"How should a responsible company operate in conflict-affected, fragile countries and weak governance zones to ensure that its operations contribute to peace-building rather than aggravate tensions and instigate conflicts?"

The history of conflicts is as old as time. However, as times change so does the nature of conflicts. Indeed, they have transformed from confrontations between countries to tensions and violence between different groups on a national level. Research shows that the incidence of violent conflicts has increased since the 1950s, with the majority of conflicts taking place within states. In this context, there appears to be a need for a new approach and the involvement of new actors processing the pursuit of sustainable peace-building and post-conflict reconstruction. Multi-National Corporations (MNCs) are amongst the ‘emerging' actors.

The term ‘conflict' can mean different things to different people, as the implications of this term depend on the perspective of the person who defines it. For the purposes of this dilemma, the term ‘conflict' means opposition between groups of people with associated tension and actual or potential violence. Conflicts defined this way can be international, i.e. taking place between countries, as well as internal, i.e. referring to an armed struggle between individuals or groups within a single state.

The dilemma not only includes those countries that are currently experiencing conflict, but also ‘conflict-affected' countries. Conflict-affected countries are those that have recently experienced, are experiencing, or are widely regarded as at risk of experiencing violent conflict. Conflict-affected countries include also ‘fragile countries' and ‘weak governance zones'.

The role of business

Businesses can have a positive or negative impact on a conflict-affected environment and (despite all intentions) can rarely remain neutral.

On the negative side, for example, companies can fuel conflicts by exploring for and developing natural resources that are at the heart of a conflict, without securing the agreement of all disputing parties. Likewise, companies' operations can – via their contributions to public revenues – provide much needed financing to repressive regimes and help them stay in power through the use of force.

Companies can also play a positive role. According to a World Bank (WB) study, 40% of conflict zones return to their state of conflict within a decade. However, according to David Ferguson, Director of Global Development Commons of the USAID, ‘...companies [with strong peace-building agendas] are a way to break that cycle.' This can be done in the following ways:

• First of all, businesses create economic opportunities and generate wealth, which is of the utmost importance to peace-building and post-conflict reconstruction (e.g. through the creation of employment opportunities and the diffusion of sectarian tensions). Also, at the conflict resolution stage, businesses can encourage parties to eschew conflict in exchange for the pursuit of economic development.
• Secondly, they can and often do assist governments in carrying out peace-building and post-conflict reconstruction work, for which governments are ultimately responsible (e.g. as contractors, project managers, etc.).
• Thirdly, the UN has recognised that the root causes of conflicts can be dealt with properly if violations of economic, social and cultural rights are effectively addressed. Needless to say, businesses have an indispensable role to play in the process by a) ensuring that their operations do not stir up tensions by violating economic, social and cultural rights in the first place; and b) by making positive contributions to the furtherance of these rights.

The impact businesses can have varies depending on the size of a company, the nature of its business activities, the natural resources involved, the potential profits to be made from investment into a conflict-affected country, as well as other complex factors in the country of operation. It also depends on companies' corporate governance and compliance requirements. For example, certain companies are likely to apply higher standards of corporate social responsibility, implement more pro-active risk management measures and be subject to more rigorous legal regimes than others. This is likely to make them more accountable and responsive to the concerns and needs of the communities in which they operate, civil society groups, shareholders and international opinion.

Some businesses enter new markets immediately after conflicts have ended. This raises the risk of businesses being drawn into situations that could make them complicit in severe human rights violations, owing to the often fragile and unstable systems of governance that generally characterise post-conflict environments. In addition, post-conflict societies are generally afflicted by high levels of poverty, widespread corruption and severe social disruption. Governments in such countries are likely to repress any opposition – and to be ready to employ violence to do so.

According to the WB's assessment, most conflict-affected countries (including post-conflict countries) were unlikely to achieve the Millennium Development Goals (MDG) set for 2015, owing to the extent of work that needs to be done in these areas.

In some cases, companies show a relatively high level of willingness to embrace opportunities in post-conflict environments – despite ongoing challenges around security and governance. This is particularly the case where they can be assured of strong direct or indirect support from their home governments or the international community – or where companies see a competitive advantage in doing so (e.g. where they believe there will be particularly high returns). Other companies prefer to wait for a number of years (usually four to five) until the situation on the ground improves significantly. This is especially the case in smaller conflict-affected economies, where businesses consider risks to be higher than the potential returns to their global operations. Although abstaining from investment in countries emerging from conflict allows companies to avoid being involved or associated with human rights abuses carried out in the early years of post-conflict reconstruction (or indeed a range of operational risks), it can also undermine much-needed post-conflict development in those countries.

In this context, it may be useful for stakeholders (whether policy makers, companies or conflict protagonists) to better understand the costs of conflict. According to Angelika Rettberg, Associate Professor and Director of the Research Program on Peacebuilding in Bogota University de lost Andes ‘few companies undertake systematic calculations of armed conflict costs, or even the costs of peace.' For instance, a 2011 study on the costs of armed conflict for businesses in Colombia demonstrates that ‘three-quarters of those interviewed would invest in expanding their businesses, innovation and generating wealth if Colombia were at peace.'

The research of Brauer and Tepper Marlin claim that ‘the cessation of violence would generate a "peace dividend" equivalent to approximately 13.1% of the 2007 gross world product.' The figure for the ‘peace dividend' was achieved by adding together two categories of economic gain – Dynamic Peace indicators and Static Peace indicators. The former considers the total additional economic output likely to occur due to the liberation of human, social and physical capital, which was otherwise suppressed by violence – and has been calculated at 8.7% of global GDP. The latter captures economic activity that would be transferred from violence towards peace-building -, such as – for example – expenditure on prisons that could otherwise be transferred to education. This has been calculated at 4.4% of global GDP.

In 2010, the Institute for Economics and Peace continued the research and found that:

• The cessation of conflicts could result in, at least, doubled world gross domestic product (GDP) in any one year.
• Economic growth could have been higher by 8.5% in a peaceful world
• The case-study of violence in Latin American countries revealed that the GDP growth lost because of violence is not recoverable
• Countries with high per capita income, high levels of GDP and lower levels of conflict have the largest gain in absolute economic terms from peace.

Besides the general incentive of tapping into the ‘peace dividend', there is another reason why companies should be, and indeed some are, interested in facilitating conflict resolution and peace-building even in countries in which they have no operations. This is because conflicts and other outbreaks of violence in states neighbouring their host countries, can spread easily and pose risks to their existing business operations. For example, in the Balkans a number of companies (e.g. banks, construction companies, etc.) are participating in regional reconstruction initiatives as part of regional peacebuilding (i.e. beyond any one single country of operation).

Considering that some MNCs have assets bigger than the annual budgets of some countries, these companies have considerable leverage that they can use to facilitate long-term peace.

The involvement of responsible companies in peace-building and post-conflict reconstruction processes could raise the bar of expected (e.g. home governments, shareholders, etc.) performance standards in different sectors in conflict-affected countries. In turn, this could help to prevent companies with higher levels of risk tolerance around human rights deprivation from gaining a competitive advantage by engaging in unethical practices in conflict-affected markets.

Incentives for companies to become prominent actors in peace-building and post-conflict reconstruction processes certainly exist and they are illustrated above. However, there is no one-size-fits-all answer to what companies could and should do to meet their responsibility to respect human rights according to the UN ‘Protect, Respect and Remedy Framework' while operating or considering investing in conflict-affected countries. Even where a company may wish to further the economic development of a post-conflict country, this alone may not prevent the company from being complicit in human rights violations. Risks may materialise, for instance, when the company does not consider the root causes of past conflicts and ends up exacerbating tensions through its operations.

Lack of assessment of sector-specific costs of conflict to businesses, as well as the size of their peace-building impact may make it difficult for businesses to decide the extent and form of engagement in peace-building and post-conflict reconstruction.

Furthermore, some initiatives, such as engaging with governments in conflict-affected environments, may also present challenges, creating the risk of a company being seen as complicit in human rights violations carried out by governments.

See Doing Business in Conflict Affected Zones case studies

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The positive impacts that companies could render, as well as the human rights challenges they are likely to encounter in conflict-affected environments, depend on a number of factors, such as:

• The sector of the economy the company is operating in
• The root causes of the conflicts in countries of operation
• The potential of companies' projects and services to exacerbate already complicated social and political situations

For the purposes of this dilemma, a number of sectors high value/high impact projects - were selected in order to illustrate common dilemma scenarios. These include, for example, telecommunications, infrastructure and construction, banking and finance, military, defence and security, the extractive industries and other sectors of the economy that depend on other natural resources, such as water and land, such as hydroelectric power, beverages, manufacturing, transport, construction, wide-scale commercial agriculture and tourism.

Telecommunications

Mobile phone, internet and cable and satellite TV operators are usually among the first ones to enter a conflict-affected environment. Sometimes they even decide to start operations in countries where conflicts are still active. The cases of Millicom, Mobitel and Celtel, operating in Sierra Leone, Cambodia, Sudan and Sri Lanka are worth mentioning here. Another example can be found in some 200 consortia of companies which applied for phone licences in Iraq in October 2003.

Telecommunications businesses can affect post-conflict environments in two different ways. On the one hand, mobile and internet providers act as ‘enablers' for other companies to start operations in these areas. Telecommunications companies can also improve the population's access to information and the ability to share it, provided that they offer affordable prices and wide coverage. They can also provide people with means to get prompt help in cases of emergencies.

For instance, cellular technology has an advantage over landlines in terms of easy installation and use, even in the most challenging of landscapes. Considering the substantial damage to infrastructure and transmission lines that generally takes place during conflict, mobile technology is of particular utility in conflict-affected zones.

However, telecommunications businesses can also facilitate or exacerbate a conflict situation. For instance, communications technology can help illegitimate armed groups to mobilize and organise more effectively and consequently to carry out military campaigns with wider coverage, resulting in an increase in violence. The same service can have both a negative and a positive impact at the same time. For instance, when a telecommunications company provides the possibility to use pre-paid cards this can help to avoid problems with payment collection. Its positive impact is most obvious where the country, only recently emerging out of conflict, does not have the capacity or arrangements to process payments otherwise.

However, when the marketing strategy of a company does not prevent the risk of pre-paid cards being sold by children, it can contribute to child labour, which can in turn undermine efforts to strengthen fragile countries and weak governance zones. Indeed, this was a risk that materialised for Australian telecommunications company Telstra in Timor Leste, where widespread poverty forced hundreds of children to engage in street trading, including in Telstra pre-paid phone cards, to make a living.

Sectors that potentially use ‘conflict minerals'

In addition, a number of manufacturers (e.g. electronics manufacturers, jewellers, etc.) utilise commodities such as columbite-tantalite (or coltan), cassiterite (the ore from which tin is extracted), wolframite (from which tungsten is extracted), gold and diamonds. These natural resources are known (in some cases) to contribute to conflict in countries such as DR Congo. They are increasingly subject to regulation (for example through the US Dodd-Frank Act and the forthcoming EU regulation on conflict minerals), as well as stakeholder scrutiny (including, for example, targeted consumer campaigns against mobile telecommunications companies). For further information see the Conflict minerals dilemma.

Infrastructure development and construction

Infrastructure development and construction companies are also likely to enter conflict-affected environments immediately after the end of conflict. Their presence in the country can serve as an indication of the start of the post-conflict recovery process and send a positive message to other companies that are considering entering the market. These companies are the main actors paving the way for the rehabilitation of conflict-affected countries, for example by reconstructing essential water and power supply infrastructure and major government buildings and roads. They are important because redevelopment is extremely difficult without these essential facilities in place.

Construction companies are usually selected through tenders organized by international aid organizations. Post-conflict reconstruction is of particular interest to companies because of the lucrative contracts at stake. For instance, Lebanon received around US$10 billion worth of aid in the first ten years after the end of conflict; Bosnia and Herzegovina has received around US$5.4 billion since 1995; and US$33 billion was pledged for Iraq in October 2003, though only a small amount of this was paid out.

Although, the positive contribution of construction companies to the post-conflict reconstruction process is obvious, their operations may also undermine peace-building efforts, as the case of Bechtel in Kosovo (described above) demonstrates. In contrast to the telecommunications businesses, such companies usually leave countries of operation straight after the completion of construction works. This can have an impact on the kind of human rights measures construction companies are willing to take. Where companies have only short-term business interests in a country they tend to be less concerned about their long-term reputation there, which may undermine their respect for human rights standards.

Finance and banking

The establishment of strong financial institutions and services is one of the key conditions for sustainable economic recovery in countries emerging from conflict. The importance of attracting international banks to a conflict-affected country (in terms of both financing and an actual presence) usually increases as aid decreases. Financial institutions ensure that companies in other sectors of the economy have the necessary facilities and financing to operate – giving them ‘a vital role in facilitating foreign investments'. The presence of large international banks in post-conflict environments is usually a sign that the governments has managed to put in place a strong financial regulatory structure. This, in turn, is a positive sign for investors to follow.

However, big commercial banks are usually among the last ones to establish their presence in conflict-affected or post-conflict environments due to relatively low levels of security risk tolerance and the lack of clearly-defined banking laws – in particular foreign exchange control and bankruptcy regulations. However, state-linked banks are often more ready to enter conflict-affected countries as soon as conflicts cease, justifying their readiness to face political risks by a wider developmental agenda. Examples include Austrian banks, such as Raiffeisen Bank in Bosnia and Herzegovina, and Kosovo.

However, even those banks that have established their physical presence in post-conflict countries tend to expand their services gradually. At the first stage, they provide services to international aid organizations and their staff, diplomats, international NGOs and peacekeeping forces. At the second stage, their services extend to prominent members of diasporas investing in the country. Later they tend to be more willing to provide loans to small and medium enterprises.

The positive impacts of financial institutions on sustainable economic growth in such environments are limited for a number of reasons:

• Interest rates on loans and other services are usually high in such countries, owing to heightened risks and higher operational costs
• Most of the time, conflict-affected countries have a legacy of unresolved land and property issues. In turn, this creates problems in using land and other property as collateral for loans, resulting in banks being willing to provide only basic and secured services, such as charitable activities and technical advice on access to finance
• Financial institutions have the potential to (and sometimes do) exacerbate tensions and instability in their countries of operation. This is because in these environments it is more difficult for financial institutions to avoid risks caused by broader government failures, including (for example) high levels of corruption. Where corrupt government activities and unjust enrichment become an issue of discontent amongst disadvantaged local populations, this may contribute to destabilising social conflict. In such scenarios, banks involved in corrupt government projects may find themselves in the media spotlight.

Egypt is a good example of a country where the 2011 popular uprising (also known as the ‘Arab Spring') was triggered by a combination of growing inequality, deteriorating living conditions of the majority of the population and the ongoing enrichment of those in power. In turn, the majority of the projects of former President Mubarak's corrupt government would not have been possible without the assistance of banks. For example, in 2011, HSBC faced serious accusations of playing a role in securing a deal on controversial land and state-owned industrial assets in Egypt. It was claimed that the deal helped ‘to enrich senior Egyptian political and business figures' who were accused of corruption.

Private military and security companies, defence and security industry

Private military companies (PMCs) operate both in countries with ongoing conflicts and in those that are emerging from conflict. According to reports there are around 1,500 PMCs around the world. They have operations in more than 50 countries and, based on estimates from the 1990s, they generated around US$100 billion of annual global revenue, which was projected to double by 2010. Based on a recent report, the total market for security and defence services has reached US$400 billion.

PMCs' main customers are limited to states and MNCs. Their activities include a wide range of services and products – from the provision of combatants, battlefield training and military advice, to supplying weapons, communications and filtering software for surveillance - including to state security forces. What makes them different from civilian security companies is that they provide combat services – although the majority of PMCs currently offer non-combat related services. Common services currently include, for example, the escorting of convoys, the provision of security to key infrastructure in conflict-affected states or the training of host government's law enforcement personnel. Due to their nature, these services can have a positive or negative impact on conflict-affected societies, depending on the motivations of their employers.

On the positive side, security operations by PMCs aimed at restoring order and preserving stability in conflict-affected countries can launch the start of the peace-building and post-conflict reconstruction process, by creating a secure environment that can pave the way for economic expansion. PMCs, when contracted by MNCs can help to protect the lives of the MNCs' employees (and other individuals under their responsibility) and the integrity of companies' property, ensuring that they are able to deliver benefits in terms of employment generation, the provision of services and contributions to wider development.

PMCs, as such, may also be hired to help an illegitimate, repressive or corrupt governments stay in power – or indeed to help rebel groups carry out more effective military campaigns. For instance, PMCs were involved and had an impact on the civil war in Angola between October 1992 and January 1995. Due to the lack of clarity about the status of persons working for PMCs (i.e. whether they are combatants or civilians under international laws of armed conflicts), it is difficult to distinguish between the defensive and offensive roles of PMCs. This, in turn, allows them to operate under ‘murky legal restraints' regarding the use of force.

On the negative side, many security products traded by defence and security companies and PMCs, when sold to state security forces or rebel groups with no measures to prevent their misuse, can be used to suppress human rights and freedoms. They can also trigger the outbreak of or fuel ongoing conflicts.

In conflict-affected, fragile countries and weak governance zones, software and other technologies produced by aviation and aerospace companies both for civil and military applications are more likely to be misused. Therefore, such companies are advised to review their company-wide acquisition integration processes and implement corrective actions where required. Improving data-gathering and citizenship reporting process also plays an important role in identifying misuse of their products purchased by various stakeholders (for more information on the misuse of surveillance technology, other security equipment, information communication technology and dual-use products, see the Product misuse dilemma).

Extractive industries

The development of extractive industries has a significant impact on global economic growth. The products of this sector, such as oil and gas, pave the way for the development of other sectors and improve general well-being, enabling modern society to function. However, a positive correlation between the abundance of natural resources and conflicts – in conflict-affected countries – is also a well-known fact.

Indeed, research from 2010 has suggested that there is a link between the incidence of conflicts and the progress of different sectors of the economy. For instance, the case of Sub-Saharan African states suggested that the incidence of civil war decreases with the expansion of manufacturing and increases with the expansion of activities in the mining sector. This is explained by the fact that manufacturing is considered an ‘uncontested sector' where each party holds secure property rights over the production of some goods. However, mining is a ‘contested sector' where agents struggle to appropriate the maximum possible fraction of a contestable output. In certain cases, security of mineral rights, for example, can be established by force rather than ordinary legal mechanisms. This has, for example, been an issue (in relation to both mining and to hydrocarbons) in countries such as Angola, Sierra Leone and Nigeria.

Other research carried out by Paul Collier and Anke Hoeffler found that the outbreak of conflict significantly increases when the dependence of a country on the export of primary commodities reaches and exceeds 26% of GDP. This is the point where the risk of civil conflict occurring in an ‘"ordinary" country within the following five years is 23%, as opposed to only 0.5% for an identical country without primary commodity exports. Thus, it comes as no surprise that the majority of conflict-affected countries depend heavily on revenues from trade in natural resources.

Examples include Nigeria, where 80% of the country's GDP is made up of oil revenues, and Angola, where this figure ranges between 70-90%. Generally, in countries rich in natural resources it is not unusual to see the government in power acquire a false sense of security owing to a big influx of easy oil money. They feel no dependence on support and legitimisation by their own citizens, nor do they depend on loans from financial institutions, such as the International Monetary Fund (IMF), which are usually conditioned by requirements to implement certain governance reforms. This can increase the risk of government policy exacerbating conflict.

In turn, the lack of such dependence translates into willingness to engage in corruption without fear of accountability. Such governments also tend to use repressive tactics more often to protect their extractives industries in order to continue receiving revenues or to stay in power through the use of force. Scholars who have studied the link between oil exploration activities and the outbreak of conflicts have pointed out that "‘Oil can predict civil war risk… because oil producers have relatively low state capabilities given their level of per capita income and because oil makes state or regional control a tempting "prize"'. This, in turn, can trigger conflicts. Examples supporting the reality of this risk include the following:

• During 2000-2001 the military government of Sudan forcibly resettled ethnic populations living in the vicinity of oil resources in the south of the country and openly declared that it would use oil revenues to strengthen its security forces. A government spokesperson, General Mohammed Yassin stated that, ‘Sudan will be capable of producing all the weapons it needs thanks to the growing oil industry.'
• Historically high levels of violence in the Niger Delta of Nigeria are directly linked to the direct social and environmental impacts of oil extraction and the indirect impacts in terms of corruption and revenue allocation.
• Furthermore, as the case of BP in Colombia (described above) has shown, extractive companies operating in countries with internal violence can easily become the victims of attacks by rebel groups that oppose the central government – or the targets of extortion by armed groups in exchange for security. In turn, companies' payments can prolong the existence of armed groups (which would not be able to operate without financing) and facilitate violence. For example, terrorist groups in Mindanao in the Philippines often try to extort ‘Revolutionary Taxes' from local mining companies.

Companies can also be attacked by rebel groups that oppose the economic policies of the central government in an attempt to distort the flow of natural resource revenues. Examples of past and present rebel movements can be found in the oil and gas regions of Cabinda in Angola, Aceh in Indonesia and Biafra in Nigeria. In Sudan, although oil was not a trigger for its long-running civil war, Christian Aid notes that oil-related revenues and attempts to control the same ‘raised the conflict into a "new league"'. Now that the civil war is over and South Sudan has been established as a separate state from Sudan, control of oil resources remains a key point of contention between the countries.

Other common human rights and environmental violations may include improper land expropriation procedures, the pollution of water and arable lands, damage to fishing and agriculture, and social disruption from increased labour migrations. Over a long period of time, these factors can stir up tensions that may result in open and violent conflict (for details see below in Sectors that impact on natural resources and services).

Despite the role that extractive activity can play in fuelling social tensions and aggravating unresolved conflicts, extractive companies have a stronger interest in sustaining peace and stability in conflict-affected countries than companies in other sectors. This is due to the long-term nature and significant size of their investments (i.e. hydrocarbon and mineral deposits), which cannot be repatriated easily should violence break out in the country.

Sectors that impact on natural resources and services

Industries dependent on other natural resources, such as water, land and forest have the potential to destabilise conflict-affected environments. This is because they can increase demand for resources that are already in short supply and which are crucial for local communities' livelihoods or the survival of indigenous peoples. A resulting deterioration in living conditions of local communities can spark protests, which, if handled badly, can grow into serious conflicts. This is particularly the case in conflict-affected environments where governance and the rule of law is weak or lacking.

For example, there are a range of sectors that can have a particularly strong impact on water and land resources, and so can seriously change dynamics in fragile environments, leading to not only tensions within countries but also (in some cases) to interstate conflicts.

Water

Research has established that shared water basins can be a major source of conflict. For example in 2000, the government initiated the construction 22 dams and 19 hydroelectric plants in Turkey. In addition to fuelling social tension over water shortages in the area inhabited by the Kurdish minority, the project has the potential to create serious water scarcity for neighbouring Iraq and Syria, which also has the potential to lead to international conflict.

The authors of the research argue that ‘unequal distribution of freshwater does not in itself necessarily lead to acute interstate conflict, but that "severe scarcities of an essential, non-substitutable, and shared resource" like freshwater may make states prone to conflict'. Moreover, the nature of water disputes suggests that where it is the quality of water that is in dispute, there is a chance of achieving agreement and cooperation. However, this is not the case where it is the quantity of water that is at issue.

Companies' support of governments' efforts to reform the public utilities sector can also contribute to the escalation of tensions over resources – whilst also deepening social inequality that may result in social conflict. A recent academic paper that analysed health outcomes in conflict-affected Sub-Saharan African countries suggested that ‘when a country is under a World Bank structural adjustment loan it tends to have higher levels of child mortality'. The analysis of 31 countries over a 15 year period found that the World Bank's requirement to reform public sectors, led to reduced access to health and – over the long-term – reduced the government's capacity to react to public health problems.' The probability of such a risk materializing is higher in countries with a history of internal conflicts and widespread poverty and illiteracy. This is because macroeconomic policy reforms that results in the privatisation of public utilities can limit access to clean water and basic sanitation via higher user fees, and negatively affect the most disadvantaged groups of people.

Land

There are different ways in which land issues can contribute to conflicts. First of all, problems surrounding land issues, such as disputed property claims, are highly complex, sensitive, and widespread in post-conflict countries (e.g. due to displacement, the destruction of records, etc.). For example, the lack of effectiveness of the property and land restitution process for displaced persons, returnees and ethnic community members, and outstanding claims on damaged or illegally occupied properties pose challenges for transitional justice. For example, in Kosovo there are 50,000 to 60,000 outstanding property restitution claims. Likewise, ‘in some areas […] in 2000, the official records of privately held land rights corresponded to the actual possession and claims to land in only 30% of the cases'. The removal of impediments to the full enjoyment of the right to land is of paramount importance to the further development of a post-conflict country and its stability, as uncertainty regarding property rights (which in many cases were the cause of past conflict in the first place) can be a potential source of new social and interethnic disputes.

For instance, during Colombia's ongoing internal conflict, peasants and landowners were forced from their lands by armed groups or were made to sell their land at low prices due to threats against their lives. As a result, around 6.6 million hectares (16.3 million acres) or 12.9% of Colombia's agricultural land was illegally taken from landowners (whose numbers reach around five million) during the conflict.During this period, the state remained passive and none of the illegal occupants were punished. Also, there were many cases of competing and conflicting claims to land rights by two or more parties, each believing that they held legal rights to the same plot of land. This was partly as a result of a government policy allowing a different person to occupy it in the absence of an initial owner for more than five years.

Recently, the President of Colombia, Juan Manuel Santos signed a new law on land restitution. However, the law envisages the restitution of only 2.5 out of 6.6 million hectares of illegally occupied land. As such, businesses securing plots in the remaining 4.1 million hectares are at risk of contributing to existing land disputes.

Secondly, because of ineffective property and land restitution processes which violate the rights of displaced persons, returnees and disadvantaged ethnic community members pose additional challenges to the pursuit of transitional justice. This was demonstrated by the case of Bechtel in Kosovo (described above). Indeed, where land has a symbolic meaning and ethnic sensitivity prevails, the allocation of rights of way for different business projects which disproportionately affect the land and property rights of certain groups can fuel conflict.

Thirdly, the lease of large plots of land to foreign governments and companies for large-scale commercial agriculture (known by critics as 'land-grabbing') can also undermine local food security and disadvantage local rural populations. Furthermore, there are cases where this type of activity has been facilitated by the carrying out of grave human rights violations.

For instance, in Ethiopia, the government allegedly intends to relocate about 1.5 million people in the regions of Gambella, Afar, Somali, and Benishangul-Gumuz by 2013. Although the government claims that the programme aims at improving general living conditions and ‘access to basic socioeconomic infrastructures', in reality it appears to be linked to the leasing of large plots of land for commercial agriculture. Starting from 2008, Ethiopia ‘has leased out at least 3.6 million hectares of land, including to foreign investors supporting the food security efforts of their home governments. Another 2.1 million hectares are currently available for lease for agricultural investment.'

Relocation from these lands has generally not been voluntary, but rather forced by state security forces, which threaten people or arbitrarily arrest and detain them. According to Human Rights Watch (HRW), in 2011 there were at least 20 cases of rape associated with the relocation. The community relocation process was neither preceded by meaningful consultation, nor followed by prompt, adequate and effective compensation of the affected villagers. The forced relocation of people in Ethiopia is not an emerging phenomenon - the country has a legacy of forced resettlements under the Derg regime (until 1991) and under the current rule of the Ethiopian People's Revolutionary Democratic Front (EPRDF).

See Doing Business in Conflict Affected Zones case studies

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Real-world examples

British Petroleum (BP) criticised for encouraging violence and stirring tensions in Colombia

BP is one of the world's leading oil companies. Its products are sold in 100 countries and it has extended its operations to six continents. In 2011, reported sales and revenues amounted to US$ 375,517million. BP has significant interests in resource-rich countries with a history of internal violence, such as Colombia, Venezuela, Indonesia, Egypt, and Turkey. The complex settings of such fragile countries often undermine BP's performance in these locations.

BP's operations in Colombia's Cusiana and Cupiagua oil fields always faced high risks. This is mainly due to a war on oil companies declared by left-wing guerrilla groups. In countries with internal violence, it is not unusual for armed groups to try to interrupt revenue flows to the central government in order to weaken its powers – or to redirect it for their own financing needs. As a result, a company moving into a country can become an obvious target of attacks that are aimed at making the company leave. Alternatively it may become a victim of extortion (for example in relation to the security of its employees and infrastructure). In turn, such payments can fund armed groups and facilitate violence in the region.

On the other hand, companies may refuse to succumb to such pressures, instead relying on public or private security forces for their protection. There is a risk that such forces fail to follow relevant human rights standards (for example by using unnecessarily excessive force) thus undermining the company's reputation, exposing it to potential legal liability and further fuelling resistance to such use of force by both armed groups and other affected stakeholders. BP's business in Colombia has encountered such challenges.

There have been frequent cases of damage and bombings of the OCENSA pipeline since 1998, a project owned by a consortium of companies including BP, which resulted in the deaths of scores of people. The construction of the pipeline reportedly also coincided with a surge in violence by paramilitary forces linked with the government, who were accused of torturing and killing civilians suspected of supporting guerrilla groups.

Considering these security risks, in 1995 BP entered into a formal agreement with the Colombian Defence Ministry and National Police to further the protection of BP's personnel and facilities. In a speech held at Amnesty International, senior BP manager Richard Newton noted that it opted to engage the state security forces, despite allegations of abuses carried out by the Colombian army. This was instead of relying on a ‘private army' that they could then ensure worked to international standards – as suggested by ‘a well-known and respected UK NGO'. Whilst noting the undesirable nature of this choice, Newton noted that ‘...in a country where there are armed guerrillas and paramilitaries [i]t is better to be protected by the legitimate forces of the state.'

The actions of the security forces often extended beyond legitimate ‘protection' activities, including the injuring of demonstrators protesting against working conditions in the oil industry and the alleged killings of the trade-unionists. According to Jorge Molano, a Colombian Human Rights Lawyer, the impression among the population of Colombia was (allegedly) that ‘BP gives money to [the] military in order to kill trade unions.' BP denies such allegations.

In July 2005, a group of Colombian farmers instituted legal proceedings against BP in the English High Court, claiming, among other things, that BP benefited from human rights violations committed by paramilitaries employed to protect its business. A settlement with affected farmers was reached in 2006 – although BP continued to deny liability. A lawyer for farmers affected by the alleged violations acknowledged that security is a headache for multinationals operating in war-torn countries, like Colombia'. However, she further stated that ‘had the company settled with these people in a decent and prompt manner, it might have helped to defuse rather than inflame an already tense situation'.

Bechtel's operations alleged to fuel ethnic tensions in an already ethnically divided Kosovo

In late April 2010, a joint venture between Bechtel (a US-based private construction company) with Enka (a Turkey-based engineering and construction company) won the bid for the construction of a EUR€700 million Albania-Kosovo highway project, which is expected to be completed in 2013. The highway is currently the biggest infrastructure development project in post-conflict Kosovo. The motorway will link Vёrmicё/Vermica (on the Albanian border) with Merdar/Merdarё (the border crossing point between Kosovo and Serbia). The highway will pass through Prishtinë/Priština in Kosovo and cover about 1,062 hectares of land.

The aim of the project is to improve communications with all of Kosovo's major trading partners, to enable access to Albania's principal commercial port in Durres (on the Adriatic Sea) and to facilitate the movement of people across borders. Despite these positive aims, the project presents challenges in terms of the impact its chosen route has on minority community groups in Kosovo, with potential to overturn stability in the region.

The highway runs through six regions, some of which have a significant ethnic minority population. According to allegations, some of the properties of ethnic minorities living in one of the villages are expected to be affected by the highway, and would be split-up or cut-off by the proposed pathway of the highway. In turn, this would negatively affect, rather than enhance, access to their lands and subsequent farming opportunities.

In May 2010, when seven km of the highway had been completed, Kosovo's Ministry of Environment was not able to confirm whether an Environmental and Social Impact Assessment (ESIA) had been carried out. In the absence of such an assessment, there is no way of telling:

Whether the highway will pass through the properties of persons that were displaced during the war and who may intend to return home

How such people's interests should be accommodated

Property restitution to returnees is a key agenda point for decision makers in the region, acknowledging it as a factor that will facilitate transitional justice.

Although issues of this kind can (and in fact often do) take place in any project in any country, the impacts can be particularly negative in countries with a history of interethnic conflict. This is because a project with a significant impact on a particular minority's property may be seen as a continuation of discriminatory practices, which could, in turn, spark another ethnic violence.

Such business projects could also make the process of post-conflict rehabilitation and peace-building more difficult, as a result of occupying the lands of persons displaced during the war and now intending to re-possess their property. This is particularly the case if businesses do not ensure proper procedures are in place to ensure fair compensation for the potential expropriation of such property to ensure that returnees are not unjustly affected.

See Doing Business in Conflict Affected Zones case studies

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Businesses in conflict-affected states may encounter the same set of legal, financial, reputational and operational risks as in relatively stable states. However, in addition to risks common (to some degree) in many countries, conflict-affected environments pose a range of unique challenges.

Legal risks

Legal risks in conflict-affected countries may take different forms. First of all, conflict-affected countries almost always suffer from failures in political, economic, legal and civil institutions, posing a serious risk to businesses. In such zones, governments usually either lack the capacity or willingness to discharge their duty to provide basic services and effective human rights protection. As a result, the divide between public and private functions can be distorted by private actors performing government services and providing essential services (for instance, defence and security services). For instance, in the 1990s, a private military company called Executive Outcomes (composed mainly of ex-South African special forces) was contracted by the Angolan and Sierra Leone governments to fight rebels in these countries.

However, companies providing military services (especially combat assistance) may face legal risks due to a lack of clarity regarding their status when taking part in armed conflicts to which their home states are not a party. Indeed, there is no uniform agreement as to whether they should be considered lawful combatants entitled to the status of prisoners of war (POW) on capture, or war criminals. The implications of this are very serious, as, unlike lawful combatants who are accorded immunity in international armed conflicts, those who do not have the status of a lawful combatant may face trial and be convicted of murder for killing lawful combatants when participating in hostilities.

Also, in the context of armed conflict, the failure to respect human rights by private military and security contractors translates into international criminal responsibility. It is no longer the issue of complicity in violations by others, but rather direct responsibility for war crimes. In most cases, either the country of operation or home country of private military contractors is party to the 1998 Rome Statute of the International Criminal Court (ICC), increasing the risk of legal suits against private military or security contractors by courts of host states of the ICC.

Investors in conflict-affected countries, where defence and security have been contracted out to private military and security companies, may face this risk in a different way. For example, private military and security contractors are subject to different accountability mechanisms than public security forces. In turn, the lack of effective oversight by the government can result in inadequate screening and training of the employees of such contractors, increasing the risk of engagement in human rights violations.

A vivid example of such a risk is Blackwater private security company, now known as Academi. The company was found to have used excessive force against civilians in Iraq in September 2007. Blackwater received a contract from the US Department of State, and, after the incident, it was determined that the State Department did not have ‘a coordinated, systematic policy for overseeing private contractors abroad and holding them accountable for serious violent crimes'. Another example is private military company CACI, which was contracted by the US government to interrogate terrorism suspects. CACI was involved in the torture of prisoners at the Abu Ghraib detention centre. In cases like this, investors seen to benefit from such violations may be perceived as complicit in the actions of private military and security contractors.

Complicity

In principle, companies can be found to be complicit in human rights violations committed by others and face negative implications, such as legal suits or reputational damage and associated costs. However, there is no one-size-fits-all international rule that would determine when a company is complicit in legal terms. Rather, different tests are provided by different branches of law, such as tort law, criminal law, contract law or company law.

According to guidance produced by the Office of the High Commissioner for Human Rights (OHCHR),

‘A company is complicit in human rights abuses if it authorises, tolerates, or knowingly ignores human rights abuses committed by an entity associated with it, or if the company knowingly provides practical assistance or encouragement that has a substantial effect on the perpetration of human rights abuse. The participation of the company need not actually cause the abuse. Rather the company's assistance or encouragement has to be to a degree that, without such participation, the abuses most probably would not have occurred to the same extent or in the same way.'

The Business Leaders Initiative on Human Rights (BLIHR), a business-led programme developing practical tools and methodologies for applying human rights principles and standards, has identified the four following scenarios to illustrate the notion of complicity:

• When a company actively assists, directly or indirectly, in human rights violations committed by others, e.g. where a company provides information that it knows will be used to violate human rights to a government
• When a company is in a partnership with a government and knows, or should have known before agreeing to the partnership, that the government is likely to commit abuses in carrying out its part of the agreement, e.g. forced relocation of peoples
• When a company benefits from human rights violations even if it does not positively assist or cause them, e.g. abuses committed by security forces, such as the suppression of a peaceful protest against business activities or the use of repressive measures while guarding company facilities
• When a company is silent or inactive in the face of systematic or continuous human rights violations, e.g. inaction or acceptance by companies of systematic discrimination in employment law against particular groups

The concept of complicity was also clarified in a 2008 Report of the International Commission of Jurists Expert Legal Panel on Corporate Complicity in International Crimes, which is a synthesis of its understanding of criminal and civil law. The Report of the ICJ Panel showed how to identify the risk of a company nearing the threshold of complicit behaviour in legal terms by looking into three sets of factors:

• Causal links between company's actions/inaction and human rights violations by third parties
• Knowledge and foreseeability of human rights violations by companies
• Proximity of a company to a perpetrator of human rights violations

The lack of government capacity to protect human rights can also pose the risk of company complicity in labour violations by supply chain partners. Conflict-affected countries usually suffer from widespread poverty, facilitating child and forced labour and unethical working conditions. Trafficking for sexual and commercial exploitation, as well severe restrictions on trade union activities, is also common. Vulnerable groups, such as children, women, migrants, IDPs and refugees, ethnic and poor communities are the usual victims of such practices.

Unbalanced or unstable legal context and corruption

Another legal risk, according to the OECD Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones, is that the legal and regulatory context in areas where the risk of conflict is very high may:

• See repressive and corrupt governments interested in the inflow of investments to pass laws that are particularly favourable to investors – not necessarily the population under its jurisdiction as a whole
• Be subject to specific constraints on the legislative process (e.g. peace settlements, new constitutions, etc.) reducing policy flexibility after investment funds have been committed to the country
• Evolve in a manner that is unpredictable – including laws being changed at the whim of unaccountable governments resulting in regulations that are less stringent than international standards, posing a dilemma to businesses in deciding which standards to follow

For instance, an oppressive government may require mobile operators to provide state intelligence officers with unlimited access to the communications of all customers. In turn, such access may enable the state apparatus to identify individuals opposing the regime and their whereabouts and facilitate their arbitrary arrests and ill-treatment. The reality of such risk is supported by the allegations of human rights abuses of Nordic telecoms company Teliasonera, an investor in a number of companies in weak governance zones, such as Belarus.

Likewise, businesses engaged or seen to be engaged in the corrupt practices of public authorities may face legal actions under the law of their home countries with extraterritorial effect.

For example, the Foreign Corrupt Practices Act 1977 (FCPA) provides a strong disincentive for companies to participate in corrupt activity abroad. The Act, which is actively enforced by the Department of Justice and the Securities and Exchanges Commission, applies to companies listed on US exchanges or with significant operations in the US, regardless of where corruption occurs geographically.Its far-reaching scope (which can include non-US companies accused of corrupt activities in non-US jurisdictions) – as well as the proactive stance of the US authorities – means it poses a serious potential risk to a significant number of MNCs. (For more information on legal risks to businesses as a result of corruption, see the ‘Risks to businesses' section of the Corruption dilemma).

Because so much government capacity is spent on addressing violence in post-conflict areas, these countries often lag behind in terms of legal developments. In the end, when the conflict ceases it is not unusual to see legal lacunas or outdated laws. Sometimes records needed for the application of laws may not exist anymore. For instance, in Liberia, records of land titles have been lost as a result of long-term conflict. The Liberian Truth and Reconciliation Commission also reported in 2008 that land tenure was unclear and that there was a conflict between customary and statutory laws. This can raise serious challenges to MNCs in terms of land acquisition, for example.

Finally, in some cases, where a part of the country has been fighting for independence, it may start developing its own system of laws. If the status of the territory seeking unilateral secession and/or independence – which has not been agreed upon by the parties to a conflict – investors may find themselves facing a dilemma as to which system of laws takes precedence in these territories. The dilemma becomes even more complicated, when these two systems of laws conflict with one another. For instance, this has been a challenge faced by businesses in Kosovo after the region unilaterally declared independence from Serbia in 2008. There is no clarity as to which laws prevail when regulating the same subject matter – Serbian laws, United Nations Mission in Kosovo (UNMiK) laws or laws adopted in Kosovo after February 2008.

Sanctions

Many conflict-affected countries and weak governance zones are likely to be affected by sanctions imposed either at an international level (for example, via UN resolutions or EU restrictive measures that are implemented through the national laws of companies' home countries) or at a national level (e.g. sanctions imposed by companies' home countries on a unilateral basis).

For example, the UN currently has sanctions in place on a range of countries, including:

• Afghanistan (e.g. arms embargo on specified persons/entities)
• Libya (e.g. arms embargo)
• Somalia (e.g. "general and complete" arms embargo)
• Yemen (e.g. arms embargo)

Likewise the EU maintains ‘restrictive measures' against more than 20 different countries, including those affecting countries such as:

• China (e.g. arms embargo)
• Libya (e.g. arms embargo, restrictions on the export of equipment for internal repression and a ban on the provision of certain services)
• Myanmar (e.g. embargo on arms and related material and a ban on exports of equipment used for internal repression)

The US Department of the Treasury lists more than 20 separate sanctions programmes affecting, amongst others:

• Iran (e.g. import ban on Iranian goods, ban – unless specially licenced – on exports to Iran, involvement in any transactions relating to goods or services of Iranian origin or goods or services owned or controlled by the Government of Iran, etc.)
• Sudan (e.g. prohibition on engaging in any transactions or activities related to Sudan's hydrocarbon industries, import ban on goods or services of Sudanese origin, ban on the export (with limited exceptions) on goods, services or technology to Sudan, etc.)

As a result, multi-national companies operating in or doing business with conflict-affected countries and weak governance zones would be well advised to check that their commercial activities do not contravene local sanctions and so expose them to significant fines and even the imprisonment of company officers.

Reputational risks

Even in the absence of legal actions, businesses can still be exposed to a range of negative impacts such as reputational damage.

Reputational risks can be posed by the following:

• Protest campaigns by affected communities: the case of Nigeria is an example of a country where local communities' resentment of the operations of Royal Dutch Shell, and the way it was dealt with, cast a negative spotlight on the company in 1990s. Since then, the company has been constantly citied as an example of controversial business behaviour.
• Spread of critical news by mass media, social activists and human rights defenders across the world with the use of new technologies: blogging by youth activists in Arab Spring countries was indispensable in raising awareness around the world about the corrupt practices of ruling regimes in these countries. Due to these revelations, a shadow was cast on the reputation of a number of financial institutions, such as HSBC, Société Générale and Goldman Sachs, which were seen as having helped the corrupt regimes to enrich themselves.
• Consumer boycotts: for instance, a pressure group initiated by Change.org gathered 20,000 signatures in support of Syrian activists. They urged four European and American technology companies, including California based NetApp to reconsider an agreement with the Syrian regime to establish software allowing a surveillance system to track online activists and bloggers. As a result, the companies decided to terminate the contract when they realised the damage caused by the project.

Reputational risks should be considered, even when the law is silent on a particular issue. For instance, copper producer Anvil Mining (then based in Australia and subsequently in Canada) was exposed to serious reputational harm – and became the focus of significant international debate – when in 2004 a local military unit in DR Congo used some of its vehicles to quash a small local uprising. The Congolese military reportedly killed around 70 civilians in the process – whilst committing additional serious human rights abuses. Although Anvil admitted their trucks were used during the incident, it insisted that it had no choice at the time but to cooperate with the government's requisition request. Three Anvil employees were subsequently acquitted of complicity in war crimes in DR Congo, in a military trial that the UN said failed to meet international standards. A class action was filed against the company in Canada in 2010 and at the time of writing was undergoing an appeal against dismissal to the Supreme Court of Canada.

In cases where companies are also members of the UNGC group, the failure to address violations might lead to the exclusion of companies from the list of UNGC participants, with further negative publicity possible through its website.

Security risks

Conflict-affected countries are likely to pose significant security risks to companies' people and assets – particularly where the root causes of conflict are not addressed. In such a context, it is incumbent on companies to adequately ensure their employees' safety and wellbeing, and if they cannot and the risk of conflict resumption is high, to remove such employees from exposure to such risks.

Depending upon the specific context (e.g. whether the conflict is resumed, intense, violent etc.), likely security risks might include:

• Boycotts and protests against company operations by various armed groups, community protesters, government opponents, etc. that turn violent
• Direct, organised attacks by armed combatants on companies' operations to disrupt their commercial activities, extract payments of money, seize assets and generate publicity – or to act as a target of ‘proxy' attacks against the company's country
• Kidnapping of company personnel in return for money and/or political concessions – as well as the generation of publicity
• General security threats outside the work context, including lawlessness, bombings, arbitrary arrests and detentions, the installation of land mines, etc.

In addition to this, there is significant scope for operational disruption in terms of:

• The necessary suspension of operations to protect employees and company assets
• Damage to infrastructure (e.g. water and power) due to lack of investment, lack of maintenance and even deliberate damage
• Damage to assets, including machinery, vehicles , buildings and stock
• Supply chain disruptions due to the impacts of conflict on suppliers, lawlessness along supply routes and limited engagement by cautious international suppliers/shippers
• The suspension of company activities (e.g. through the suspension of licences, permits, etc.) where their activities are – or are perceived to – contribute to conflict and instability

Such security risks are particularly high for – amongst others:

• Extractive companies (due to the fact that the locations of their activities are dictated by the locations of fixed hydrocarbon or mineral deposits – which may sit in unstable regions – as well as their potential generation of revenues for governments, both local and national)
• Companies whose activities have the ability to influence local conflicts and/or opponents (for example through the provision of their services or products, such as security companies, media and telecommunication companies and others – or their generation of economic benefits for opponents)
• Companies that are of a symbolic nature (e.g. where they are seen to represent the values and policies of their countries of origin, or to host citizens of the same – such as hotels, cultural institution and others)

For example, in January 2013, the In Amenas gas facility in Algeria, jointly operated by Algerian firm Sonatrach, British firm BP and Norwegian firm Statoil, was attacked by al-Qaeda linked terrorists. During the attack, the group killed 67 people, including 39 foreign nationals from countries including Japan, the Philippines, Norway, the United Kingdom, the United States, Malaysia, Romania, Colombia and France.

Likewise, in June 2015, the Port El Kantaoui tourist complex, situated north of the city of Sousse in central Tunisia, was attacked by a ‘lone wolf' Islamist terrorist, resulting in the death of 38 foreign nationals, and the wounding of 39 others. The perpetrator of this attack is believed to have been a member of Jund al-Khilafah, an armed group that claims to be affiliated with the Islamic State.

Operating environment

In addition, root causes of tensions and unresolved violent conflict can severely undermine the operating environments of MNCs. This may include the addition of project costs that might make projects unfeasible. Examples include:

• Widespread poverty, illiteracy and high mortality rates among children resulting in the lack of a professional labour force with which to staff operations
• Underdevelopment of the country can translate into a lack of necessary infrastructure and facilities (for example) energy supplies, logistics, supply chain integrity, health and sanitation
• Serious environmental degradation in the form of polluted soil or water can present challenges to commercial agri-businesses or businesses heavily dependent on water

Financial risks

Relevant legal disputes, reputational and operational risks can have negative financial implications for businesses by affecting their assets, access to capital and brand value. For instance, Shell ended a thirteen year-long court case related to its operations in Nigeria with a US$15.5 million settlement in favour of the plaintiffs.

There is growing shareholder activism, especially on the side of big institutional investors. These are usually the pension funds which are strictly adhering to codes of conduct. These kinds of investors ‘could have a significant impact on share value' owing to the large number of shares they usually hold. Besides divestment by ethical investors, the loss in share value by companies who fail to address environmental, social and governance issues in conflict-affected countries is another risk.

The lack of predictability in conflict-affected environments means that violence may erupt any time, forcing companies to allocate more finances to protect their employees and assets. In the worst case scenario, businesses may be forced to leave the country while suffering large losses as a consequence.

See Doing Business in Conflict Affected Zones case studies

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The UN ‘Protect, Respect and Remedy' Framework for Business and Human Rights provides guidance on how to protect individuals and communities from corporate related human rights harm.

The framework is comprised of three key principles:

• Protect: The state duty to protect against human rights abuses by third parties, including business;
• Respect: The corporate responsibility to respect human rights; and
• Remedy: Greater access by victims to effective remedy, both judicial and non-judicial.

The framework states that in addition to complying with national laws businesses have a responsibility, in the context of the countries where they operate, to respect human rights through their own business activities and through their relationships with third parties – such as business partners and entities in their supply chains. To meet this responsibility, the framework notes that businesses should engage in human rights due diligence and specifies the main components of the process:

Policies: Including a human rights policy containing broad commitments, supported by more detailed guidance in specific functional areas

Impact assessment: Including assessments that explicitly reference internationally recognised human rights and are used by companies to avoid potential negative human rights impacts on an ongoing basis

Integration: Including the embedding of respect for human rights throughout a company

Tracking performance: Including regular updates of human rights impact and performance

The Guiding Principles for the Implementation of the UN "Protect, Respect and Remedy" Framework aim to provide "concrete and practical recommendations" about how businesses can operationalise their responsibility to respect human rights. According to the Guiding Principles, the responsibility to respect human rights requires responsible companies to:

• Implement a human rights policy
• Apply human rights due diligence
• Provide for remediation

The UNGPs apply to all States and to all business enterprises, both transnational and others, regardless of their size, sector, location, ownership and structure.

The UNGPs have experienced widespread uptake and support from both the public and private sectors, and numerous companies have publicly stated their commitment to the Guiding Principles. The UN Guiding Principles Reporting Framework is also used by companies to report on how they respect human rights.

Companies can seek specific guidance on this and other issues relating to international labour standards from the ILO Helpdesk. This aims to help company managers and workers understand the ILO approach to socially responsible labour practices and to assist in the development of good industrial relations.

The Guiding Principles emphasize the challenges of doing business in conflict-affected areas, by stating that ‘the risk of gross human rights abuses is heightened in [such areas]'. Businesses are advised to pay special attention to both gender-based and sexual violence which tend to be especially prevalent during times of conflict. The Commentary to this section of the Guiding Principles states that ‘[i]nnovative and practical approaches are needed' in order to avoid contributing to human rights violations in these environments.

While designing its Human Rights Impact Assessment, businesses may wish to consult existing guidance documents, such as the International Finance Corporation (IFC), UN Global Compact and International Business Leaders Forum's (IBLF) Guide to Human Rights Impact Assessment and Management. This latter guide provides companies with a ‘process to assess their business risks, enhance their due diligence procedures and effectively manage their human rights challenges.' The online guide takes users through different stages of the impact assessment process, including Preparation, Identification, Engagement, Assessment, Mitigation, Management and Evaluation.

Some existing tools are specifically devised to guide businesses as to the risks present in conflict-affected environments and include the Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones, which was adopted by the OECD Council on 8 June 2006 and is complementary to existing procedures, and the OECD Guidelines for Multinational Enterprises updated in 2011. The Risk Awareness Tool aims to help multinational enterprises in meeting challenges in countries, where ‘government failures lead to broader failures in political, economic and civic institutions that, in turn, create the conditions for endemic violence, crime and corruption and that block economic and social development.' In particular, the Tool invites business enterprises interested in investment in weak governance zones to answer a number of questions, grouped around the following topics:

• Obeying the law and observing international instruments
• Political activities
• Knowing clients and business partners
• Speaking out about wrongdoing
• Businesses roles in weak governance societies – a broadened view of self-interest

In addition, the Risk Awareness Tool for Multinational Enterprises in Weak Governance Zones requires ‘heightened managerial care' to investigate and address risks in weak governance zones, acknowledging the unfortunate reality that the risk of different violations in conflict-affected countries is heightened. This approach should apply to all stages of due diligence, including ‘information gathering, internal procedures, relations with business partners (including agents, joint venture partners and subsidiaries) and use of external legal, auditing and consulting services – in order to ensure compliance with legal obligations and observance of international standards'.

The OECD's Due Diligence Guidance for Responsible Supply Chains helps companies respect human rights and avoid contributing to conflict through their mineral purchasing decisions and practicesThe Guidance is for use by any company potentially sourcing minerals or metals from conflict-affected and high-risk areas and in 2012, it was recognised by the US Securities and Exchange Commission as an international framework for companies filing a conflict minerals report under Dodd-Frank legislation. The Guidance outlines a five-step due diligence framework that includes: establishing strong company management systems; identifying and assessing risk in the supply chain; designing and implementing a strategy to respond to identified risks; carrying out third-party audits of supply chains; and reporting on supply chain due diligence.

Specific actions that responsible businesses might take to prevent or mitigate the risks posed by conflict-affected countries include the following:

1. Company policy regarding operations in or with conflict-affected countries

Companies concerned about the potential of their operations having a negative impact on the situation in conflict-affected countries, as well as the risk of challenges in such areas adversely affecting their operations, may consider adopting a tailored policy to govern their work in such environments. Such a policy could require businesses to:

• Follow best practices in the protection of people and assets, in accordance with international standards such as the Voluntary Principles on Security and Human Rights
• Avoid the exacerbation of actual and potential conflict by, for example, ensuring all business decisions involving conflict-affected countries are carried out with an informed understanding of past and existing tensions and the company's potential to improve or exacerbate the situation on the ground
• Ensure that all investments involving conflict-affected countries are sustainable, meaning that they contribute to economic and social development and protect the environment
• Comply with applicable national laws, including those on corruption, money laundering, human rights and trade sanctions
• Follow higher international legal standards where national laws are below international standards (e.g. protection of property rights, etc.)
• Carry out due diligence on customers in conflict-affected countries to identify the risk of customers engaging in human rights violations with the use of companies' products and services
• Design products (where practicable) in such a way that their misuse to violate human rights is minimised
• Carry out due diligence on business partners in conflict-affected countries to a level commensurate with the risk of engaging with partners with a history of human rights violations
• Ensure that the company's policies are informed by the views of local communities, civil society, think tanks, international organisations, local businesses and host government (e.g. around the legality of commercial engagement in a country and the potential application of international sanctions)
• Ensure that companies' policies require it to include provisions to allow the termination of business contracts with partners and customers found to have violated human rights with the use of companies' products
• Regularly review the policy and supporting procedures as prompted by new concerns

2. Assess the context of business operations

Companies are advised to carry out due diligence before making decisions on whether to operate in conflict-affected countries or to do business with actors based in these areas. This will help ensure they have a prior and informed knowledge of the situation on the ground, as well as an understanding of the potential of their operations to have either a positive or negative effect.

It will also help companies make a decision as to whether to invest in conflict-affected countries at all. Where companies do decided to make such an investment, the results of such due diligence will give them the opportunity to devise measures to avoid or mitigate potential risks – and to maximise the positive impact on the situation.

In the process of undertaking ‘heightened due diligence' responsible companies might consider the following set of factors:

Country context

• The nature of in-country conflict, its drivers and key stakeholders – as well as associated security risks and impacts. This includes the history of conflict and the existence, the efficiency of government mechanisms to address the consequences of past conflicts and the tendency of the protagonists to abide by the standards of the international law of armed conflicts
• The nature of the regime in host countries (i.e. whether it is a democracy, tyranny or oligarchy, and its constitutionality), as well as its ability to manage/prevent conflict. As part of this exercise, companies should also examine whether the host government tends to use force to stay in power or to keep resource revenues for private use, or uses resources to stay in power
• The quality of national laws in host countries with respect to issues such as the protection of human rights and the environment, corruption, money laundering, responsible public/private security provision – as well as the quality of the enforcement of laws
• The international obligations of host countries in the above mentioned areas and the nature of their legal system (i.e. monist or dualist). In the case of countries with a monist system international law does not need to be translated into national law and the act of ratifying an international treaty incorporates the international law into national law at once. In countries with a dualist system, international laws are not directly applicable. For this to happen the country has to adopt national acts to implement the provisions of international treaties to which it is a party
• The level of general government tolerance to the different freedoms and rights of its population as demonstrated by the prevalence of human rights violations, their types and gravity. Companies should likewise establish whether the host government has the capacity or the willingness to ensure accountability of both state and non-state actors for not complying with human rights standards
• The existence of a strong civil society in the host country to act as a check on government actions
• The structure of a country's economy and the contribution of the economic sector of interest to GDP
• Rates of economic and social development in host countries in recent years and the existence of a strong government policy to ensure basic needs of the wider population are addressed. This includes levels of poverty and rates of unemployment in the country and the existence and efficiency of government mechanisms to address these challenges and to ensure revenues from economic activities are spent efficiently
• Levels of corruption in the country and its prevalence in both the public and private sectors
• The amount of revenues from a particular economic activity being spent by the government on military purposes and the government's internal and foreign military policy
• The prevalence of discrimination (i.e. in access to land, education, employment, capital, economic opportunities, among others) on the basis of ethnicity, religion, social status, political affiliation and other grounds – and the potential of such practices to grow during open conflict
• The existence of other grievances or tensions in the host country, particularly in economic sectors of interest to companies, and their root causes

Impact of a company's products, services and operations

• The potential impact a company's product / service may have on various human rights in the country where it is sold when used as intended
• The potential impact a company's product / service may have on various human rights in the country where it is sold if misused
• The potential of business operations to create a scarcity of natural resources, such as water and land, for local communities, especially where their livelihood depends on it

• The potential of business projects to increase the gap between different groups in society by unjustly enriching one group as against other more marginalised groups
• The potential of a company's operations to aggravate tensions or ongoing conflicts in host countries, especially if groups within a country oppose each other with regards to the desirability of such operations or their being carried out by foreign companies
• The potential of a company's projects to lead to the displacement of or other discrimination against minority groups that have been victimised during past conflicts

• The potential of a company's business strategies to result in labour rights violations, even where strategies are devised to maximise the positive effect of the project on the ground

Company relationships (business partners, entities in a distribution chain, end-users)

• Whether there is a reason to believe that a business partner may misuse a company's product or an entity in a distribution chain may re-sell the product to an end-user likely to misuse it to commit human rights violations
• Whether business partners' or security contractors' past operations and preferable methods of payment – such as untraceable transactions - suggest that they may have engaged in human rights violations
• Whether contractors are a part of a wider multinational conglomerate or a locally established business owned or controlled by public officials who have attracted negative publicity for human rights violations
• Whether laws and regulations at the place of incorporation of business partners or contractors serve as an effective restraint on unethical business practices
• In the absence of industry-wide regulation, whether business partners and contractors have internal codes of conduct that are in line with international standards, such as the Voluntary Principles on Security and Human Rights, Financial Action Task Force's (FATF) Recommendations, the International Chamber of Commerce's Rules of Conduct and Recommendations on Combating Extortion and Bribery and Transparency International's Business Principles for Countering Bribery: TI Six Step Process
• Whether a security or defence contractor is used as a ‘proxy company' by other states with an interest in the region to further their foreign policies
• Whether business partners or contractors have internal policies, supported by operational procedures, that prohibit engagement in corruption and commit employees to respect the letter and the spirit of anti-corruption and anti-money laundering laws and standards
• When business partners are registered in offshore locations, whether the rationale for the offshore registration is reasonable and necessary as per (for example) the International Association of Oil and Gas Producers' Guidelines (OPG) on Reputational Due Diligence

Companies can address each of these company relationship issues by reviewing the following:

• Relevant laws, regulations and policies of host conflict-affected countries and home countries of business partners and other contractors
• Credible human rights reports on conflict-affected countries of interest that highlight the prevalence and gravity of human rights violations, as well as incidents of misuse of products for impeding human rights
• Human Development Reports and Indicators, commissioned by the United Nations Development Programme
• Reports and press releases of the International Committee of the Red Cross Country reports and Indicators published by Transparency International, the global coalition against corruption
• Relevant mass media news sources that could point to violations of international human rights law and the international law of armed conflict in countries of interest and by potential business partners and other contractors
• Evidence of business partners and other contractors having policies and management systems in place that act as an effective restraint on controversial practices

3. Procedures for risk assessment

Companies may consider establishing an internal specialised team within their own organisational structure to carry out impact assessments on new and existing projects. This might include legal consultants, human rights experts, experts in environmental science, technical and financial consultants, sustainability analysts, individuals with specialist knowledge of the history and root causes of conflicts in countries of interest, as well as specialists in conflict resolution and management.

The team should ideally be used to engage in field visits in order to supplement desk-based research with first-hand knowledge of the situation on the ground. This includes engagement in consultations with local actors, especially ones that could potentially be affected by planned business activities – or pose serious risks to companies' people and assets

Alternatively, companies can contract out social and environmental impact assessments (ESIA) and human rights impact assessments (HRIA) to independent professional consultants. For this purpose the companies can consult International Finance Corporation (IFC) Performance Standards on Environmental and Social Sustainability. The HRIA can be carried out as an independent exercise or be incorporated into the standard ESIA. The latter does not generally assess a project's potential to negatively impact human rights (both in terms of peace and war) – making such incorporation desirable. Companies could also consider the use of independent professional auditors to provide assurance over this process.

Business decisions made on the basis of the results of the impact assessments should be taken at the highest levels of management in the company. The involvement of senior management in such decisions is justified by the heightened risk of violations in conflict-affected countries and a higher risk that the company will exacerbate tensions in fragile environments.

See Doing Business in Conflict Affected Zones case studies

4. Procedures for legal compliance

Companies could consider establishing a mechanism for identifying applicable laws and regulations (both national and international, applicable in times of peace and war), as well as best practices in relevant areas, and checking compliance with the standards. Internal company procedures should incentivise company management and its employees, as well as its business partners, to follow higher standards and ensure accountability for violations. Penalties for breaking a company's codes of conduct should be grave enough to deter inappropriate behaviour by its own employees and those of its business partners.

Issues that often trigger conflicts and with regards to which companies should be especially vigilant in meeting all legal requirements around:

• Corruption and money laundering: the Corruption dilemma identifies international standards and specifies good practices a responsible company could consider taking in order to prevent or mitigate the risk of corruption in its countries of operation
• Partnerships with state-owned enterprises (SOEs): the Working with SOEs dilemma identifies international standards and suggests good practices a responsible company could implement to prevent or mitigate the risk of complicity in human rights violations carried out by SOEs or companies controlled by states through means other than full or majority ownership
• Land acquisition and community relocation: the Community relocation dilemma identifies international standards and specifies good practices a responsible company could consider taking to prevent or mitigate the risk of violating the rights of local communities, especially where land titles may be unclear (a common problem in conflict-affected areas). In addition, given that conflicts often result in the displacement of people, a company may consider establishing a mechanism to verify existing land claims based both on national law and customary practices before and after the conflict
• Conflict minerals: the Conflict minerals dilemma identifies international standards and specifies good practices a responsible company could consider taking to prevent or mitigate the risk of procuring minerals through supply chains that profit armed groups in producer countries and fuel local conflicts
• Security arrangements: the Security forces dilemma identifies international standards and specifies good practices a responsible company could consider taking to prevent or mitigate the risk of human rights violations by public and private security providers. In times of armed conflict, and where a company is itself provide defence services, it should observe the applicable norms of international law of armed conflicts which regulate combat services (for example, the Geneva Conventions of 1949 and its Additional Protocols), as well as relevant international standards codes (e.g. The Voluntary Principles on Security and Human Rights). Company procedures should also prescribe effective sanctions to prevent managers or employees from paying rebels and other groups in exchange for the security of assets and personnel as long-term security arrangements
• Labour practices: the Forced labour and Human trafficking dilemmas identify international standards and suggest good practices a responsible company could consider to proactively address the risk of forced labour posed to persons displaced during conflicts, who are particularly vulnerable to abuses. Displaced persons are also common victims of human trafficking
• Access to limited natural resources and environmental degradation: the Access to water dilemma identifies international standards and suggests good practices a heavily water-dependent company might consider to ensure respect for local communities' right to water, both in terms of access and cleanliness – and so help avoid social conflict
• Minority rights: the Ethnic minorities and Freedom of religion dilemmas identify international standards and suggest good practices a responsible company should consider taking to ensure that the rights of ethnic and religious minorities are equally respected and supported, irrespective of location or context
• Product misuse: Product misuse dilemma identifies international standards and suggests good practices a responsible company could consider implementing to address the risk of misuse of its products to violate human rights, which can exacerbate tensions in conflict-affected countries

5. Going beyond legal compliance

Conflict-affected countries present many more challenges than otherwise stable countries. As a result, responsible companies interested in pursuing economic activities in conflict-affected countries should be ready to take measures beyond simple compliance with applicable laws and regulations in order to address the complexities of the local environment.

For instance, where widespread discrimination against an ethnic minority is a root cause of conflict, engaging in affirmative action (otherwise known as ‘positive discrimination') regarding the minorities could assist the process of transitional justice. A company policy requiring the employment of a quota of workers drawn from minority groups is one example of affirmative action which is in line with international law.

The rationale behind these measures is that if the groups were refused equal opportunities for a long time they may not have the capacity to compete in the same way as other individuals who have historically been in a better position. However, such measures should be eliminated once the balance of justice has been restored and they are no longer required.

Where governments fail to fulfil their obligation to protect the economic, social and cultural rights of local communities, different initiatives by companies in this area, subject to available resources, could also help to address the root causes of conflicts. Examples include:

• Improving educational opportunities for disadvantaged groups
• Improving access to health for poor communities
• Financially supporting the development of small and medium enterprises
• Aiding post-conflict reconstruction works (e.g. building roads and other infrastructure)
• Improving the access of poor communities to clean, safe and affordable water
• Raising awareness about human rights

Although these initiatives may add to project costs, they can contribute to the long-term sustainability of a company's investments.

6. Facilitating conflict resolution

Responsible companies interested in economic activities in conflict-affected countries can facilitate peace-building on a macro-level by pro-actively addressing potential conflicts in their local working environments – where they have a relatively high degree of influence. A company that clearly understands the links between its activities and potential positive and negative impacts on the ground has a higher chance of preventing conflicts. This knowledge could help companies plan practical solutions to prevent the worsening of relations with and between different groups, including local communities and employees.

Actions might include, for example:

• The encouragement of dialogues between stakeholders
• Technical assistance to governments to address reconstruction and the encouragement of current investment
• Support for research on peace-building

In addition, where governments in conflict-affected countries are interested in attracting certain companies to establish a presence, these companies could use their leverage to place conditions on their investment. They may emphasize the importance of the government creating a stable and peaceful environment, as well as conditions for human-rights based development, before funds would be committed.

Another way for companies to assist the process of conflict resolution and management could be by helping business leaders from countries and/or communities that have been long-standing adversaries to find common ground and undertake joint projects – for example through commercial and other forms of engagement. This can potentially be a start to building mutual trust and peaceful relations between the two countries.

7. Cooperation in peace-building research and initiatives

Companies could establish and strengthen cooperation with international governmental and non-governmental organisations in developing programmes aimed at building long-term and sustainable peace. These projects could include the following:

• Working with affected stakeholders to build knowledge of the root causes of conflicts to enable the development of effective recommendations on how to address them
• Research on the role of businesses in fuelling conflicts and peace-building
• Research on ways to improve legal accountability in conflict affected areas
• Assistance in reaching those displaced during the conflict, uniting families and helping them to integrate back into society
• Assistance in reconciling divided local communities

8. Grievance mechanisms

Companies might consider the establishment of grievance mechanisms to address the complaints of stakeholders whose rights have been affected by business operations. Subject to a company's resources, these mechanisms can take different forms – from an officer appointed to specifically deal with such complaints to a bigger team supported by the services of different experts on human rights, environmental protection, conflict management or sustainability.

Examples of grievance mechanisms include, for example:

• Formalised, multi-stakeholder grievance processes/forums
• Third-party provided initiative such as confidential whistleblowing hotlines
• Anonymous complaints boxes/email addresses
• Structured and ongoing stakeholder engagement activities that allow for open and frank debate without fear of retribution

Subject to the nature of a specific problem (and depending on the degree to which a company has control over third parties also engaged in violations), remedies could take the form of:

• Investigation of complaints and the restoring of the rights of affected stakeholders when the situation can be remedied by the company itself (e.g. labour rights of workers, land rights of local communities or rights that were affected by environmental pollution). Where it is not feasible to restore the status quo, remedies could take the form of prompt, adequate and effective compensation
• The ending of business contracts and refusal of the further sale of products to partners who have been found to have misused them to violate human rights
• Alteration of the design of products to minimise the potential of their being misused to further illegal and illegitimate purposes in armed conflicts
• Ending business contracts with security contractors, ensuring their accountability by enforcing the terms of their contracts, and compensating victims of violations

See Doing Business in Conflict Affected Zones case studies

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As noted above, conflict-affected, fragile countries and weak governance zones are characterised also by ‘social conflicts'. These are further defined below.

Social conflicts are of relevance to this dilemma, as they have the potential to erupt into violent confrontations between different groups within the same society. They refer to ‘the friction between contending parties in the processes of social change'. Social conflicts could arise between individuals and groups within a given state, who have different views on how the process of social change should take place and how the benefits of those processes are to be shared between the groups concerned. For instance, the same business project could be perceived differently – welcomed or treated with hostility – by different strata of society in the project-hosting state. In turn, active confrontations could lead to general social disorder.

Fragile countries are characterised by state structures lacking political will and/or capacity to provide the basic functions needed for poverty reduction, development and to safeguard the security and human rights of their populations. USAID uses the term fragile states to refer generally to a broad range of failing, failed, and recovering states. […] the strategy distinguishes between fragile states that are vulnerable to crisis, and those that are already in crisis.

Weak governance zones are defined as investment environments in which public sector actors are unable or unwilling to assume their proper role and responsibilities in protecting rights (including property rights), providing basic public services (e.g. social programmes, infrastructure development, law enforcement and prudential surveillance) and ensuring that public sector management is efficient and effective. These ‘government failures' lead to broader failures in political, economic and civic institutions that are referred to as weak governance. Weak governance zones can be identified by:

• Extremely low ‘human development' indicators. These are published by the United Nations Development Programme and measure welfare performance outcomes such as infant mortality, literacy, life expectancy and various measures of material standard of living; and inputs such as health and education spending
• Widespread and serious corruption and lawlessness. The Corruption Perception Index published by Transparency International provides information on the relative levels of corruption in countries across the world, whist the World Bank's Governance Indicators provide additional insight around related issues
• Serious violations of human rights and international humanitarian law, as well as endemic violent conflicts driven by cross-cutting motivations (e.g. ideological, economic, political, ethnic, religious, tribal) and involving potentially diverse combatants (e.g. domestic / international and formal / informal)
• Extremely weak evaluation of the country's public sector management and performance in economic and policy reviews conducted by international financial institutions or other international organisations

Common root causes of conflicts include:

• Political, social and economic inequalities between groups, including those groups which are organised based on a certain criteria, such as ethnicity, religion and culture
• Extreme poverty
• Underdevelopment and high unemployment
• Poor government services, including those related to governance, provision of safety and security and public services
• Environmental degradation, negatively affecting the living conditions of people

Similar to the difficulties of defining the term ‘conflict', ‘peace' can also be ambiguous. For the purposes of this dilemma, however, the term ‘peace' means a state or period when there are neither tensions nor a danger of violence, and civil order prevails. This definition extends beyond a simple cease-fire and includes the successful resolution of the roots of conflict to ensure that there is no danger that the same or similar tensions will trigger further violence.

Business-based peace-building is a fairly new term defined as ‘...the action and programs [that] are managed and implemented by businesses and commercial actors. "Peace-building" in this context is used generally to indicate actions that may extend beyond limited conflict resolution (mediation and negotiation) and could also include conflict prevention and post-conflict work.'

Human rights impact

Human rights violations caused by private security providers

Companies utilising or benefiting from the services of private security providers in conflict-affected countries (whether through their own employment or through the employment of the state) will be at heightened risk of complicity in human rights violations carried out such providers because they generally have weaker accountability mechanisms in place. Governments, in turn, may feel no pressure to fulfil their functions properly, having passed the initiative to companies.

Human rights violations as a result of product misuse

Conflict affected societies are characterised by weak governance and low levels of accountability for violations. As a result, the risk of company products being used for improper purposes in such environments is higher. Products of different sectors of the economy could be misused with a negative impact on the right to life (UDHR, Article 3 and ICCPR, Article 6, Geneva Conventions). This right is protected both in times of peace (by international human rights law) and in times of war (by the international law of armed conflicts). For instance, communications and security products can enable rebel groups to launch their military campaigns more effectively, resulting in mass killings, including among civilian populations.

Other rights that could be negatively affected by the misuse of telecommunications and security products, include the following:

• The right to vote and to be elected (UDHR, Article 21 and ICCPR, Article 25)
• The right to freedom of expression (UDHR, Article 19 and ICCPR, Article 19)
• The right to freedom of association (UDHR, Article 20 and ICCPR, Article 22)
• The right to liberty and freedom from arbitrary arrest (UDHR, Articles 3 and 9 and ICCPR, Article 9)
• The right to freedom from torture and other ill-treatment (UDHR, Article 5 and ICCPR, Article 7)

In conflict-affected countries and weak governance zones that are rich in natural resources, governments tend to use violence to stay in power – including through the systematic oppression of political opponents. Telecommunications products allowing the identification of political activists and their whereabouts, as well as security products used to inflict pain on such individuals in detention, can directly contribute to violations of the above-mentioned rights. (For more information on how the improper use of company products could result in human rights violations, see the Product misuse dilemma)

Human rights violations as a result of prevalent corruption

As was shown above, high levels of corruption in the country inevitably lead to social inequality, concentrating power and resources in the hands of a select minority, while negatively affecting the living standards of the remaining majority. This can fuel societal tensions and protests, which, if mishandled, can lead to violent internal conflicts.

• In turn, corrupt government activities can have a negative impact on a range of human rights, such as:
• The right to an adequate standard of living (including access to adequate food, clothing, housing and water) (UDHR, Article 25 and ICESCR, Article 11)
• The right to equality before the law, equal protection of the law and non-discrimination (ICCPR, Article 26), and the right to participate in public life (ICCPR, Article 25)
• The right to an effective remedy for acts violating fundamental rights (UDHR, Article 8 and ICCPR, Article 2) and
• The right to a fair trial (UDHR, Article 10 and ICCPR, Article 14)

Where businesses contribute to corrupt government activities in any way (for example, financial institutions backing corrupt projects), they are arguably playing an indirect role in undermining the above-mentioned rights (for more details of the negative human rights impacts of corruption, see the Corruption dilemma).

Human rights violations as a result of trade in conflict minerals

Mineral extraction can (a) cause of violent conflicts, where different groups within states attempt to control natural resources; and (b) facilitate conflicts, by helping fund civil wars against legitimate governments.

Relevant examples of both situations can be found in Angola, DR Congo and Sierra Leone.

In turn, the involvement of businesses (in any form) in the exploitation and trade in mineral resources by armed groups (for example through unwitting purchases through long and complex supply chains) could have a negative impact on a number of fundamental human rights and freedoms, such as:

• The right to life (UDHR, Article 3 and ICCPR, Article 6)
• Freedom from torture and other ill-treatment (UDHR, Article 5 and ICCPR, Article 7)
• Prohibition of slavery, servitude or forced labour, and trafficking for economic and sexual exploitation (UDHR, Article 4; ICCPR, Article 8; ILO Convention No.29, on Forced Labour of 1930; ILO Convention No.105, on Abolition of Forced Labour of 1957; the United Nations Protocol to Prevent, Suppress and Punish Trafficking in Person, Especially Women and Children of 2003)
• Prohibition on child labour (Convention on the Rights of the Child of 1990; ILO Convention No.138, on the Minimum Age for Admission to Employment of 1973; ILO Convention No.182, on the Worst Forms of Child Labour of 1999).

For instance, child labour is relatively common in artisanal mining in conflict-affected areas, owing to weak governance and widespread extreme poverty, forcing children to work in mines to earn a living (for more details of the negative human rights impacts of the extraction and trading of conflict minerals, see the Conflict minerals dilemma).

Human rights violations as a result of environmental degradation

On the one hand, conflict-affected environments provide ample ground for corner-cutting in the implementation of projects, owing to weak governance and a lack of legal clarity. On the other hand, pollution of the environment as a result of public-private commercial partnerships can have a significant impact on the living standards of project-hosting communities, sparking violent protests. Although the right to a safe and clean environment has not been widely recognized, environmental degradation as a result of business projects does affect human rights, such as:

• The right to life (UDHR, Article 3 and ICCPR, Article 6)
• The right to health (UDHR, Article 25.1; ICESCR, Articles 11 and 12)
• The right to property (UDHR, Article 17 and the European Convention on Human Rights and Fundamental Freedoms, Protocol 1, Article 1)

Pollution ensuing from badly managed and implemented projects can result in forced migration, increasing the number of internally displaced people. Business projects can also have a disproportionate environmental impact on already disadvantaged communities, raising the issue of discrimination (UDHR, Article 2 and ICCPR, Article 4) and general environmental justice.

See Doing Business in Conflict Affected Zones case studies

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