| This is the fifth blog post in a series looking at an array of issues in 2024 related to weapons use, the arms trade and security assistance, often offering recommendations. |  Hiruni Alwishewa |
In recent years, the applicability of general guidance for due diligence from soft law instruments, such as the UNGPs and OECD Guidelines, to the arms industry have been reaffirmed. With the growing force of these soft law instruments, and the increasing expectations for corporate actors to identify, prevent and mitigate the adverse human rights impacts of their business activities, arms companies have started to develop, adopt and publicise human rights and other corporate policies that integrate human rights due diligence measures.
In comparison to other high-risk sectors, particularly those for which specific regulations have been introduced (such as child labour and supply chains), the creation of such policies is a relatively new phenomenon for the arms industry. This post identifies several common aspects of these policies that are apparent from the examination of the corporate policies of selected large arms manufacturing and exporting companies based in Europe and the United States that have consistently been on SIPRI’s top one hundred arms producers lists since 2015. The selected companies (and their country of registration) were: Airbus (registered in the Netherlands, operating in France, Germany and Spain); BAE Systems (United Kingdom); Boeing (United States); Dassault (France); General Dynamics (United States); L3Harris Technologies (United States); Leonardo (Italy); Lockheed Martin (United States); MBDA (France, Italy and United Kingdom); Northrop Grumman (United States); Raytheon Technologies (United States); Rheinmetall (Germany); Rolls-Royce (United Kingdom); and Thales (France).
Limited transparency of policies
An ongoing challenge in this area, as with many other issues with the arms trade, is the lack of transparency. Some companies make reference to the existence of a human rights policy but do not disclose them publicly. Others provide policy summaries but not full disclosure of policies, thereby limiting opportunities for public scrutiny. The public availability of corporate policies is an important complement to effective due diligence by these companies as the full and public disclosure of policies creates opportunities for scrutiny by stakeholders and civil society. Indeed, the UN Working Group on Business and Human Rights’ recommendations also call for companies to publicly communicate information about their human rights due diligence and risks assessments undertaken for arms exports, to commit to ceasing the circumvention of export controls through the use of subsidiaries in other states, and to establish grievance mechanisms.
From the publicly available corporate polices, several common features are notable, including the importance of compliance with export controls, the establishment of human rights policies, and the inclusion of risk assessment processes.
Licensing compliance
A licensing system is an integral component of the export control regimes of all major arms exporter states, and reaffirmed as a key requirement in international and regional arms controls. Most of the publicly available policies or policy summaries (Airbus, BAE Systems, Rolls-Royce) acknowledge that non-compliance with the domestic licensing regimes represents a reputational risk for the company, which may be accompanied by loss of business and perception as an unreliable export partner. In some instances, the importance of complying with licensing regimes is affirmed as a ‘special responsibility’ (Rheinmetall, Lockheed Martin).
Several American companies go further, with General Dynamics, L3Harris and Raytheon all affirming their commitment to regulatory compliance and also noting the importance of undertaking additional internal processes to the licensing process of the United States. BAE Systems, based in the United Kingdom, similarly recognises that ‘stringent internal controls’ are necessary and reaffirms its commitment ‘to maintaining an effective system of export control compliance that is designed to avoid violations, detect them promptly if they occur, and provide timely investigations and appropriate remedial actions’. Overall, this shift in recognition to acknowledge the importance of internal due diligence measures represents an important first step in the adoption and integration of human rights due diligence into the business processes of arms companies.
Human rights considerations
Some arms companies have incorporated human rights considerations into their corporate policies, either as part of their company codes of conduct or through specific human rights policies, that provide further information on their due diligence processes. The potential for the activities of arms companies to adversely affect human rights is acknowledged in some of these documents, demonstrating an acceptance of the need for these companies to integrate human rights considerations into their business processes.
An example of a stronger statement on human rights incorporation is Raytheon’s human rights policy, which acknowledges ‘that the human rights issues associated with our defense products and services are a dynamic and complex subject’, including in relation to ‘carry[ing] potential risks associated with their misuse’. Other companies, such as BAE Systems, implicitly recognise the adverse effects of arms exports, stating that: ‘We understand that some of our stakeholders have views and perceptions of defence companies and human rights, particularly in the area of exports and how our products are used’. Overall, however, there appears to be a reluctance by these arms companies to explicitly recognise the inherent and significant risks of the products which they manufacture and export, including the short- and long-term consequences for individuals and communities affected by arms sales.
The adoption of human rights policies or the inclusion of human rights considerations in corporate codes of conduct is a positive step by companies toward the dissemination of ethical business practices which have the potential to leverage prospective recipients into changing their behaviours, such as by ceasing future arms deals where weapons have been misused by a recipient. For example, L3Harris includes an option in its human rights policy to terminate a business relationship in the event there is a breach of that policy, though the focus of such options remain centred on the termination of relationships with suppliers rather than customers, who are not referenced despite them posing the ‘most salient risks’. An alternative approach is taken by Northrop Grumman, which states the company will decline a potential sale where the risk to human rights or company reputation are unacceptable irrespective of whether that sale would be legally permissible.
The most comprehensive human rights policy of the selected companies was from the Italian manufacturer Leonardo. This policy explicitly references human rights standards elaborated in the Universal Declaration on Human Rights and OECD Guidelines and maintains a list of states to which it does not export weapons to, referred to as the List of Sensitive Countries. This List is updated every year and is compiled based on factors including breaches of international human rights law, and currently includes several states involved in the Yemen conflict, namely Saudi Arabia, United Arab Emirates and Egypt (but not Kuwait and Qatar which are also coalition states involved in this conflict), in addition to Yemen.
Risk assessments
Complementary to the incorporation of human rights considerations into corporate policies is the development of strong due diligence processes. In particular, risk assessments are an integral component of the UNGPs (Principles 17 and 18), and many corporate policies affirm that ‘enhanced’ or ‘reinforced’ due diligence is required for the arms sector by virtue of it being a high-risk sector. Several arms companies have incorporated risk assessments into their company policies to identify and mitigate the human rights risks associated with the sale of their products. For example, BAE Systems states that its risk assessments consider the type of product and its intended use, the end user, and the country of sale.
Likewise, Raytheon operates a due diligence process for these purposes, which involves ‘screen[ing] potential sales involving certain types of products in countries identified as presenting a higher risk of human rights violations from product misuse’. Raytheon is also notable because it has its own Human Rights Council which ‘is responsible for assisting the businesses in their assessment of specific sales opportunities that may present heightened human rights risks’, reflecting the requirements of UNGP Principle 18.
The extent to which risk assessments are integrated throughout the business enterprise, as required by the UNGPs (Principles 17 to 21) and the OECD Guidelines, is varied. Some companies (Airbus, Dassault) only assess human rights risks for activities under their full and direct control, thereby limiting the risk assessments to their supply chains and not extending these to potential clients.
Furthermore, only a few companies elaborate the specific criteria and processes that are used in their risk assessments. For example, Rheinmetall has asserted that in compliance with German, EU and international law, the company has developed due diligence processes which include risk identification, risk mitigation, results tracking, and complaints procedures. General Dynamics is one company that provides further information on what its risk identification processes involve, including its ‘use [of] a variety of tools, techniques, and analyses’, which may include site visits and meetings, open source and web searches for adverse media, and specialised database searches, among other methods.
Leonardo states that its risk assessment includes risk identification, qualitative and quantitative analyses of risk, a risk treatment action plan to reduce the impact of risks on a project, contingency management, and risk monitoring and review, which includes quarterly reporting on risk trends. Leonardo also identifies four criteria which it uses to assess whether the sale of arms to a state would pose an unacceptable risk: domestic export controls, sanctions, ‘know your customer’, and territory.
For the most part, however, the steps these companies are required to undertake for identifying, assessing and mitigating risks are not specified in their public policies. Consequently, there is no indication from the selected arms companies how human rights considerations are balanced against other factors, in particular, commercial and security interests. In general, aside from statements confirming that risk assessments are required to be undertaken, the corporate policies of the selected arms companies make limited references to the due diligence obligations outlined in UNGPs and OECD Guidelines and do not elaborate on the processes involvement in risk assessments.
Conclusions
From the examination of selected company policies, there are some indications that these arms companies are responding to changing societal expectations, even if only reluctantly. These development and adoption of policies that incorporate human rights due diligence measures indicate there is growing acknowledgment and acceptance by the arms industry to prevent and mitigate the adverse human rights impacts of their business activities.
While not a comprehensive examination of all policies, there are nevertheless several notable insights available from the selected policies that were examined. First, some arms companies emphasise the need for due diligence that is independent of and in addition to the measures undertaken by state licensing authorities. Second, some companies have developed human rights policies that include risk assessments as part of their human rights due diligence. Third, overall, there are limited details provided on how risk assessments are conducted and what standards of due diligence are applied.
Although currently there is a lack of legislative push toward the adoption of due diligence regulations domestically or supranationally, the instruments, policies and practices from other high-risk industries (such as the mining of conflict minerals and surveillance technology sectors) can provide pertinent guidance for arms companies to (further) develop their policies to effectively incorporate the UNGPs and OECD Guidelines and, in turn, to address the adverse human rights impacts of their business activities.
Hiruni Alwishewa is a PhD Candidate in International Law at Graduate Institute of International and Development Studies in Graduate Institute Geneva. Her research examines the responsibilities of actors involved in the transfer of arms to conflict zones.
Inclusion on the Forum on the Arms Trade emerging expert program and the publication of these posts does not indicate agreement with or endorsement of the opinions of others. The opinions expressed are the views of each post's author(s).
In comparison to other high-risk sectors, particularly those for which specific regulations have been introduced (such as child labour and supply chains), the creation of such policies is a relatively new phenomenon for the arms industry. This post identifies several common aspects of these policies that are apparent from the examination of the corporate policies of selected large arms manufacturing and exporting companies based in Europe and the United States that have consistently been on SIPRI’s top one hundred arms producers lists since 2015. The selected companies (and their country of registration) were: Airbus (registered in the Netherlands, operating in France, Germany and Spain); BAE Systems (United Kingdom); Boeing (United States); Dassault (France); General Dynamics (United States); L3Harris Technologies (United States); Leonardo (Italy); Lockheed Martin (United States); MBDA (France, Italy and United Kingdom); Northrop Grumman (United States); Raytheon Technologies (United States); Rheinmetall (Germany); Rolls-Royce (United Kingdom); and Thales (France).
Limited transparency of policies
An ongoing challenge in this area, as with many other issues with the arms trade, is the lack of transparency. Some companies make reference to the existence of a human rights policy but do not disclose them publicly. Others provide policy summaries but not full disclosure of policies, thereby limiting opportunities for public scrutiny. The public availability of corporate policies is an important complement to effective due diligence by these companies as the full and public disclosure of policies creates opportunities for scrutiny by stakeholders and civil society. Indeed, the UN Working Group on Business and Human Rights’ recommendations also call for companies to publicly communicate information about their human rights due diligence and risks assessments undertaken for arms exports, to commit to ceasing the circumvention of export controls through the use of subsidiaries in other states, and to establish grievance mechanisms.
From the publicly available corporate polices, several common features are notable, including the importance of compliance with export controls, the establishment of human rights policies, and the inclusion of risk assessment processes.
Licensing compliance
A licensing system is an integral component of the export control regimes of all major arms exporter states, and reaffirmed as a key requirement in international and regional arms controls. Most of the publicly available policies or policy summaries (Airbus, BAE Systems, Rolls-Royce) acknowledge that non-compliance with the domestic licensing regimes represents a reputational risk for the company, which may be accompanied by loss of business and perception as an unreliable export partner. In some instances, the importance of complying with licensing regimes is affirmed as a ‘special responsibility’ (Rheinmetall, Lockheed Martin).
Several American companies go further, with General Dynamics, L3Harris and Raytheon all affirming their commitment to regulatory compliance and also noting the importance of undertaking additional internal processes to the licensing process of the United States. BAE Systems, based in the United Kingdom, similarly recognises that ‘stringent internal controls’ are necessary and reaffirms its commitment ‘to maintaining an effective system of export control compliance that is designed to avoid violations, detect them promptly if they occur, and provide timely investigations and appropriate remedial actions’. Overall, this shift in recognition to acknowledge the importance of internal due diligence measures represents an important first step in the adoption and integration of human rights due diligence into the business processes of arms companies.
Human rights considerations
Some arms companies have incorporated human rights considerations into their corporate policies, either as part of their company codes of conduct or through specific human rights policies, that provide further information on their due diligence processes. The potential for the activities of arms companies to adversely affect human rights is acknowledged in some of these documents, demonstrating an acceptance of the need for these companies to integrate human rights considerations into their business processes.
An example of a stronger statement on human rights incorporation is Raytheon’s human rights policy, which acknowledges ‘that the human rights issues associated with our defense products and services are a dynamic and complex subject’, including in relation to ‘carry[ing] potential risks associated with their misuse’. Other companies, such as BAE Systems, implicitly recognise the adverse effects of arms exports, stating that: ‘We understand that some of our stakeholders have views and perceptions of defence companies and human rights, particularly in the area of exports and how our products are used’. Overall, however, there appears to be a reluctance by these arms companies to explicitly recognise the inherent and significant risks of the products which they manufacture and export, including the short- and long-term consequences for individuals and communities affected by arms sales.
The adoption of human rights policies or the inclusion of human rights considerations in corporate codes of conduct is a positive step by companies toward the dissemination of ethical business practices which have the potential to leverage prospective recipients into changing their behaviours, such as by ceasing future arms deals where weapons have been misused by a recipient. For example, L3Harris includes an option in its human rights policy to terminate a business relationship in the event there is a breach of that policy, though the focus of such options remain centred on the termination of relationships with suppliers rather than customers, who are not referenced despite them posing the ‘most salient risks’. An alternative approach is taken by Northrop Grumman, which states the company will decline a potential sale where the risk to human rights or company reputation are unacceptable irrespective of whether that sale would be legally permissible.
The most comprehensive human rights policy of the selected companies was from the Italian manufacturer Leonardo. This policy explicitly references human rights standards elaborated in the Universal Declaration on Human Rights and OECD Guidelines and maintains a list of states to which it does not export weapons to, referred to as the List of Sensitive Countries. This List is updated every year and is compiled based on factors including breaches of international human rights law, and currently includes several states involved in the Yemen conflict, namely Saudi Arabia, United Arab Emirates and Egypt (but not Kuwait and Qatar which are also coalition states involved in this conflict), in addition to Yemen.
Risk assessments
Complementary to the incorporation of human rights considerations into corporate policies is the development of strong due diligence processes. In particular, risk assessments are an integral component of the UNGPs (Principles 17 and 18), and many corporate policies affirm that ‘enhanced’ or ‘reinforced’ due diligence is required for the arms sector by virtue of it being a high-risk sector. Several arms companies have incorporated risk assessments into their company policies to identify and mitigate the human rights risks associated with the sale of their products. For example, BAE Systems states that its risk assessments consider the type of product and its intended use, the end user, and the country of sale.
Likewise, Raytheon operates a due diligence process for these purposes, which involves ‘screen[ing] potential sales involving certain types of products in countries identified as presenting a higher risk of human rights violations from product misuse’. Raytheon is also notable because it has its own Human Rights Council which ‘is responsible for assisting the businesses in their assessment of specific sales opportunities that may present heightened human rights risks’, reflecting the requirements of UNGP Principle 18.
The extent to which risk assessments are integrated throughout the business enterprise, as required by the UNGPs (Principles 17 to 21) and the OECD Guidelines, is varied. Some companies (Airbus, Dassault) only assess human rights risks for activities under their full and direct control, thereby limiting the risk assessments to their supply chains and not extending these to potential clients.
Furthermore, only a few companies elaborate the specific criteria and processes that are used in their risk assessments. For example, Rheinmetall has asserted that in compliance with German, EU and international law, the company has developed due diligence processes which include risk identification, risk mitigation, results tracking, and complaints procedures. General Dynamics is one company that provides further information on what its risk identification processes involve, including its ‘use [of] a variety of tools, techniques, and analyses’, which may include site visits and meetings, open source and web searches for adverse media, and specialised database searches, among other methods.
Leonardo states that its risk assessment includes risk identification, qualitative and quantitative analyses of risk, a risk treatment action plan to reduce the impact of risks on a project, contingency management, and risk monitoring and review, which includes quarterly reporting on risk trends. Leonardo also identifies four criteria which it uses to assess whether the sale of arms to a state would pose an unacceptable risk: domestic export controls, sanctions, ‘know your customer’, and territory.
For the most part, however, the steps these companies are required to undertake for identifying, assessing and mitigating risks are not specified in their public policies. Consequently, there is no indication from the selected arms companies how human rights considerations are balanced against other factors, in particular, commercial and security interests. In general, aside from statements confirming that risk assessments are required to be undertaken, the corporate policies of the selected arms companies make limited references to the due diligence obligations outlined in UNGPs and OECD Guidelines and do not elaborate on the processes involvement in risk assessments.
Conclusions
From the examination of selected company policies, there are some indications that these arms companies are responding to changing societal expectations, even if only reluctantly. These development and adoption of policies that incorporate human rights due diligence measures indicate there is growing acknowledgment and acceptance by the arms industry to prevent and mitigate the adverse human rights impacts of their business activities.
While not a comprehensive examination of all policies, there are nevertheless several notable insights available from the selected policies that were examined. First, some arms companies emphasise the need for due diligence that is independent of and in addition to the measures undertaken by state licensing authorities. Second, some companies have developed human rights policies that include risk assessments as part of their human rights due diligence. Third, overall, there are limited details provided on how risk assessments are conducted and what standards of due diligence are applied.
Although currently there is a lack of legislative push toward the adoption of due diligence regulations domestically or supranationally, the instruments, policies and practices from other high-risk industries (such as the mining of conflict minerals and surveillance technology sectors) can provide pertinent guidance for arms companies to (further) develop their policies to effectively incorporate the UNGPs and OECD Guidelines and, in turn, to address the adverse human rights impacts of their business activities.
Hiruni Alwishewa is a PhD Candidate in International Law at Graduate Institute of International and Development Studies in Graduate Institute Geneva. Her research examines the responsibilities of actors involved in the transfer of arms to conflict zones.
Inclusion on the Forum on the Arms Trade emerging expert program and the publication of these posts does not indicate agreement with or endorsement of the opinions of others. The opinions expressed are the views of each post's author(s).
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