Can Sanctions, Boycotts and Divestment Achieve Human Rights Outcomes?

As the Russian invasion of Ukraine enters a second painful month, more questions are being asked about the extent to which sanctions, boycotts and divestment campaigns can change the behaviour of Russian leaders, and what the wider human rights implications of such actions may be in the short and medium term.

Can renewed reliance on tools that have been tried in the past with mixed success produce different results today? And can sanctions and boycotts that claim to be based on international human rights norms lead to desired outcomes?

History teaches that to be effective, sanctions have to be applied by many, if not all countries. That does not always happen, and the current crisis will again test this. It is also clear that to be meaningful, boycotts have to target specific businesses, individuals, or commodities, but that is not always the case as well. Imposition of sanctions creates opportunities for some governments to increase their market share by not going along, and a parallel market emerges, which can produce its own adverse consequences. Comprehensive sanctions and boycotts, all too often, penalise civilians and raise costs for the poor, while doing little to inconvenience perpetrators of human rights abuses. What observations might we draw?

It is clear that whilst targeted-sanctions are more clearly defined in human rights terms, some governments feel they are not sufficient on their own as a  response to the Russian invasion of a neighboring country.

The sanctions imposed on Russia, though extensive but by no means universal, appear to be biting. We have written previously about the growing number of ‘Magnitsky-style’ targeted sanction regimes that cite explicit human rights criteria. Sergei Magnitsky was the lawyer of Bill Browder, an American investor who had major interests in the post-Soviet era Russian economy. Magnitsky was arrested and suffered abuses in a Russian prison where he died, and the resulting approach is named in his honour. US, UK, Canadian, Australian and European Union sanctions regimes of this kind vary in their scope, with the EU’s being the most expansive and the UK’s the most restrictive. But there is general alignment in terms of the individuals and companies implicated (and assets frozen). These targeted sanctions have been used against nationals in a growing number of countries (e.g. Myanmar, Xinjiang/China, Saudi Arabia), but the focus is now back onto Russia itself, addressing government officials and businessmen (almost exclusively men). But in the current context, we are now beyond targeted-sanctions alone – blanket sanctions have also been applied, in particular against the Russian financial sector (from the Central Bank through to the SWIFT transfer system). It is clear that whilst targeted-sanctions are more clearly defined in human rights terms, some governments (not least President Zelenskyy of Ukraine) feel they are not sufficient on their own as a  response to the Russian invasion of a neighbouring country.

Targeted boycotts can work even if sometimes they take time to do so. But they never exist in isolation of other factors, in particular the struggle of workers and human rights defenders on the ground.

Boycotts have been in the news over recent days as well concerning Uzbekistan. Most governmental sanctions on Uzbekistan have already been lifted, but there was – until a few days ago – a 16-year long boycott of cotton and apparel goods from the country due to forced labour practices, which was supported by 260 manufacturers and brands. There were several factors leading to the lifting of this boycott, not least the elimination of any evidence of central government imposed forced labour in the cotton fields. The Cotton Campaign’s efforts to change government actions will be seen as a successful boycott alongside those of apartheid-era South Africa of the 1970s and 1980s, for example. Targeted boycotts can work even if sometimes they take time to do so. But they never exist in isolation of other factors, in particular the struggle of workers and human rights defenders on the ground.

According to the Financial Times there are a number of considerations that make such rapid extraction very challenging, from how best to treat local staff, to the threat of expropriation and the challenge to find buyers at such short notice.

But to say that a boycott achieved it aims in one context does not necessarily mean it will work in another. Since the genocide in Rakhine State, and more recently since the military coup of last year, there have been calls for a blanket boycott of all goods made in Myanmar. For a country that is now tipping into civil war, the human rights situation has already been cited by international companies such as Telenor, Total and Chevron as part of their reasons for withdrawing. Now the pressure is on brands that source clothing from Myanmar’s fragile apparel sector, which still employs around 400,000 people, mainly women. Will a boycott of these factories bring about the return of democracy to Myanmar, even in the longer term? There seems little reason to believe this could be a factor influencing the Myanmar junta, particularly as the military has no major stake in this area of the economy. Rather, it will present much tougher life choices for the workers who would be impacted, many of whom might have to resort to formal and informal agents for similar jobs in Malaysia and elsewhere, and the risks and vulnerabilities that comes with this. This is not an easy decision to make. To pretend it is misses the context.

And this brings us to the wider implications of the current Russia boycott and divestment. Over the past month, over 400 companies have announced they will cease, suspend or scale back operations in Russia – an unprecedented development in size and speed. According to the Financial Times there are a number of considerations that make such rapid extraction very challenging, from how best to treat local staff, to the threat of expropriation and the challenge to find buyers at such short notice. Some companies have suspended operations and kept employees on full pay – no small feat when it is 62,000 employees in the case of McDonalds or 12,000 staff in the case of Ikea. Others, such as Unilever, Nestle, Mars and Danone have all announced (at least at the time of writing) that they will stay or dramatically scale back operations given their place in the country’s food chain. Some companies have taken decisions in anticipation of consumer boycotts they may face in other markets, including in their own countries.

It goes without saying but sanctions, divestment, and boycotts are different things. They might coincide but not always. It is more than possible to support human rights-based sanctions, particularly targeted ones, but oppose aspects of comprehensive boycotts on human rights grounds.

Events concerning Russia require fresh reflection on other situations, such as the boycott movement focusing on Israel’s breaches of international law, particularly in the Occupied Territories. The Boycott, Divestment, Sanctions (BDS) movement is an explicit linking of all three concepts and aims “to end international support for Israel's oppression of Palestinians and pressure Israel to comply with international law”. Again, the need for nuance is important –  a complete boycott of Israel may not be viable, but sanctioning its military-industrial complex (most directly associated with human rights concerns)  as well as  businesses that are complicit in the occupation of the West Bank could garner ongoing and broad based support. 

What observations might be drawn from the above?

1. It goes without saying but sanctions, divestment, and boycotts are different things. They might coincide but not always. It is more than possible to support human rights-based sanctions, particularly targeted ones, but oppose aspects of comprehensive boycotts on human rights grounds.

2. As many commentators have said over recent weeks, times such as these can be inflection points that shape the course of history. If this is the case, then we are at a critical moment for the global economy and defining the responsibilities of states and businesses within it. There is now extensive evidence concerning the effectiveness of sanctions, divestment, and boycotts, including those which have claimed protection of human rights as part of their legitimacy. Our collective task now is to learn those lessons, and fully consider the potential longer-term human rights consequences of actions being taken today and in the days ahead.

3. Whilst geopolitical events can move rapidly in relation to sanctions, divestment, and boycotts, keeping an eye on longer-term consequences is important. Whether the issue is forced labour in Xinjiang or war crimes in Ukraine, geopolitical responses to such crimes can bring about important pressure but may inadvertently undermine other fundamental freedoms. The majority of the world’s copper is still smelted in China, for example, and Russia is the world’s third largest producer of both nickel and aluminium. At the moment, most governments and companies buy and sell off the global market. If the world moves away from globally traded commodities managed on a mass-balance basis towards siloed and securitised value-chains, we risk both overproduction on the one hand and less human rights leverage to ‘raise all boats’ over the longer term. This might be the future we are inevitably heading towards, but we need to be aware of this fact.

4. Investors are currently scrambling to keep up with evolving state responses, and some are dumping assets purely because they are Russian without undertaking adequate human rights due diligence. To use the example of Sudan again, the Sudan Divestment Taskforce did take the time to calibrate the nature of the boycott and to allow some companies engaged in the provision of public goods such as medical supplies, healthcare, food, water, electricity for civilian use, to remain economically engaged. This might also prove to be case for Russia over time, but for now, the Sudan approach should be considered (think also of the Sullivan Principles in relation to apartheid era South Africa or the MacBride Principles applied by US companies in the 1980s in relation to their operations in Northern Ireland).

5. Sanctions, divestment, and boycotts can easily be weaponised in greater geopolitical struggles that are more to do with advancing trade and security interests than protecting human rights. Being clear about the objectives of any sanction, divestment, or boycott measure in human rights terms is important. Understanding the wider adverse consequences of blanket measures is also crucial, as is mitigating unintended impacts wherever possible. The decision of international companies engaged in the provision of food or pharmaceutical products, for example, to remain in Russia for the time being should not be dismissed out of hand. These nuances were developed in similar otherwise blanket boycotts, such as against Sudan following the Darfur massacres, and so might prove to be the case for Russia as well.

6. The importance of “Responsible Exit” for businesses committed to respect for human rights is a complex challenge. The UN Guiding Principles on Business and Human Rights (UNGPs) point companies towards this decision in contexts of grave human rights risks and limited leverage to influence others involved. But the UNGPs don’t offer direct guidance in relation to boycotts, divestment, and sanctions. It is clear that in cases of international crimes and breaches of international humanitarian law, corporate involvement and the risk of complicity in unlawful actions of others are red lines that supersede questions of leverage. However, actions in the current context such as companies deciding to suspend operations in Russia should be understood as acts of leverage in themselves– which might or might not work. It seems perverse to see as entirely equivalent the role of any business regardless of their purpose and whether or not they perform a public good. The European Convention on Human Rights (to which Russia and Ukraine are still technically party) does distinguish between ‘state-like’ and ‘non-state-like’ functions a business might undertake. The UNGPs only acknowledge that corporate respect for human rights applies to all businesses “regardless of their size, sector, operational context, ownership and structure” and in 2020 the Working Group published a report that called for ‘heightened due diligence’ by companies operating in conflict or post-conflict areas.

As many commentators have said over recent weeks, times such as these can be inflection points that shape the course of history. If this is the case, then we are at a critical moment for the global economy and defining the responsibilities of states and businesses within it. There is now extensive evidence concerning the effectiveness of sanctions, divestment, and boycotts, including those which have claimed protection of human rights as part of their legitimacy. Our collective task now is to learn those lessons, and fully consider the potential longer-term human rights consequences of actions being taken today and in the days ahead.

Photo by Ehimetalor Akhere Unuabona on Unsplash