Sudan’s Conflict-Torn Economy Raises Concerns for Businesses Over Human Rights Due Diligence

As Sudan grapples with political unrest and human rights abuses, businesses operating in the country are facing increased scrutiny over their due diligence procedures. The crisis has highlighted the need for companies to take a proactive approach to ensuring their operations do not contribute to or exacerbate the conflict.

Heightened Due Diligence Requirements

According to recent guidance from the United Nations Working Group on business and human rights and the UN Development Programme, businesses must go beyond simply identifying and mitigating human rights impacts. They must demonstrate efforts to respect human rights within the specific context of the conflict. This requires a heightened due diligence process that takes into account the unique challenges of operating in a crisis-affected area.

Challenges Faced by Businesses

• Sudan’s military forces have been accused of violently cracking down on peaceful protests, killing protesters, and suppressing the media.
• The US Government has advised businesses to undertake increased due diligence related to human rights issues and be aware of the potential reputational risks of conducting business activities with state-owned enterprises or military-controlled companies.

Investor Concerns

Investors are urging companies to consider ways they can assist in resolving the crisis rather than worsening it. However, some have questioned whether companies that choose to divest from Sudan are doing so due to genuine human rights concerns or for more practical reasons such as reputational damage or economic sanctions.

Lessons from Other Conflicts

• The examples of Myanmar and Russia highlight the importance of heightened due diligence procedures.
  • In both cases, businesses faced criticism and legal action over their human rights record despite conducting some form of impact assessment.
  • A heightened due diligence process could have identified additional risks and discouraged initial investment in Myanmar, while improving business operations and legitimizing investment with a public rights-based approach.

Ukraine’s Response to Russian Invasion

• Hundreds of companies suspended or divested from Russia following the invasion, citing economic sanctions, legal, reputational, or financial risks.
• However, many Western companies continue to operate and invest in Russia despite its problematic human rights record.

Threshold for Divestment

The threshold for divestment remains unclear, but it is critical that companies undertake heightened due diligence procedures to identify and mitigate systemic violations of human rights law and international humanitarian law. Businesses operating in high-risk areas must demonstrate a public, benchmarked, rights-based exit strategy and show they have taken action to prevent, mitigate, and remedy potential negative impacts.

Conclusion

The Sudanese government’s recent crackdown on peaceful protests underscores the need for businesses to prioritize human rights due diligence and consider ways they can assist in resolving the crisis. As the international community continues to monitor the situation, companies operating in Sudan must demonstrate their commitment to upholding human rights standards and taking proactive measures to prevent harm.