The most recent Report of the UN Working Group on Business and Human Rights centered around business and human rights in conflict zones. The Working Group noted for the first time in its history the unique problem of companies that are “captive”. “Captive” companies (s. E.4) are placed alongside armed non-state actors (s. E.1), gender (s E.2),[1] and responsible exit (s. E.3) as additional considerations in conflict contexts that are all underexamined for one reason or another. The report defines “captive” companies as those with “limited ability to leave” the conflict zone (s. E.4, p. 70). As the Report notes, these types of companies are severely “underexamined” meaning that there should be more work done by researchers and practitioners alike to examine the business and human rights obligations that are different (or not) to these companies.

The Report does not note why captive companies are unexamined. Yet a major indication is in who captive companies tend to be. The Report makes specific note of the “most prevalent” type of captive company, namely local firms that are “headquartered, founded and run within the conflict zone”[2]. If a company is both local and cannot move its operations, the Report rightly notes that they may face unique challenges and may be able to play roles in the post-conflict environment that those companies that are able to withdraw are not. These possibilities are considered below.

First, the vast majority of these companies are small. Second, these companies are more often than not owner-operated and provide the sole source of income for the individuals owning and managing the company. These are not branches of multinationals with expatriate managers or employing relatively well-off local staff. By and large, captive companies are run by small business owners and employees who are full members of the community. Third, these companies are often critical to the functioning of communities. Small food shops, bakeries, and pharmacies all fall into this category. They very often provide critical needs to local communities, so critical that they become important pieces of the conflict itself. In Syria, bakeries survived multiple changes in group control of territory and were critical in effectuating the public diplomacy of these groups through bread subsidies.

Further, for these types of captive companies, the option of “withdrawing” from a conflict zone would mean becoming refugees along with their families. “Withdrawal” is available to large, especially multinational entities because they are not dependent on the conflict country for their survival and that of their employees. This places captive companies in a unique position relative to multinationals. Finally, captive companies are distinguishable in that, because of their role within communities, they are often much closer to human rights violations (and are more likely themselves to be subject to human rights violations) than others. Smaller firms and their owners and employees as citizens of the affected countries and communities, are just as likely as any other to being subject to human rights violations.

None of these differences however mean that captive entities are exempt from human rights obligations. On the contrary, the role of captive companies is, in some ways, even more critical. This is for three reasons, two of which the Working Group mentions in its Report.

First, captive companies can greatly benefit the peacebuilding and reconciliation process once conflict ends. Because of their role within their communities, businesses that are captive are often trusted actors within their communities. They are often the only ones within their communities who engage with different conflict actors throughout the conflict and lived to tell the tale. This allows for them to bridge gaps that others may not even know exist. Within the ‘business and peace’ research field, this is known as track-two diplomacy, allowing conflict actors to negotiate with each other without engaging directly. Captive companies have played this critical role in South Africa and Colombia.

Second, captive companies are potentially critical human rights protectors because they are on the ground. What the Report rightly notes is that because these companies are captive, they are more likely to be subject to forms of coercion by human rights abusers. This is potentially unlike large international companies, which are substantially more protected because of their ability to withdraw, something I witnessed in my research in Iraq. The Report thus implicitly notes the privileged position of those companies that are able to withdraw from conflict contexts. Captive companies are not so lucky. This may be why the Report itself places the underexamined issue of responsible exit (s. E.3) immediately before that of captive companies (s. E.4).

A third critical role that captive companies may play is in the documentation of human rights abuses that can then help in the remediation of human rights abuses. Companies, captive or not, must record data about their operations. Even in conflict zones, this type of information is necessary company information because it helps determine basic business data such as profit and loss statements. Accurate reporting of that information, even if initially for internal use only, might provide critical information on human rights abuses that can be used later.

The Report’s note of captive companies will hopefully draw attention to the potentially different and important challenges that these companies face. As some scholars have noted, corporate strategies will necessarily be different depending on their type and location with respect to the conflict. The Report does not, as some have suggested, absolve these companies from their legal obligations under international human rights law. Additional focus on these types of companies may yet reveal that they have increased responsibilities. What the Report has rightly done is to call attention to these issues. It is now the work of academics and practitioners to heed that call.

John E. Katsos is Associate Professor of Business Law, Business Ethics, and Social Responsibility at the American University of Sharjah School of Business Administration and a Research Affiliate at the Queen’s University Belfast Centre for Leadership Ethics and Organization.

[1] Gender is more specifically noted as being an underutilized lens, rather than one that is underexamined in the research.

[2] It should be noted here that the Report also mentions a far less prevalent type of captive company: one that engages in a business that is only possible within one specific geography. It’s example was that of coltan which is both a critical global resource for computing technology and which is almost entirely found only within the geographic boundaries of the Democratic Republic of Congo. However, companies are not captive because of resources of hydrocarbons for instance because these resources are globally found and available outside of conflict countries.

This post is part of the Business and Human Rights Journal (BHRJ) Symposium on Business, Human Rights and Conflict-Affected Areas. For more on this topic from the BHRJ, click here.