Yet companies will find there are challenges in Iran to obtaining the information and enlisting the local cooperation necessary to identify and assess such impacts. In this briefing, we summarise these challenges and propose ways forward. Subsequent IBR briefings will explore challenges to other steps of the due diligence process for responsible business.
Unfamiliarity can result in resistance and distrust, and this will impact the way foreign companies can communicate with workers and communities and interact with their Iranian counterparts.
This has important implications for knowing your partner, an imperative in the Iranian context. While international sanctions related to Iran’s nuclear program have been lifted, certain UN, EU and US sanctions remain, and hundreds of individuals and entities are still under sanctions. Sanctions compliance is complicated by the fact that full information regarding company ownership, effective control of a firm, or individuals in a company acting on behalf of others (who might be sanctioned) can be hard to obtain. Publicly listed companies provide some information, but, as in many geographies, information can easily be obscured and individuals can act as representatives for others. Less information is available for privately held companies.
In addition, an entity may not be on any sanctions list, but might be partly owned by or a subsidiary of a sanctioned entity. This is not unlikely because sanctioned entities such as Iran’s Revolutionary Guards have significant holdings throughout major sectors of the Iranian economy. A sanctioned entity’s ownership or stake may not be clear because it may sit behind other company structures.
Companies also face the risk of being involved with entities that are not on any sanctions list but which engage in practices that depart significantly from responsible business practices. This risk is heightened by the fact that such practices are prevalent in Iran (see IBR Briefing #1). Difficulties obtaining information on a partner’s or supplier’s practices raises a company’s risk of being linked to violations of responsible business standards.
In a context where this kind of engagement is unusual and unfamiliar, companies may face an environment of distrust that can make communication with local partners, workers and communities more challenging, and it may even pose risks to company personnel or local interlocutors carrying out due diligence.
For more detailed information on the issues in this briefing, please contact IBR project at firstname.lastname@example.org.