Introduction

Global conflict and instability are increasing, with 56 active armed conflicts and 162,000 battle-related deaths recorded in 2023. Around 40% of the global population now lives under authoritarian regimes. These dynamics impact companies and investors operating in conflict-affected and high-risk areas (CAHRA). Investors face challenges in assessing exposure due to limited ESG data and reactive responses to crises.

Background of the pilot project

The Pilot Project aimed to support investors in engaging companies on CAHRA-related risks, focusing on the tech and renewable energy sectors. Twenty-two institutional investors from ten countries participated in dialogues with three tech companies and one renewable energy company.

The project unfolded in three phases: capacity building, company engagement, and synthesis of findings. Participants identified three dimensions of risk proximity—geographic, relational, and operational—and analysed company exposure to salient human rights harms and material risks in countries such as Mexico, China, and Western Sahara.

Applicable frameworks included the UN Guiding Principles on Business and Human Rights (UNGPs), international humanitarian law (IHL), and the 2024 EU Corporate Sustainability Due Diligence Directive (CSDDD), which mandates heightened human rights due diligence (hHRDD) for companies in CAHRA.

Investor capacity building

Investors were trained on hHRDD through webinars and workshops in collaboration with the UNDP, UN Working Group on Business and Human Rights, and other partners. These sessions covered IHL, business responsibilities in conflict zones, and case studies of best practice.

Enabling effective investor engagement on CAHRA

Investors are encouraged to adopt a standardised approach to assessing CAHRA-related risks using the “saliency-materiality nexus” to prioritise risks that are both severe and financially material.

Key actions include:

• Engaging third-party experts for risk mapping.
• Advocating for ESG providers to improve CAHRA-related data.
• Implementing exclusionary screens and HRDD-aligned investment strategies.

Effective company engagement should include clear expectations, agenda-setting, use of case studies, and discussions grounded in international legal frameworks.

Findings from the company dialogues

Policy commitments on CAHRA and transparency of salient CAHRA risks

No engaged companies had a stand-alone hHRDD policy. Some integrated hHRDD elements into existing frameworks, such as human rights impact assessments and conflict minerals due diligence. One renewable energy firm provided systematic public disclosures, identifying 15 salient human rights risks across its value chain.

Companies are encouraged to publish a clear hHRDD policy, disclose CAHRA risks, and specify accountability for implementation.

Practices in heightened human rights due diligence

All companies conducted standard HRDD, but few demonstrated a distinct hHRDD process. Only one tech firm considered conflict dynamics comprehensively. Another renewable energy firm integrated hHRDD into project initiation and stakeholder engagement, including on-the-ground assessments and grievance mechanisms.

Challenges included limited use of IHL, lack of consistency in identifying hHRDD triggers, and insufficient engagement with directly impacted stakeholders.

Governance

Board and senior management oversight varied. One tech company established a clear escalation process for CAHRA risks via a risk committee. Another had structured crisis response protocols based on severity.

A renewable energy firm demonstrated cross-functional collaboration in response to the Ukraine conflict, with clear coordination among legal, compliance, procurement, and operational teams.

Companies are advised to define roles and responsibilities for CAHRA-risk management, disclose crisis response processes, and invest in internal capacity and training related to human rights and conflict risks.

Conclusion

Investor dialogues revealed emerging good practices but also significant gaps. There is a pressing need for scalable, decision-useful CAHRA data and consistent engagement frameworks. Broader application across sectors is necessary to support responsible investment in complex operating environments.