Due diligence on conflict is a business necessity
Published date: 17 May 2023
Policy paper explores key role of reporting in conflict-affected areas
Armed conflicts are pervasive across geographic regions - creating deeply challenging conditions for companies to navigate through and within. Meanwhile, businesses face growing expectations for conflict-sensitive due diligence, with transparency on their operations, activities and supply chains.
A new GRI publication, Why corporate transparency is critical during conflict, explores this topic, with advice for companies on how to integrate sustainability reporting with their due diligence obligations, including those set out in intergovernmental guidelines by the UN and OECD.
As Peter Paul van de Wijs, GRI Chief Policy Officer, explained:
“There is no ‘one size fits all’ approach – each company will have specific impacts to consider related to the nature of the conflict, their business model and presence of staff in the conflict area. Through stakeholder engagement and a comprehensive assessment of what’s relevant in a conflict, the GRI Standards enable organizations to understand their impacts, which is the starting point for a well considered response strategy. Transparency brings accountability; it’s what turns the guidelines on due diligence into powerful tools that facilitate action.”
The paper identifies five essentials for corporate due diligence during conflict:
- Due diligence requires continuous communication: Companies need to regularly monitor changes in risks and impacts – from the conflict itself, and through their activities and operations. Maintaining close contact with key stakeholders is essential – such as staff, business partners and local communities.
- Actions depend on the nature of the company and the conflict: Given that conflicts can emerge or change dynamically, businesses need to be ready to reassess decisions on mitigating measures. For example, national conflicts can go international, or areas of operations might switch from government control to armed non-state groups. That means risk assessment, including human rights due diligence, is not a one-off exercise.
- Information is needed from multiple external sources: The ability to carry out full, conflict-sensitive risk and impact assessments may be challenging or impossible. Input from civil society actors, such as NGOs or human rights defenders, helps build a picture of the reality on the ground, while highlighting information gaps that need addressed.
- Recognition that tough decisions can be required: A company may face contrasting demands from different stakeholder groups – such as employees, communities and consumers. For example, how a business balances the international reputational damage associated with their presence in an area of conflict with their responsibilities locally towards those who rely on their goods, services or employment.
- Exiting a conflict-affected area brings obligations: Reaching a decision to cease operations needs risk assessment that involves and engages employees, local communities and human rights defenders. For example, identifying steps to ensure local staff receive income for the duration of the crisis, or capacity-building to mitigate the loss of employment.
Bringing personal and professional insights from living with conflict in Colombia, Andrea Pradilla, Director of GRI Latin America, shared:
“When you are working in a conflict, or you’re trying to build peace, it’s essential to create wide-ranging, multi-stakeholder partnerships. That takes time and commitment, but it’s the only way forward. In Colombia, companies began to see GRI reporting as about more than just ‘a report’. It became a way to communicate with stakeholders and tell the story of how they were navigating this complex context. Reports stopped being a monologue and became a dialogue.”
GRI thanks the Swedish International Development Cooperation Agency (Sida) for their financial support for this project.
In June 2022, GRI, GlobeScan and CSR Europe hosted the webinar Corporate Transparency and Due Diligence in Conflict-Affected Areas as part of Sustainability for Ukraine (S4U), the output of which informed the development of the policy paper. A recording of this session can be accessed online.
The GRI Mining Sector Standard, currently under development, highlights ‘conflict affected and high-risk areas’ among the likely material topics for mining companies to report on.
International guidelines and regulations setting out obligations and expectations for companies on due diligence during conflict include: the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises, and the EU Conflict Minerals Regulation.