Profits Are Not a Defence: The Lafarge Verdict, the ‘S’ of ESG, and What Business Leaders Must Understand About Operating in a World at War

Between 2013 and 2014, Lafarge SA — then the world’s largest cement company, now part of Holcim made payments totalling approximately EUR 5.5 million to armed groups in Syria, including the Islamic State (ISIS), to keep its cement plant in the Jalabiya region operational during the Syrian civil war. The court rejected the company’s argument that it was the victim of a ‘racket’. Instead, the Paris Criminal Court found that the payments constituted a ‘commercial partnership with ISIS.’

The former Chief Executive Officer (CEO), Bruno Lafont, personally approved the arrangement. Former deputy director Christian Herrault, who led negotiations with ISIS, was sentenced to five years in prison and fined EUR 225,000 for ‘financing terrorism and violating international sanctions.’ He was taken into immediate custody on the day of the verdict.

More than 190 former Syrian employees of Lafarge joined the case as civil parties. They testified in the court’s own words, ‘with strength, precision, dignity and humanity’ about their daily lives marked by kidnappings, crossing sniper-fire checkpoints, bombings, and the constant threat of reprisals from armed groups. The employees were knowingly placed in danger so that the factory could keep producing cement.

A separate investigation into Lafarge’s potential complicity in crimes against humanity remains ongoing. The terrorism financing conviction is not the end of this story.

Why This Is a Watershed Moment for Corporate Governance
The Lafarge verdict is being called historic for three reasons that every board member and general counsel needs to understand.

First: it establishes that a corporation can be criminally convicted for financing terrorism to protect business operations.
This is not a theoretical legal risk. It is now a documented outcome in a major Western jurisdiction. The European Centre for Constitutional and Human Rights (ECCHR), which was recognised as a civil party in the case, described the verdict as ‘proportionate to the extreme gravity of the facts’ and noted that the presiding judge emphasised ‘the scale of the incalculable disruption to public order’ caused by the financing.

Second: individual executive accountability is real.
The Lafarge verdict imprisoned executives who argued they were acting in the company’s commercial interest. That argument was found to aggravate, not mitigate, their culpability. Under French law, corporate complicity turns on knowledge and facilitation, not on a shared criminal purpose. Directors do not need to have intended the crime. They need only to have known and enabled it.

Third: the ‘business continuity’ defence is dead.
Lafarge’s leadership chose to stay operational in an active conflict zone, funding the very groups that were terrorizing their own employees. They did so to protect revenue. The court’s verdict is a declaration that this calculation where profits over human lives is not a business decision. It is a criminal one.

The ESG Implications: What the ‘S’ of ESG Actually Means in 2026
The ESG conversation in Asia, Australia, and Latin America has been dominated by the ‘E’ — climate disclosure, carbon markets, clean energy transitions. The ‘S’ (Social) dimension has been treated as softer, harder to quantify, and somehow less urgent. The Lafarge verdict challenges that hierarchy directly.

Human rights due diligence is not a reputational exercise. It is an operational, legal, and governance imperative. And for companies operating in or sourcing from regions of geopolitical instability which describes much of the world in 2026 the Lafarge case is a precedent that now sits inside the risk calculus.

Consider the landscape: companies in Southeast Asia source from supply chains that passthrough Myanmar, where credible reports of forced labour and human rights abuses have been documented since the 2021 military coup. Companies in Latin America operate in regions where narco-linked extortion and paramilitaries create structural operating risks not unlike those Lafarge faced in Syria. Companies in the Middle East and Central Asia face similar tensions between commercial presence and conflict exposure.

The Business and Human Rights Journal’s post-verdict analysis identifies three governance failures that created the Lafarge exposure: the absence of a conflict-zone operating policy; the absence of escalation protocols when payments to armed groups began; and the absence of board-level oversight of geopolitical risk. All three are gaps that ESG governance frameworks are specifically designed to close.

The Regulatory Trajectory: Where This Is Heading
The Lafarge verdict does not exist in isolation. It sits within a rapidly hardening global human rights enforcement environment.

The EU Corporate Sustainability Due Diligence Directive (CS3D), even in its post-Omnibus narrowed form, still requires companies above the EUR 1.5 billion turnover threshold to conduct human rights due diligence across their value chains. The EU Forced Labour Regulation (EUFLR) is advancing separately. Australia is consulting on strengthening its Modern Slavery Act. New Zealand has introduced its bipartisan Modern Slavery Bill with director-level criminal liability. And in the United States, the Uyghur Forced Labour Prevention Act has been actively enforced with import bans affecting semiconductor, agricultural, and textile supply chains with connections to Xinjiang.

The direction of travel is unmistakable. Human rights compliance is moving from voluntary corporate social responsibility (CSR) reporting to enforceable legal obligation with criminal consequences at the far end.

ESG-BI PERSPECTIVE
ESG-BI does not believe the Lafarge verdict is an outlier. We believe it is a preview.

The conditions that created the Lafarge situation: geopolitical conflict, commercial pressure, weak board-level oversight of human rights risk, and the absence of escalation protocols exist in dozens of operating environments that multinational companies navigate today. What the verdict has done is establish that none of those conditions are a defense. They are, in fact, aggravating factors.

Boards that treat human-rights risk as secondary, informal, or ‘managed by operations’ are exposing their companies to legal, financial, and reputational consequences that no commercial rationale can erase. In the ESG era, continuity is not a defence unless it is governed.

Our recommendation to members is direct: if your company operates in a conflict affected or high-risk area, or sources from one, you need a conflict-zone human rights policy that is board-approved, operationally tested, and documented. Not a paragraph in your code of conduct. A policy. With an escalation protocol. With board-level signoff. With evidence that it has been applied.

The question your board must answer is not ‘Are we compliant?’

It is: ‘If a court examined every decision we made in the last three years about where to operate and how to manage human rights risk in that context, would we be comfortable with the verdict?’

For most companies, the honest answer is that they have not asked the question at all. Start asking it now.