Victor Zhu
The Russian invasion of Ukraine has drawn strong international condemnation and resulted in tough and coordinated sanctions. More than 600 companies have withdrawn from Russia, but some continue to operate. As the conflict progresses, multinational businesses should consider the long-term risks of operating in Russia and ensure their responses are consistent with human rights standards. Furthermore, businesses operating in Ukraine should also ensure they are operating in a way which does not increase suffering for the country’s citizens.
Human rights obligations
The UN Guiding Principles on Business and Human Rights (UNGPs) provide guidance for businesses operating in conflict-affected areas and emphasise the corporate responsibility to respect human rights which includes conducting human rights due diligence. This means companies should identify and mitigate the human rights-related risks of their activities. The UNGPs and other available resources can assist business to navigate potential human rights impacts and integrate conflict analysis into their approach. Recent responses to the conflict illustrate how various companies may apply a human rights framework to decision making.
Consumer goods
Iconic brands, such as Adidas, Apple and McDonalds have withdrawn their brands or temporarily suspended their operations in response to public sentiment and global sanctions. However, the responsibility of companies does not end with the decision to withdraw. Businesses should take steps to minimise the harm their exit creates for workers and communities affected. Companies that have ceased operations in Russia such as Inditex, which owns fashion retailer Zara, or US coffeehouse chain Starbucks have indicated they will provide support to affected employees. However, it is unclear from their statements whether these strategies will continue long-term given the rapidly changing nature of the situation.
Essential medicines and food
The situation is more complex where companies play a critical role in safeguarding the welfare of civilians, such as companies that supply critical foods or medicine. Economic sanctions can have an adverse impact on individual’s right to health and life, and may disproportionately affect the most vulnerable members of society.
Nestlé’s immediate response to sanctions was to stop all imports and exports from Russia, except for essential products. It was then criticised by some for “carrying on business as usual”, including the Ukrainian president, despite having halted non-essential imports and exports into and out of Russia, stopping all advertising, and suspending all capital investment in the country. French food giant Danone similarly decided to maintain its production and distribution of fresh dairy products and infant nutrition “to still meet the essential food needs of the local population”. It has received similar criticism for continuing to operate in Russia to protect sales and providing implicit support for Putin’s invasion.
These examples highlight the need for businesses to conduct adequate human rights due diligence. The potential impacts of choosing to withdraw from conflicts must be identified and for cases where a company provides key services, its statements might address factors such as who could provide the services in its absence and the consequences of the services ceasing to function.
Ensuring companies avoid contributing to violations of international law and assaults on online freedoms
Companies investing in or partnering with Russian state-owned enterprises have a higher risk of aiding, abetting, or facilitating Russia's violations of international law. Firms providing arms or weapons-making materials, dual-use technologies or military equipment risk being directly complicit in ongoing violations. However companies should also consider their relations with sectors such as oil, gas, strategic minerals and surveillance software. This has led to the exit from Russia of companies such as Rio Tinto and BP.
The withdrawal of technology companies, such as Google, Microsoft and Apple from Russia has exacerbated the risk of isolation from the global internet for the country’s residents at a time when the government has cracked down on war coverage. Large internet providers, Cogent and Lumen also withdrew services for clients in Russia. Such moves will further inhibit access to independent media and social media platforms, especially when accompanied by Russia blocking Facebook and its sister platform Instagram in retaliation for the platform placing restrictions on state-owned media.
The UNGPs are clear on the need for companies to respect human rights, but the decision to withdraw or remain in conflict regions is rarely straightforward. What is clear, is that whether or not companies decide to adopt a rights-based approach will not only impact the Russian and Ukrainian people now but will set an example for businesses in future conflicts.
Victor Zhu is a fifth-year Bachelor of Commerce/Law student at UNSW Sydney and an intern with the Australian Human Rights Institute for Term 1, 2022.