Doing business and respecting human rights in high-risk areas
This piece was originally published in our 2022 Q1 Impact Update.
Opposition to war is perhaps the most essential, emboldened through-line in the evolution of ethical investing. War is catastrophic and painful—and the collective mission to promote peace has been a cornerstone of ethical investing since its beginnings.
Unfortunately, right now, this mission demands our attention. A spate of international conflicts, civil wars, and other violent disputes have caused tragic losses of life and severe humanitarian repercussions. A UN assessment in 2021 revealed that over 84 million people were forcibly displaced by war, violence, and persecution—the most since the end of World War II.11
This year, Russian government’s invasion of Ukraine has brought conflict to the fore of the ethical investing conversation. Shareholders need to know whether the companies they invest in are prepared to respond to conflict and respect the human rights of all those affected.
What role do companies play?
Companies are not neutral actors. They can exacerbate conflict and profit off it. Reckless or ill-intentioned companies can endanger their own employees, customers, suppliers, and local communities.12, 13
On the other hand, their wide resources and international presence allow companies to help reduce harm in dire situations. They can be instrumental in providing conflictaffected communities with access to food, water, and medicine. They can help people receive information and communicate with loved ones, near and far.14 Companies also have legal obligations to comply with international sanctions.
What are the best practices
When operating in conflict-affected areas, companies need to conduct their due diligence, as defined by the United Nations Guiding Principles on Business and Human Rights. This detailed guidance directs companies on how to assess the human rights impacts of their operations, remedy harms they may have contributed to, and report these outcomes to stakeholders.
The foundation of Domini’s approach
Conflict presents distinct challenges for companies and investors. For decades, Domini has engaged with companies operating in conflict-affected areas, urging them to conduct enhanced due diligence that prevents human rights abuses.
Universal human dignity, one of two fundamental goals embedded in our Impact Investment Standards, guides how we approach conflict. It’s the bedrock of our position to exclude investments with significant ties to weapons production, nuclear power, and fossil fuels—three elements that have intensified the complexity in Ukraine.
How we take action
With our standards in place, we’re able to respond quickly as conflicts unfold. First, our in-house research team carefully analyzes how countries and companies are being impacted. Then we initiate dialogues with portfolio companies, urging them to respect human rights by adhering to UN-defined best practices and, further, by enacting programs that support conflict-affected communities and refugees. Companies can improve their conflict responses by consulting experts, peer companies, civil society groups, and government actors.
From there, we remain steadfast. Conflicts can be lengthy and complex, so our initial response rarely means our work is done. Continuous, diligent work—in the form of research, investment analysis, and direct dialogue—are how we invest responsibly amidst conflict.