The Four Pillars of Material Risk

Corporate Exposure to Israeli Human Rights Violations

A Framework for Material Risk Assessment

Following the ICJ rulings of 2024, the ICC arrest warrant applications, and the consensus among major human rights organisations regarding war crimes, business-as-usual with Israel is no longer tenable. Multinational corporations must assess exposure across these four quadrants.

1. Legal & Regulatory Risk

• Complicity in International Crimes: Under the Rome Statute, corporate officers can be held individually criminally liable for aiding and abetting war crimes and crimes against humanity. This liability exists regardless of a final "genocide" determination.
• US Liability (Alien Tort Statute & Caremark): US Courts have jurisdiction over claims for human rights violations committed abroad (ATS). Furthermore, Delaware Law (Caremark) imposes a duty of oversight on Boards to prevent criminal conduct.
• EU Mandatory Due Diligence (CSDDD): The Corporate Sustainability Due Diligence Directive imposes strict penalties (up to 5% of global turnover) for failing to identify and mitigate human rights adverse impacts in the value chain.
• National Legislation: Strict liability exists under the French Duty of Vigilance Law and the German Supply Chain Due Diligence Act (LkSG).
• Contractual Nullification: Contracts dependent on violations of peremptory norms of international law (jus cogens) may be deemed unenforceable on grounds of Public Policy.

2. Financial & Investment Risk

• Divestment Cascades: Sovereign wealth funds (e.g., Norway) and pension funds (e.g., Dutch ABP, UK LGPS) are actively screening against companies involved in the occupation and severe human rights abuses.
• Credit Rating Downgrades: ESG rating agencies (MSCI, Sustainalytics) are downgrading companies with "Severe Controversies," increasing the cost of capital.
• Stranded Assets: Infrastructure projects or factories in occupied territories face the risk of seizure, destruction, or legal closure without compensation.
• Insurance Exclusions: Underwriters are increasingly excluding "war risk" and political violence from standard policies in the region.

3. Operational & Supply Chain Risk

• Workforce Disruption: The "Tech Walkout" phenomenon sees high-value talent refusing to work on projects (e.g., Project Nimbus) that support military occupations.
• Supply Chain Contamination: Goods entering the supply chain from illegal settlements violate customs regulations and forced labour prohibitions (e.g., US Tariff Act).
• Unreliable Partners: Israeli suppliers face labour shortages due to military conscription and economic instability, threatening Service Level Agreements (SLAs).

4. Reputational & Brand Risk

• Toxic Association: The consensus that war crimes have occurred makes association with Israel a critical reputational toxicity risk—comparable to historical associations with apartheid regimes.
• Recruitment Retention: Gen Z and Millennial talent (the future workforce) overwhelmingly view this issue as a red line for employment.
• Loss of Social License: Companies perceived as complicit face boycotts, protests at HQs, and disruption of AGMs, damaging the brand's social license to operate globally.

Last updated: January 2026