightened human rights due diligence demands companies assess the harms their presence and business model create for people against their benefits. For companies in Russia, this assessment should include not only the direct impact on Russians, but also the harm and suffering to Ukrainian civilians created or strengthened by their obligatory collusion with the Russian draft.

Many of the companies that continue operations in Russia justify themselves by insisting they are providing essential goods and services to the Russian people. Michael Posner, like many other experts, argues for a keener differentiation between companies contributing to war efforts and those providing for the basic needs of Russian people. I would agree. But ‘essentiality’ amid such intense suffering must surely refer to items such as life-saving medicines not manufactured in Russia, rather than ice cream or even painkillers that have locally available alternatives. Companies that continue operations in Russia cannot avoid contributing to the war effort either indirectly by paying taxes that go into the Russia’s defense budget or directly by helping the Russian government recruit new soldiers. According to B4Ukraine coalition, corporate taxes constitute 50% of Russia’s military budget. The financial and human resources that companies provide continue to enable the Russian aggression that results in mass killings of Ukrainians. A key way to stop these killings is to block access to the resources that enable the aggression. This can be done while guaranteeing the basic needs of affected Russians through tax-exempt humanitarian aid.

It is increasingly unlikely any company can justify remaining in Russia under international human rights law. Therefore businesses which continue operations in Russia need to review their presence by verifying thoroughly whether or not there are any risks of complicity in human rights abuses through their business activities in Russia. If the results of their investigation show human rights risks which cannot be addressed, they must seek responsible withdrawal as the next step. As aggressions enter a second year, responsible action by business and investors is imperative – the livelihoods and lives of millions of innocent civilians depend upon it.

By Ella Skybenko, Senior Researcher & Representative, Eastern Europe/Central Asia

Rights under fire: A business & human rights lens one year after Russia’s military aggressions in Ukraine

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