> Return to Network of Global Agenda Councils 2011-2012 report
Given the World Economic Forum’s strong global network in the private sector, the Global Agenda Council on Conflict Prevention 2011-2012 agreed to focus its efforts on increasing business’ awareness of, and role in, peace-building. Though it was not an entirely new perspective – as many non-governmental organizations are currently working in this area – the Council acted in concert to leverage the relationships and various multi-stakeholder platforms provided by the World Economic Forum to attract more business actors to the peace-building processes.
Through its deliberations and interactions within the Forum network, the Council worked specifically to attract more business actors to the discussion so that the potential alignment between the private sector and peace could be better understood and communicated through wider channels, while also prompting the traditional NGO/IO/governmental actors to seek new alliances with business. The Council also put forward three concrete projects designed to encourage business partnerships for peace – including, the Business Champions for Peace network, the Post-conflict Peace-building Business Resource Initiative, and the Global Curriculum on Conflict Management.
Why business? Poverty and low economic growth are correlated to conflict.
Not surprisingly, poverty rates in conflict-ridden countries are 20% higher than average.1 The wealth of natural resources in many poor countries multiplies the likelihood of conflict in those regions. Recent research (Uppsala/PRIO) indicates that 40% of civil wars are related to natural resources, and that resource-related conflicts are twice as likely to recur within five years of their resolution. Moreover, low economic growth and poverty, compounded by violence and conflict, is extremely costly over the long-run. The World Development Report 2011 estimated that the average cost of a civil war in a medium-sized developing country is equivalent to more than 30 years of its potential GDP growth. One report estimates that armed conflict in Africa has cost at least US$ 284 billion since 1990. Estimates by regional banks suggest that conflict in the Middle East has cost the region US$ 12 trillion over the past 20 years. All too quickly, fragile countries enter a vicious cycle of poverty-conflict-cost that is extremely difficult to break.
Business activity can be key to breaking this cycle of poverty and conflict. One of the major elements of strategic peace-building is a strong and equitable economic foundation, to which companies can be major contributors. As the principle engine for job creation through the production of goods and services, and as a source of foreign currency and technology, business can play a leading role in the economic foundation of nations, and thus of peace.
At times, large companies may be the only service providers, or sources of infrastructure, in conflict zones. In these cases, as the sole source of authority or resources, their impact on surrounding communities can be akin to that of a government.
Further, businesses can contribute to stability simply through their day-to-day operations. For example: by ensuring conflict-sensitive and participative planning in their supply chains or hiring policies; through non-discriminatory labour regulations that take account of ethnic tensions; by advocating or upholding transparent investment regulations; and by avoiding opportunities to influence governmental officials or policy through undue means.2
For companies who are sensitive to corporate social responsibility, but do not have this at the heart of their core business, investments into areas such as education, healthcare, or infrastructure – in the local communities where they operate – can help to reduce the drivers of conflict.
Small players can have a great impact as well. Council members emphasized the positive effect that grass-roots enterprises can have on conflict in their own communities. Indeed, small and local entrepreneurs are at times the only business-people to be found within kilometres of a conflict zone. The goods, services and jobs that they provide locally, are an important contribution to peace-building that should not be overlooked.
In addition, business can also influence a conflict situation by playing the neutral mediator or third party in negotiations. The experiences of mediators highlight the fact that many peace negotiations conducted by government officials, politicians or international diplomats, have unrealistic expectations as to how the private sector will respond to agreements made (in their absence) during negotiations. Assumptions regarding the economic or productive aspects of a peace agreement may, in fact, be overly optimistic or misplaced for the sake of achieving a deal that everyone can live with. Business could exert its role in pressuring parties to strike a deal that would enable a better economic environment. Though participation in a peace negotiation requires a great deal of sensitivity, business could be challenged to assume the role of a potential contributor to the resolution of a conflict.
Business also benefits from peace.
The peace-business relationship works both ways – without exception, political and social stability can only enhance business prospects and profitability. The Council examined the potential overlap between companies’ financial motivations and peace-building objectives. The data collected by certain Council Members and their experiences in the field, indicated that companies investing in conflict-ridden zones consider, in addition to commercial returns: the physical risks to its staff; governmental, political and social risks to its business; regulations that may penalize companies operating abroad for corrupt purposes; reputational risks; and the robustness of the rule of law.3 Instability and conflict essentially raise these risks, and, therefore, the potential costs that companies face by doing business in a fragile zone. Most companies operating in such situations are quick to agree that their interests lie in stability and peace, the sine qua non of clear legal business frameworks, and respect for the rule of law.
For certain sectors, particularly the extractive industries, operations in conflict zones or fragile states are necessary because of the location of resources or assets. Thus, peace-building is ultimately a core activity enabling their commercial viability.
Beyond the local risks that conflicts may pose to business, there are often regional dimensions which may suddenly impact a company’s operations. For example, a conflict next door may disturb supply chains or cut off neighbouring markets. For businesses operating in several neighbouring nations simultaneously, conflict in one of these may literally spill over into its neighbours thereby threatening the overall viability of operations, staff and company assets.
Peace-builders in silos
Paradoxically, while many companies invest into lucrative sectors in conflict-prone countries, international organizations, NGOs and donors are simultaneously investing in related, if not similar fields, to tackle the roots of the conflict, i.e., to reduce poverty, encourage the rule of law, and build institutions. The two groups may not necessarily collaborate, despite the convergence of their interests around the establishment of peace and stability. Indeed, research conducted into business and peace-building indicates that companies generally operate independently, and only collaborate with NGOs, IOs or governments at second or third remove.4 Combining the resources, expertise and leverage of all of the actors would probably produce a more formidable force for peace.
Despite these compelling opportunities for collaboration and the increasing number of companies that are taking into account the impact of their operations on conflict, business at large is still broadly absent from peace-building activities. The reasons for this are not hard to deduce. The Council’s experiences in attracting companies to the cause of peace-building through business have revealed a certain reluctance of companies to engage, either from lack of interest (their priorities are closer to their core business), concern over the risks involved, or a perceived lack of their expertise or ability to make an impact. This last concern was particularly evident to the Council; many executives and business leaders want to be involved in building peaceful societies, but find it difficult to see how they can do so amongst the myriad of related guidelines, recommendations or rules which have been developed in recent years. More formal research into business and peace-building has indicated that companies who consider conflict-resolution closer to their core business are more likely to become engaged. Some companies may prefer to remain at the fringe of politically sensitive processes, for fear of overstepping their bounds, attracting reprisals, or suffering unforeseen consequences.5
But a blind eye, too, can be profitable
Throughout modern history, businesses have been complicit with authoritarian regimes, in Latin America, Asia, and the Middle East particularly, as well as in African nations facing protracted conflicts. Undeniably, business – acting on their own or through association – can also be drivers of conflict through their practices and dealings with authorities in fragile contexts.
One common example is the nefarious equation between government contracts and business which can easily exclude or even undermine peace objectives, while providing immense benefit to corrupt officials and company coffers. Other examples are provided by companies extracting resources, who have been accused of acting inappropriately and exploiting fragile governments, weak legislation, or vulnerable communities. In many instances, unscrupulous companies have acted in concert with corrupt governments of fragile or conflict-ridden countries, who have been complicit with the private sector and benefited immensely from practices such as direct bribery, high tax revenues, monopolies, and cartelization. Finally, private security firms or government security agencies contracted by companies, have in the past committed important violations of human rights in local communities, with consequent damage to peace-building efforts.6
A big challenge in conflict-ridden countries is, therefore, to ensure that governments also embrace and encourage corporations to adopt best practices for peace. Likewise, many businesses in fragile zones continue to operate with little understanding of the impact of their operations or products on peace and stability.
Building on the win-win case
Ultimately, the Council agreed that “win-win” equilibria can exist for companies and peace-builders alike, where the objectives of both are complementary and aligned. Despite the complexity and nuances of business relationships in conflict-ridden zones, and the historically mixed results, the space in which businesses and peace-builders can complement each other is growing. This alignment should be enlarged and expanded as much as possible – a task that the Council set out to explore in 2011-2012.
Several trends worldwide underscore the importance of bringing the private sector into peace-building
On the one hand, rising demand for natural resources worldwide is spurring investment by companies in fragile and conflict-ridden countries. Likewise, the overthrow of several regimes in the resource-rich Arab World has temporarily altered the rules of engagement for many multinationals operating in this region.
A not-so-new trend which is gaining ground, and also prompting countries to look more closely at their practices in fragile states, is the increasing awareness that many consumers in Westernized countries look unfavourably at products or services originating in conflict zones. Reputational concerns have increased in importance for most companies, and especially those operating in fragile zones. Meanwhile, legislation in the home countries of many multinationals has tightened to prevent unfavourable practices abroad such as bribery, corruption, or environmental damage. The USA, for example, has significantly increased the number of litigations brought forward under the Foreign Corrupt Practices Act since 2010, extracting an impressive US$ 1.8 billion in sanctions in that year alone.
Numerous resources already exist that attempt to engage the business community in peaceful development or human rights matters, such as the Extractive Industries Transparency Initiative and the UN Global Compact. However, these instruments operate on a voluntary basis and may have a limited, Western corporate membership. Second, there is not much literature available on international, cross-industry endorsed standards. Much of the material is badly organised, issue or industry-specific, or not targeted to the business audience. Nothing specifically addresses companies in emerging markets – although there remains a question as to whether those companies need a distinct process of engagement or treatment. Ultimately, the debate has not yet permeated beyond multinational companies.
What should be done?
As a first step, increased awareness and cooperation between businesses and peace-builders could foster the common objective of stability and peace. The World Economic Forum is uniquely placed at the nexus of many stakeholders to facilitate such cooperation.
- One of the big gaps identified by the Council is a lack of easily accessible information for companies currently operating in, or interested in investing in, resource-rich but conflict-affected environments.
- Similarly, the dissemination of positive experiences or best-business practices in peace-building is limited.
The Council has begun to address these gaps with the following projects and actions:
Global Curriculum on Conflict Prevention
Since 2009, the Council has incubated and developed a new approach to prevent destructive conflict, based on the idea that emotions and identity are key obstacles – and opportunities – to constructive conflict-management. The Global Curriculum on Conflict Prevention – developed in partnership between the Harvard International Negotiation Project (HINP) and the World Economic Forum – provides a common set of negotiation tools for current and future leaders and institutions around the world. In 2012-2013, HINP will develop a series of workshops for senior business and political leaders which will employ a unique method combining first-hand accounts by regional and global peacemakers with the latest conceptual thinking on how to deal with the emotional roots of conflict. Rather than focusing on linear problem solving, the curriculum looks at the deeper dynamics driving conflict – and how to deal with them effectively. It delves into the hopes, fears, needs, worries and opportunities facing peacemakers. It will explore what leads groups to polarize, and what can be done to bring everyone back to the negotiating table, committed to a sustainable outcome. The curriculum also examines issues of resistance to negotiation, such as deeply held suspicion and distrust, as well as ways to overcome them.
Business Champions for Peace
The Council, and in particular the PeaceNexus Foundation, have laid the conceptual foundations for a new network of business figures active in the field of peace-building. Through the collaboration of the Council and the network of the World Economic Forum, a recruitment exercise for a new network “Business Champions for Peace” is under way with a view to bringing together senior business leaders who have demonstrated that the private sector can contribute to sustainable peace, as a source of example and information for the larger peace-building community. “Business Champions” will be figures who have initiated and promoted activities that improved the livelihood of conflict-affected societies by means of different forms of engagement. The main purpose of the group Business Champions for Peace is to share, as widely as possible, their experiences and the lessons they have learned regarding the role of the business community in fostering peace through conflict-sensitive business practices. Ideally, their engagement will be perceived as a strategic one, not as philanthropy.
Post-conflict Peace-building Business Resource Initiative
One of the big gaps identified in the business and peace-building argument is the lack of easily accessible information for companies currently operating in, or interested in investing in, resource-rich but conflict-affected environments. Several websites provide sector-specific and thematic analyses of different issues across countries. However, few provide either information on conditions in specific countries emerging from conflict, or information in formats that are accessible to, and useful for, the business community. Even fewer existing sites provide tools and information to enable businesses to reduce the risks of investing in conflict zones.
The Post-conflict Peace-building Business Resource Initiative therefore intends to address these gaps. The project will do so by providing a complete package of information, analysis, guidance and tools for businesses looking to invest in countries emerging from conflict in one easily accessible place. In the longer-term, the goal will be to eventually provide a “One-Stop-Shop” for businesses interested in investing in countries emerging from conflict.
Role of Business Engagement
Council members have actively sought out opportunities to discuss the role of business in conflict-affected or fragile societies at World Economic Forum events. During the Summit on the Global Agenda 2011 in Abu Dhabi, council members participated in a brain-storming session on the role of business in conflict-zones and contributed their views on the potential good and harm that companies could do while operating in these environments. During the Annual Meeting of the World Economic Forum 2012 in Davos, Council members spoke at events on Rebuilding Fragile States, Multiculturalism, and the Political and Economic Context of Resources Extraction.
Developing Future Recommendations for Engaging Business in Peace-building
The Council will work in concert with other sister Councils – such as the Mining and Metals Global Agenda Council and the Fragile States Global Agenda Council – towards some concrete recommendations on how business can be brought into peace-building:
- On the one hand, the private sector should be included more prominently in development plans, economic policy-making, and the economic aspects of peace agreements.
- On the other hand, the private sector could be further encouraged or incentivized to participate directly in community development, peace and reconciliation efforts, and – where appropriate – peace negotiations themselves. One concrete case study of a business person participating in peace negotiations is currently being facilitated by a Council member.
Moving forward in the 2012–2014 Council session, the Council plans to take a sequenced approach to the projects above:
- First, encouraging a unified message on business and peace-building, by defining the five or 10 principles or action points business must embrace, based on the developments seen in this field over the past 10 years
- Identifying clearly what the web platform could provide for further engagement around those key action points.
- Promoting actions to avoid/lessen first-mover dilemma.
The opinions expressed here are those of the individual Members of the Council and not of the World Economic Forum or any institutions to which they are affiliated