Navigating Portfolio Exposure to Conflict-Affected & High-Risk Areas: Practical Guidance for Investor Engagement with Companies

In October 2023, Heartland Initiative, PeaceNexus Foundation, and the Investor Alliance for Human Rights launched the Investor Engagement on CAHRA Pilot Project (Pilot Project). This initiative supports a coalition of twenty two lead and support investors in jointly engaging renewable energy and technology companies on emerging policies, practices, and governance strategies related to operations in conflict-affected and high-risk areas (CAHRA).

The Pilot Project was created in response to a growing recognition that investors can shift from reactive to proactive risk management by conducting systematic portfolio analyses for CAHRA risks and engaging effectively with companies on these issues. However, apart from a few exceptions, there is limited guidance available to investors on engaging companies about CAHRA risk management—particularly regarding policy commitments, due diligence, and governance practices. Examples of corporate good practices and lessons learned in these challenging and dynamic contexts are also scarce.

This report, titled Navigating Portfolio Exposure to Conflict-Affected and High-Risk Areas: Practical Guidance for Investor Engagement with Companies, aims to address these gaps. It shares insights drawn from a series of dialogues with four leading companies in the technology and renewable energy sectors. The project partners hope this report will serve as a valuable resource for:

  • Investors seeking to deepen their engagement with portfolio companies on CAHRA risk management.
  • Companies looking for examples of evolving good practices and common challenges.
  • Civil society and other stakeholders trying to understand what responsible conduct looks like in such complex contexts.

The first section of the report provides context on rising geopolitical tensions and outlines the legal and normative frameworks that define investor and company responsibilities for managing CAHRA risks. It also details the purpose and methodology of the Pilot Project and the development of this report.

The second section offers practical recommendations for identifying and assessing CAHRA risks within investment portfolios, along with strategies for engaging companies in constructive dialogue on these risks.

The third section presents key takeaways from company engagements, including:

  • Emerging policies, practices, and governance approaches used to address CAHRA risks.
  • Ongoing challenges faced by companies operating in these environments.
  • Practical recommendations for strengthening corporate CAHRA risk management.

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