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Beyond sanctions: investor responses to armed conflict

Armed conflict has enormous humanitarian consequences, as well as long lasting economic, social and environmental repercussions. Whilst the Russia-Ukraine conflict is unfortunately far from the only armed conflict globally (the Geneva Academy is currently monitoring over 110 armed conflicts)1  and there have been a number of conflicts taking place in Ukraine since 2014, the escalation of this conflict in 2022 led to sanctions that were unprecedented in scope and severity at state level as well as for corporates. 

Initial decisions by both companies and investors appeared to focus on compliance with these sanctions and connected to this, companies reactively exiting Russia. Sanctions are of course important and should be complied with. But beyond sanctions, were companies thinking closely about the human rights implications of their decisions to leave or to stay Russia or Ukraine? And were investors asking questions of the companies they invest in about this?

For companies with exposure to Russia or Ukraine through their operations or supply chains, an approach grounded in human rights is not a simple question of staying or exiting, but of considering and consulting with stakeholders including workers, customers and vulnerable populations, to understand the broader potential human rights impacts of any decisions made. This is not something that can be done once, but that needs to be considered on an ongoing basis as the conflict evolves and new issues arise.

The Frameworks

International human rights law and international humanitarian law both provide frameworks for identifying, understanding and addressing human rights risks related to conflict. This article does not discuss these frameworks in depth, however there are a small number of important principles which should be drawn out.

The UN Guiding Principles on Business and Human Rights (UNGPs) require companies to avoid causing or contributing to adverse human rights impacts, including those that are linked to their operations, products or services and their business relationships2.  This includes an expectation that companies will conduct human rights due diligence (HRDD) in order to identify and act on actual or potential human rights impacts that the company may cause, contribute to or be directly linked to. Where there are early warning signs of an armed conflict, companies should undertake heightened human rights due diligence (hHRDD) in order to gain a deeper understanding of the context in which the company is operating3

International humanitarian law is the “law of war” – a set of laws that set out what can and cannot be done during armed conflict in order to maintain some level of humanity, save lives and reduce suffering4

Our approach

Whilst we had very limited exposure to companies domiciled in Russia or Ukraine, when the conflict escalated we focused initially on compliance with sanctions and consulting with our clients. We also tried to gain an understanding of how companies were impacted by the conflict, as well as the human rights implications as part of our broader approach to human rights. First Sentier Investors (FSI) first started its work on human rights in 2016, setting up a human rights working group of investment team members, which produced our Human Rights Toolkit , a set of steps for investment teams to consider to help identify and manage human rights risks within our portfolios. In 2022 we updated the Human Rights Toolkit5 to provide additional guidance on the human rights implications of armed conflict and arranged for human rights experts from Pillar Two to provide our investment teams with training on this topic. 

Based on this work, we worked with investment teams to identify a priority list of companies for further engagement (in addition to the engagement already undertaken by individual teams prior to and following the escalation of the conflict) on this topic. Given the minimal exposure we had to Russian and Ukrainian companies, in order to identify companies to engage with, we considered a number of factors, including:

  • Companies in sectors that may be connected to this conflict: we considered companies involved in consumer staples (and within this, specifically agricultural products), banks, IT and military contracting
  • Companies identified by third parties as having links to Russia or Ukraine: we considered a range of sources including the Business and Human Rights Resource Centre, Sustainalytics controversy research, Business for Ukraine, Yale CELI List of Companies, Pillar Two resource repository on business and human rights issues relating to the Russian invasion of Ukraine and media articles

We had two key objectives for our engagement:

  1. To try and understand individual company exposure to these risks and the steps they are taking to address them
  2. To raise awareness of the importance of applying a human rights lens to any decisions made on an ongoing basis and our focus as investors on this topic

Based on these objectives, we asked a series of questions which varied between companies but broadly included a consideration of the elements listed below. In preparing these questions we drew from the work we had already done as well as the questionnaires produced by the Business and Human Rights Resource Centre. We also sought advice from organisations including Pillar Two, Red Cross and RMIT.

Nature of involvement 

  • Does the company or any subsidiary have exposure to Russia or Ukraine through its operations or supply chain? What is the nature, sector, scale, and geographic area of these operations or investments? 

Assessing risks 

  • How is the company enhancing its due diligence to identify, prevent, and mitigate heightened human rights risks and comply with international humanitarian law? 
  • What measures is the company taking to ensure it relies and acts upon robust monitoring of the situation, including through consultation with its workers, affected communities, human rights groups, and/or humanitarian organizations?

Mitigating risks and tracking effectiveness

  • What measures is the company or subsidiary taking to ensure that its business relationships, products, services, operations, or other actions do not contribute to Russian military activities or occupation in Ukraine?
  • Is the company or subsidiary planning to scale-down or suspend its operations in Russia or Ukraine? If so, what are the immediate and longer-term steps that the company has taken or is prepared to take to mitigate the negative impacts of this decision on affected communities and its workers? If not, what human rights due diligence has been undertaken and how is the company planning to mitigate any human rights impacts?
  • Does the company have a plan in place to regularly re-evaluate your response? What would be the threshold for the company to return to ‘business as usual’?

Exercising leverage

  • Is the company or subsidiary taking any other actions to promote respect for humanitarian law, human rights, democracy, and peace in Ukraine?

Our engagements are ongoing and we have limited outcomes to share at this point, but we will report on progress in due course. Overall, our findings have been similar to those of the Business and Human Rights Resource Centre, although we targeted a smaller number of companies based on their exposure and materiality within our portfolios. As direct investors in those companies the response rate has been higher although from less companies. The quality of company feedback has been low, with few companies providing a full or partial response to our questions. The majority of the responses were general in nature rather than specifically answering our questions or even referring to actions taken specific to this conflict. While companies made general statements that they are committed to human rights, if they had taken a thorough approach to ensuring that their decisions were grounded in human rights, the information should have been readily available to answer most, if not all, of our questions. This suggests to us that companies should be doing more, and investors should be asking more from them in order to signal the importance of human rights. We have gone part of the way to meeting our objectives for this engagement, but we need more information and feel this would benefit from more investor voices engaging either collectively or individually (preferably both). Our follow up actions will include focusing on getting a better understanding of specific actions taken by companies, follow up with companies that have not responded to us, and sharing examples of best practice with other companies where we identify them. Depending on these outcomes, we will consider the best way to escalate the issue on a company by company basis.

Next steps

In addition to the follow ups on our own company engagement mentioned above, we are leading a subgroup of the Responsible Investment Association of Australasia (RIAA) Human Rights Working Group developing global investor guidance on the topic as we would like to see more investors addressing this issue and raising it with investee companies. This work will seek to coordinate with and leverage off other working groups globally. We are also conducting an impact assessment of any other exposure to actual or potential armed conflicts globally, in particular to ensure that companies are undertaking proactive HRDD in advance of an armed conflict breaking out. We would like to coordinate with other investors on this topic globally, and would welcome their feedback, insights and collaboration. As investors we have a responsibility to consider human rights issues as part of the investment process, and to actively engage with investee companies on these important issues.


2 Principle 13 of the UN Guiding Principles on Business and Human Rights  

3  United Nations Development Programme (2022) Heightened Human Rights Due Diligence for business in conflict-affected contexts: A Guide, p9

4  ‘Doing Responsible Business in Armed Conflict, Risks, Rights and Responsibilities’, Australian Red Cross and RMIT University, p 12;,saving%20lives%20and%20reducing%20suffering

A summary of our Human Rights Toolkit is available at 

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