Considerations for Remaining and Exiting Challenging Contexts

Our key takeaway: Whether to stay or exit a challenging human rights context has become a pressing issue for businesses today against the backdrop of heightened conflict, worsening human rights situations and even extreme climate conditions. The question is also being debated in the context of human rights and environmental due diligence regulations, since decisions to leave or stay are never straightforward. The OHCHR recognises these dilemmas in its recent guidance; a recognition that is, in it self, a valuable contribution to the debate. It also provides tools to inform responsible decision-making and civil society assessment of those decisions. First, it defines which contexts can be considered challenging: those with grave human rights situations due to conflict, political turmoil and/or systematic violations of rights; those where national laws or regulations require businesses to take actions against internationally recognised rights; and those where States can’t protect internationally recognised human rights. Second, it provides a set of key considerations for deciding whether to leave or stay, including how the business is involved with the relevant impacts on rights (through causation, contribution, or direct linkage), whether the business can mitigate those impacts, and the severity of the impacts of staying and leaving. Finally, it provides guidance on how to exit or stay responsibly - which generally includes mitigating the risks from the decision, conducting meaningful stakeholder engagement and addressing and remediating impacts that have already happened.‍

The UN Office of the High Commissioner for Human Rights (OHCHR) published the guidance note Business and Human Rights in Challenging Contexts: Considerations for Remaining and Exiting (August 2023). (For this one, we have four summary points here:

• What are “challenging” operating contexts when it comes to human rights? A human rights situation might be particularly grave already due to conflict, political turmoil and/or systematic violations of rights. In these cases, businesses could have their products or services used to to commit human rights violations or abuses, or they could become complicit to state actions against human rights. The OHCHR considers that these situations merit “a very swift and decisive response” and that businesses should be carrying out heightened human rights due diligence “to fully understand the situation and how the presence, behaviour and stance of the business enterprise and its representatives might bear on human rights-related risks to people.” On the other hand, businesses may be required by national laws to take actions that are inconsistent with internationally recognised human rights standards, impacting privacy, freedom of expression or freedom of assembly, for example. In these cases, businesses should be taking legal advice to assess what are the impacts of those regulations on people’s rights and what options are available to mitigate these and to engage with governments to clarify the scope of the law or influence its enforcement in practice. Finally, in certain contexts, national laws can’t protect human rights to the level of internationally recognised standards due to deficiencies in legislation, lack of clarity or poor legal enforcement. In these cases, companies should implement “human rights due diligence processes that are finely tuned and sensitive to this higher level of risk” and conduct robust stakeholder engagement to properly understand the situation.
  

• Remaining and exiting: what are businesses expected to do under the UNGPs? Even in deteriorating situations due to military coups, armed conflict, civil unrest or increasingly repressive actions “the UNGPs do not per se require a business enterprise to exit.” However, they do clarify that at least two considerations to take into account when making the decision to exit: (i) how the business is involved with the relevant impacts on rights (through causation, contribution, or direct linkage) and (ii) whether the business can mitigate those impacts. When a business has caused or contributed to the impacts, it is expected to stop or prevent these contributions. In some cases, the only way to do so might be to shut down operations or end a business relationship. In other cases, remaining in a relationship gives a business has more leverage that can “be used to address the impact more effectively.” When it comes to direct linkage (where an impact is linked to a business’ operations, products or services), appropriate action will also depend on the context. However, “business enterprises should be encouraged to stay, engage and use whatever leverage they can obtain to achieve change.” Actions to build or exercise leverage with partners include offering capacity-building; highlighting impacts across the sector to encourage a sector-wide response; using the prospect of repeat business, potential public or private blacklisting, publicly announcing exits, collaborating with other partners to encourage change; and maintaining a credible prospect of disengagement. Finally, the severity of the impacts of staying and leaving should also inform the decision. “The more severe the harms involved, the more justifiable it would be for a business to consider terminating the business relationships involved.” Additionally, the impacts of existing should be assessed in a separate and distinct risk assessment exercise.
  

• How to exit responsibly. The OHCHR recommends treating the decision to leave as a process and not as an event. To the extent possible, businesses should have contingency plans pre-agreed with service-providers to employees, to minimise human rights-related risks. They should also act in consultation with stakeholders, specifically workers and local communities in challenging environments since they “may have few other sources of livelihoods or access to the goods and services a business provides.” Their views “should weigh heavily on the ultimate decision about whether a business should leave or stay.” Businesses may also need to remedy harms that have already occurred and address post-exit consequences. “A business should not be leaving behind unaddressed adverse impacts to which it contributed, for instance as regards environmental contamination, uncompensated or unaddressed displacement, or uncompensated or unaddressed data breaches.” Regarding post-exit consequences, businesses should prioritise “support for workers and communities who may be the most affected by the situation with the least opportunities to find alternative sources of livelihood on exit,” “consider the human rights commitments of potential replacements and guide the sale to more responsible entrants,” and consider “any potential risks of retaliation against workers or human rights defenders.”
  

• How to stay responsibly. If, on the other hand, a business decides that human rights risks are best addressed by maintaining a business relationships or staying in the challenging context, it might need to make adjustments to ensure it can continue to meet its responsibility to respect human rights under the UNGPs. First, it should be able to “demonstrate ongoing efforts to avoid infringing on the human rights of others and address any impacts with which they are involved, including through stakeholder engagement and use of leverage.” It should also, “be prepared to accept any consequences of remaining in relationships that pose ongoing risks of involvement in human rights abuses.” Businesses that choose to stay may maintain the possibility of exit to increase leverage since “without the prospect that exit may happen, other forms of action can be less effective in delivering change as the ultimate consequences for relevant third parties are limited.” And “in deciding how best to deploy and enhance that leverage, business enterprises should not overlook the importance of credible threats of termination.”