The case of the French cement company Lafarge in Syria highlights the need for corporate accountability legislation that includes ‘heightened’ due diligence obligations for companies active in conflict-affected areas, as well as their investors. A new report “Funding Conflict”, published today by Dutch peace organization PAX and the Berlin-based European Center for Constitutional and Human Rights (ECCHR), analyzes the consequences of failing to identify and address the human rights risks at play in conflict-affected areas.
Companies operating in conflict-affected areas face an acute risk of getting involved in severe human rights violations, as well as violations of international humanitarian law, including forced displacement, pillage or unlawful attacks against civilians. These actors must address the specific risks at play in these areas by conducting heightened human rights due diligence. By closely examining the case of the French company Lafarge (now Holcim) in war-torn Syria and describing what actions the company and its investors could and should have taken as the situation in the country evolved, the report unpacks the concept and practice of heightened human rights due diligence in conflict-affected settings.
According to Eva Gerritse, PAX’s project lead on Business, Conflict and Human Rights: “Companies that operate or have business relationships in conflict-affected and high-risk areas need to be extra diligent and understand the contexts they operate in, the conflict triggers they may be sparking and the role their business relations may play in the conflict. In addition to identifying potential and actual violations of human rights, as well as international humanitarian law, companies in conflict-affected and high-risk areas need to identify, assess and address the risks of contributing to the conflict itself. Similarly, financial institutions need to include conflict risks in their screening and prioritization procedures and address these risks in their engagement with companies.”
In practice, conducting effective due diligence in conflict-affected and high-risk areas is still far from common practice for companies, as well as for the banks, pension funds and insurers investing in these companies. As the reports shows, Lafarge is most certainly not the only case in which companies and their investors failed to take appropriate actions to identify and address the human rights risks at play and provide remedy for violations they caused or contributed to.
Ben Vanpeperstraete, ECCHR’s Senior Legal Advisor in Brussels, adds: “Cases like Lafarge clearly demonstrate the need for both companies, as well as their financial backers, to engage in continuous due diligence to safeguard all human rights. It is therefore crucial that the upcoming Corporate Sustainable Due Diligence Directive fully includes the financial sector. Furthermore, it is important that lawmakers ensure explicitly that all companies need to respect international humanitarian law.”