Businesses not always free to keep the peace

Businesses are regarded as important stakeholders in the future configuration of society. One might therefore think that businesses in the private sector would make every effort to ensure a stable environment in which to operate as this would make good business sense. But the private sector’s efforts to help ensure good governance and peaceful development seem weak – also  true in Africa.

This is despite the global focus on sustainable development, as entrenched in the United Nations Sustainable Development Goals, especially SDG 16 which promotes peaceful and inclusive societies for sustainable development, providing access to justice for all, and building effective, accountable and inclusive institutions. Europe, too, has committed itself to sustainable development and sees the private sector as “a critical partner” to achieve the objectives of the Joint Africa-European Union strategy.

It is clear that some businesses are part and parcel of the conflict-prone political economy. They seem to have no special powers to change the trajectory of conflict-ridden states towards peace. Why is this the case in so many fragile and conflict-affected states?

Understanding the apparent reluctance of some businesses to do good’

On the one hand, the UN Global Compact says businesses can “make a meaningful contribution to stability and security in conflict-affected and high-risk areas”. On the other hand, business is seen as a primary enabler of conflict, either through complicity, or through the exploitation of conflict for profit. Both of these competing worldviews are underpinned by extensive research.

This calls for a more nuanced understanding of the reasons for business engagement or non-engagement in peacebuilding initiatives. To gain this much-needed insight, I together with a group of researchers built 11 case studies over two years and compiled a report titled A Seat at the Table: Capacities and limitations of private sector peacebuilding.

The cases were intentionally selected from various regions (Latin America, Africa, Asia and the Middle East), economic sectors and types of enterprises. The nature of the underlying conflict (from civil war in Colombia to urban violence in Brazil) also varied. The cases were drafted and then discussed at four expert roundtables in Bogota in Colombia; Cambridge in Massachusetts, US; Cape Town in South Africa, and Dubai in the United Arab Emirates. More than 200 people contributed to the analytic process.

In essence, this study examined three factors that can help to explain why it is so challenging for private sector actors to take a leading role in peacebuilding initiatives:

·   The political economy shaping the private sector;

·   Disincentives for the private sector to engage in peacebuilding; and

·   The practical limitations of companies as peacebuilding actors.

The nature of business in fragile and conflict-affected states

Embedded in the many calls for business to take on greater peacebuilding roles is the presumption that business actors are autonomous agents who can simply decide to take on a more peace-positive role. The private sector in each country, however, is the product of the many rules and decisions – and therefore the decision-makers — that determine who may operate what kind of business, and how. “License to operate” is increasingly understood as a social construct, recognising the roles of communities and other stakeholders to grant or withhold support for a business venture. But it is first and foremost a set of hurdles, formal and informal, set by those actors who control the levers of government in fragile and conflict-affected states. In almost all cases, the governments of these fragile states are conflict actors. This means that the private sector that emerges, survives and in some cases thrives is the product of a conflict-rife political economy.

All of the countries in this study have elites who control access to important economic opportunities through informal manipulation of patronage, tenders or licensing processes, among other means. This allows them to advance their economic interests and consolidate their political power. This can lead to an unholy alliance of government officials and supposedly private sector actors, with the boundaries between them largely blurred.

These dynamics help to explain why business is not necessarily good for peace, simply through the jobs, tax revenues or other economic impacts of its investment, presence and operations. In fragile and conflict-affected states, in which elites within both the political and bureaucratic classes exercise inordinate control over the formal economy, the distribution of benefits and risks from economic activity remain skewed and highly contested.

This is particularly true for the African cases in this study, which included the Consultative Business Movement (CBM) in the transition to a democratic South Africa, the Kenya Private Sector Alliance (KEPSA) engagement to reduce election violence, and a study of the political economy of conflict in Sierra Leone.

Disincentives to corporate peacebuilding

Why would businesses not make an effort to build peace?

The claim that peace is good for business is generally premised on the costs of conflict, and the business opportunities lost in the chaos of volatile environments. Various additional factors must also be considered to understand why some private sector actors participate in peacebuilding efforts while others stand aside from or even oppose such efforts. These factors include the significant business pressure many companies feel in such places, and risks of reprisals that companies face when tempted to engage in peacebuilding activities. More profoundly, many companies would need to put their status quo arrangements at risk — whether a cosy relationship with the government in power, or an economic system that favours the interests of capital over labour and communities. Therefore, some businesses might benefit from peace but not from peacebuilding:

·   The risks of peacebuilding: While compiling the company case studies, informants recounted how difficult it is to survive as a business in a conflict-prone environment in which the national government was almost always a conflict actor. They felt that they did not have time or energy to engage in reflection, planning and action for a systems change. The companies said they faced reprisals when their actions aimed at reducing conflict or promoting peace were perceived as opposing entrenched interests.

·   The costs of peace: Even businesses uncomfortable with or threatened by the status quo of conflict may be more interested in stability than in renegotiating the social contract that lies at the heart of peacebuilding. For some companies, taking advantage of the situation in conflict-affected areas is more important than transforming environmental, social and labour regulations. Peaceful development, on the other hand, will entail a fairer division of the profits of business between labour and capital. Businesses profiting from the economic status quo are therefore unlikely to be enthusiastic peacebuilding actors. Some South African commentators say that the country’s current business community promotes policies that exacerbate inequality, unemployment and poverty — both through indifference and their dependence on a low-wage economy.

Limitations on business as a peacebuilding actor

It is challenging for a company to intentionally try to change the driving factors of conflict and fragility in ways that are good for both business and society. The question, however, is not only whether a business wants to be a peacebuilder, but also whether it can be one. Here, three interrelated dimensions need to be taken into account:

·   The company’s capabilities for peacebuilding;

·   The strength of its working relationships with peace-aligned actors; and

·   Its ability to harmonise its agenda with the agenda of other stakeholders.

Private sector actors in fragile and conflict-affected states typically appear to be challenged across all of these dimensions. Let’s take a closer look:

Missing capabilities

The goal of peacebuilding is increasingly understood as a system that reinforces peaceful development rather than conflict and violence. It requires focus on the positive and negative factors that drive the evolution of the system. It also requires focus on the resilience of social institutions, attention to the motivations for violence, and linkages of individual and personal change efforts with socio-political change. The starting point for contemporary peacebuilding practice is generally a systems map of key actors and the key driving factors of cohesion and division, onto which peacebuilding interventions can be mapped.

Larger companies typically undertake business studies to assess the potential profitability and ‘net present value’ of an investment. They may also include political risk analyses, social and environmental impact analyses or human rights due diligence exercises.

But peacebuilding requires more than analysis and planning; it requires courageous and effective personal action. It asks companies to subject most of their planning and operational decision-making to radical transparency and consensus building by involving more stakeholders — including community members and the traditionally voiceless and vulnerable. Effective private sector peacebuilding must entail governance, decision-making and operational dimensions not typically part of the business and peace discussion.

The range of capabilities required for effective peacebuilding helps to explain why businesses appear more likely to participate in peace-positive action when they have a structure in which they can participate instead of acting on their own. The cases illustrated that some of the most prominent business-oriented vehicles for peacebuilding are not led by business. For example, the Consultative Business Movement in South Africa was not a “business” organisation as typically understood. Rather, it operated as a multi-stakeholder initiative engaging individual business leaders who may not have had the full support of their companies. These initiatives were driven by independent staff who analysed conflict situations, planned peacebuilding, and facilitated dialogue between diverse role players.

Weak relationships

A company that wishes to play a constructive role in addressing the key driving factors of conflict and fragility  —  even one that overcomes the capabilities hurdle  —  must realise that its engagement is not a one-sided decision; its actions in peacebuilding must also be accepted by other parties. This depends on the quality of its working relationships with a wide variety of role players, including direct parties to the conflict, other stakeholders in its operations and peacebuilding actors.

But what about the company’s past? Companies bring with them legacies of animosity and mistrust because of involvement in past violence and injustice. It is certainly not impossible for the same companies to play both positive and negative roles in conflict and peace. Mining companies in South Africa, for example, were champions for change at the national level in South Africa (where their support for CBM was acceptable to mass movement leaders), while their local operations were focal points for violence driven by apartheid policies and practices in which the mines actively participated. It appears that the full range of a company’s impacts in a complex environment will shape its relationships and thus its ability to play a peace-positive role.

Furthermore, companies are judged by the company they keep. For example, a company’s close relationship with a government and its security forces can allow it to resort to power tactics rather than negotiation to resolve issues. When this happens, community members will see the company as directly increasing their insecurity and sense of injustice.

Companies can also be limited by the company they may not keep. Business leaders of CBM ignored South African laws by openly meeting with ANC leaders whom the government had banned as communists and terrorists.

The variety of dynamics contributing to weak company relationships with the actors around them helps to explain the prevalence of intermediary structures to help manage business-society conversations about conflict and peace.

Divergent agendas

The case studies showed that it is difficult to harmonise the expectations of other parties with the boundaries businesses set around the conversation, the actions they are willing to support, and how long they are willing to stay at the peacebuilding table. Businesses typically want to control the agenda, limit commitments and leave the table long before other role players would agree that peace has been achieved.

The extent to which a common vision for the future will be shared by businesses with other actors agitating for social change may be limited. For every “low-ego patriot”, there are others who will do everything to protect their partisan political or economic interests.

There appears to be a preference among businesses  —  whether realistic or not  —  for stability without fundamental social transformation. South Africa’s case, for instance, traces an arc followed from active support of the apartheid regime by the majority of the business community, to late and reluctant support for an inevitable transition, to the almost immediate disbanding of CBM after “economic growth and wealth creation” had been embedded in national policy, and property rights had been protected in the new constitution.

The default position of companies may be towards accommodation of the government that provides its formal and informal licence to operate. This keeps business aligned with government even when it brings it into opposition with other stakeholders and peacebuilding interests.

Private sector interests in its own stability — which in most cases implies the stability of a government in power even if it remains a conflict actor — means that business may part ways with other peacebuilding actors over questions of social justice, human rights, democratisation, reconciliation, and reparation for abuses of the past.

The cases and related research show that business engagement is greater when the “consensus space” for peace includes a vision for the private sector. The South Africa case study showed that CBM could play its role because it was “in the centre” between the apartheid regime and the ANC. It could emphasise dialogue, trust building and consensus building, because the solution space those activities enabled brought society closer to what business in any case wanted.

Today’s relative business inaction  —  even apathy  —  in the face of profound socio-political conflict may be as a result of business no longer playing a stabilising role as it no longer occupies the social centre. That is why the transformation of business often lags behind the socio-political and economic transformation of the country in which it operates.

What can we learn from this?

The three factors discussed above — the political economy shaping the private sector, disincentives for the private sector to engage in peacebuilding, and the practical limitations of companies as peacebuilding actors — help to explain the scarcity of businesses as peacebuilding actors.

The case studies and other research show that the private sector remains strongly implicated in instability, which disproportionately affects the most vulnerable. But the evidence also confirms that exceptional private sector enterprises can make a measurable contribution to moderate the dynamics of conflict and support peaceful development. More importantly, we can learn from the ways in which they are doing this.

This has implications for change leaders in enterprises who see themselves as “systems takers” – constrained from engaging in transformative action by the political economy of conflict and their own role in the system — and for “systems shapers”  —  those inside and outside of companies who play a role in promoting, financing, regulating and holding accountable private sector actors in fragile states. These implications are outlined below.

·   Company impacts are potentially negative or positive — but are easily negative: The evidence proves that a growing private sector is not, in and of itself, peace positive. The distribution of benefits and risks from a particular private sector initiative or from economic growth remains skewed and highly contested in the political economy of conflict. Systems shapers must avoid the trap of believing that GDP growth, FDI flows or business start-ups are indicators of peace being built.

·   Company roles matter more than resources in terms of peacebuilding: Where companies acted intentionally to help resolve conflict in a peaceful way, it was the conversations they facilitated, and the changes in power relationships and institutional arrangements that resulted, that seemed to support private sector peacebuilding. Hence, systems shapers must not underestimate the value of spaces for dialogue, planning and decision-making related to private sector development.

·   Conflict sensitivity is essential at enterprise level: Conflict-sensitive business practice is critical for business to play a peace-positive role. It can serve as the foundation on which to build sufficient analytic understanding of the context, stronger relationships with stakeholders, avoidance of harm, and a shared agenda with agents for positive social change. Systems shapers must look for ways to support conflict-sensitive business practice, in particular by intervening in the conflict-prone political economy to help level up the playing field on behalf of companies that would like to do better. They must also look for ways to enforce more conflict-sensitive action through the leverage points of finance, insurance and accountability, knowing that conflict-sensitive action may reduce profitability and therefore be resisted.

·   The selection of private sector partners matters: The barriers to entry for business and peace are high. Even for businesses for whom peace may be beneficial, peacebuilding may come with government reprisals or other forms of pushback. For many others, the changes in the business environment brought about by peace may be less advantageous. Also, the barriers to exit from transformational efforts are low, which means businesses will rather align with stability than with social and economic change. The promotion of SDG 16 and related good governance and sustainable development initiatives will therefore not assume a ‘business case’ for peace-positive action. The companies and their leaders found at the forefront of business peacebuilding efforts are exceptional. They go beyond the accounting ledger to find their motivations for what is often slow, risky and even personally dangerous engagement.

·   Policy must become conflict sensitive if it is to mitigate conflict risks: The very dynamics of political fragmentation, mistrust, exclusion and grievance that make a context fragile also undermine the policies and initiatives meant to address it. This analysis has shown that conflict sensitivity at enterprise level is insufficient to mitigate conflict risks. Policies and initiatives aimed at promoting economic growth, shaping the investment and business climate, and stimulating private sector development must therefore be conflict sensitive if they are to promote peaceful development.

·   De-risking is particularly risky business: Enterprise and policy level conflict sensitivity come together in contemporary policy discourse around “de-risking” private sector development to drive greater investment flows into fragile and conflict-affected states. Most business actors in fragile environments unsurprisingly think in business terms: They want to reap the upside rewards of fragile state investment without bearing the associated downside risks. It is therefore unlikely that they will invest in the analysis, planning, engagement, slower implementation and sharing of benefits at the risk of lower profitability that may be required by conflict-sensitive practice. Many advocates see the ability of companies to make money in fragile states without being required to internalise the risks they pose to others as a key contributor to chronic conflict. Yet current policy plans do not seem to consider the possible negative impacts on social, political and conflict dynamics of de-risking private sector investment, and therefore have no mitigation plans to adequately address them.

·   Support structures and networks matter: Effective peacebuilding is analytically intensive, time consuming, stressful on relationships at both institutional and interpersonal levels, often dangerous, and a long-term endeavour. Systems shapers, however, need not wait for exceptional private sector actors to step forward. Some companies may have the foresight, resources and incentives to help organise and provide support for data collection, analysis, convening, capacity building, expert input, collaborative planning, operations management or conflict interruption. These are perhaps best understood as public goods that are typically lacking, compromised or uncoordinated in fragile environments, and that can be supported as a matter of public importance.

Potential entry points for positive influence

This study suggests that the business case for the private sector to pursue good governance and peaceful development is weak. This is worrying.

Enthusiastic claims of business and peace, or the private sector advancing SDG 16 in fragile states, therefore needs to be approached with caution. If assertions that “peace is good for business” and that there is a “business case for peace” were broadly true, one might reasonably expect to find efforts by private sector actors to reduce violence, manage conflict, and lay the foundations for peaceful development in the fragile and conflict-affected societies. But this is not the case. Instead, these businesses play power games to manipulate situations and protect their money-making interests.

In South Africa, today, commentators noted that business is still at best indifferent in its response to issues, such as the collapse of the education system, that feed long-standing grievances of the majority, and at worst actively colluding to make a fragile political situation worse.

It is clear that the motivations and capacities for business to engage in peace-positive action are not fixed. Instead, they are a function of a cluster of interrelated dynamics:

·   Interests: how business incumbents see the future and their place within it;

·   Affinity: who the business chooses to be and with whom it chooses to be associated;

·   Incentives: benefits arising from a more peaceful environment;

·   Disincentives: costs and risks of peacebuilding, and of peace;

·   Capabilities: analytic, interpersonal and organisational;

·   Autonomy: the willingness and ability to confront powerful actors and take risks; and

·   Networks and support structures: With peers and with diverse peace-inclined actors.

For change agents, these dynamics provide potential entry points for positive influence to advance SDG 16 and other policies for good governance and peaceful development in fragile and conflict-affected states.

The study found that when companies were not tied to the predominant political order, they often had greater political freedom to operate. Hence, these peace-oriented companies were to some extent seen as political outsiders.

The lived experience of the people with whom study teams consulted in all of the countries in which research took place reveals that private sector businesses working towards peaceful development are exceptional.