Companies operating in conflict-affected areas can find themselves vulnerable to multiple types of risks. Companies can become severely impacted by worsening spates of violence, which can undermine their ability to operate, or possibly even encounter reputational or legal damage should their operations become associated with human rights abuses. Company activities may even become subject to sanctions as governments respond to state violence and oppression.
Two recent geopolitical developments concerning Burma and Sudan show us why companies seeking to mitigate conflict risk should consider that they, too, also “have a stake in the peace.”
The first, Myanmar: The country seemed on the road to democracy (the United States had previously terminated its Burma Sanctions Program). However, in February 2021, the country’s military overthrew the country’s ruling party, the National League for Democracy. Rather than an obvious setback, companies should also view the coup as a manifestation of the sort of action that can occur in a country continually affected by conflict. Myanmar, with its multiple insurgent movements spread throughout the country, should continue to be viewed as a conflict-affected area. Countries with ongoing internal conflict are often accompanied by empowered militaries that are too often unwilling to submit to civilian rule—Could companies have done more to help promote peace, stability, and democracy in Myanmar?
The Second, Sudan: Over the course of the last few years, Sudan has ousted its former ruler and formed a transitional government with the objectives of holding democratic elections in 2022. The country also had its status as a “state sponsor of terrorism” rescinded by Washington. Despite the progress, we continue to see violence in the country. According to recent figures, over 470 people—including three humanitarian workers—were killed in Darfur because of intercommunal clashes—How can companies jointly support the transitional government’s progress while also acknowledging that Sudan remains unstable and affected by conflict?
The developments in Burma and Sudan show that although the removal of sanctions often coincides with positives steps taken by countries towards peace, stability, and democracy, it is still the first step on the difficult path towards constructing a sustainable peace. Thus, any removal of sanctions may not accurately portray current, on-the-ground realities, and this may be confusing for companies and investors alike. As we have seen with Burma and Sudan, both countries still suffer from conflict.
Most conflicts that affect the world today are protracted conflicts, which vary in intensity but generally feature common elements such as marginalized areas, rebel groups, oscillating levels of violence, and unfinished peace processes. Companies choosing to operate in such environments after the removal of sanctions are, therefore, likely to continue to encounter significant conflict risk. Without action, the level of conflict risk companies face is likely to remain unchanged.
Any company wishing to mitigate such risks from conflict (and fulfill their responsibilities to shareholders and other ESG considerations) should, therefore, acknowledge that they also have a shared responsibility with other members of civil society to contribute to peace efforts in the conflict-affected areas in which they operate. By adopting this as a principle, companies can understand that they, too, have a stake in any peace process and can also adopt strategies to become a positive actor in such areas.
“Heightened Due Diligence (HDD)” for areas affected by conflict is a new framework developed by the UN Working Group on Business and Human Rights so that companies can better understand the risks associated with conflict and the potential impact of their operations. This is a welcomed step. However, I argue that companies should go a step further and ensure that HDD exercises—such as conflict risk mapping—are used to pinpoint specific areas where companies can use their influence and resources to work towards tackling some of the underlying causes of conflict and promote peace. Companies that fail to do this will see little change in their operating environment and will continue to remain exposed to conflict risk.
At EIRIS CRN, we have tackled how companies with operations in conflict-affected areas can direct their resources towards tackling some of the root causes and worse impacts of conflict, hoping that such efforts will help build peace for the long-term. We have welcomed the progress made by companies so far and hope that this approach is taken into further consideration by companies and investors seeking to promote peace and stability.