Investor Commitments on Conflict
The United Nations has estimated that around a quarter of the global population, or around two billion people, live in conflict affected areas. According to the 2023 Global Peace Index Report, there has been an increase in the level of conflict since 2019, even before the Russian invasion of Ukraine is factored in. The global economic impact of violence was reportedly $17.5 trillion or 12.9% of the global GDP in 2022.
Acknowledging the increasing extent of conflict and the heightened economic and social risk this poses is an important first step. Actors within a conflict, including companies and investors, then need to consider their roles and responsibilities in that context: How can they best align their actions with existing and new international norms to ensure they are not exacerbating negative human rights impacts? Where are the opportunities to play a positive role in the interests of those directly impacted by conflict and of sustainable development?
EIRIS CRN has been working with investors for over 10 years on how to bring conflict to the top of their priority lists. We have maintained our historic Sudan service which is linked to U.S. investor reaction to the genocide in Darfur. We also conducted a five-year project funded by the Open Society Foundations which looked into companies operating in Crimea and Palestine and asking them a set of questions on whether they operate under occupation and/or disputed territories. At the onset of the 2021 Myanmar military coup, we released a list of companies with known operations in the country. As conflict rages around the world, we will continue to find ways to advocate for the inclusion of conflict in investors’ agendas.
In recent years, throughout our many conversations with global asset owners and asset managers, we have observed the following:
- The hesitation to act immediately on calls to divest from Russia due to the concern that it may result in inconsistency of actions or reflect a double standard in relation to how they react to other conflicts;
- There have been many statements signed by investors calling on companies on what to do in conflict affected areas, but there has been minimal commitment to action by investors themselves on how they will deal with situations of conflict.
Acknowledging these challenges faced by investors, EIRIS CRN developed a set of Investor Commitments on Conflict with the help of various asset owners and managers, as well as several experts in the field of business and human rights. The Commitments aim to address the observations we have made and bring awareness to the importance of conflict in investor’s considerations.
The Commitments are composed of four major pillars which are based on three sets of principles. The UN Guiding Principles for Business & Human Rights which provides guidance to companies on human rights risk in conflict; International Humanitarian Law which is conflict-related international law; and conflict-related SDG 16: Peace, justice and strong institutions targets which are a globally agreed pathway to develop more peaceful and prosperous societies around the world.
The four pillars of the Commitments are:
Involves two-way communication between asset owners and asset managers regarding conflict specific considerations or policies
Includes incorporating the effects of conflict into investment analysis through identifying any conflict affected investments
Focuses on communicating with the most relevant stakeholders to address both investment and human rights risks linked to any conflict affected investments
Entails developing redlines for divestment other than sanctions