Business in Peace and Development
Dear Participants,
This issue of the Compact Quarterly highlights the topic of business and conflict – or put another way, how companies can pursue their interests and operations in ways that contribute to security and development, rather than in ways that stoke the flames of violence and tension. Peace and development are the twin missions of the United Nations. They are, indeed, highly interconnected. It is virtually impossible to achieve meaningful and sustained development without peace. Equally, poverty is often a root cause of conflict and violence in societies.
The role of business in conflict zones has been explored only recently – and is not yet a mainstream corporate responsibility issue. Much work is needed to understand the many complexities and challenges on the ground. However, a consensus is emerging that business has a critical stake in promoting peace in partnership with governments and other stakeholders. Setting aside the moral imperative, this is fundamentally about risk management and building market opportunities. Peace is a prerequisite in creating stable, growing and inclusive markets. In cases where businesses may be profiting amid the chaos of conflict, they face grave reputational damage and may be, as Donal O’Neill argues in this Compact Quarterly, contributing to “slow-burn” problems that can smolder for years before bursting into flame.
Different industries have distinct interactions with conflict. Thus far, most of the focus of business and conflict has been on the extractive industries – especially oil, gas and mining. The Extractive Industries Transparency Initiative (EITI) is leading the effort to bring greater transparency to revenue payments to governments – in an attempt to stamp out the sort of corruption that has destabilized so many countries and given rise to the notion of the “natural resource curse”.
Upon closer examination, it is clear that many other sectors have a relationship with conflict or potential conflict through supply chains, business partners or portfolio investments, to name just a few factors.
Responsibility for peace lies with governments. It is governance failure that gives rise to so much conflict in the first place – from corruption and oppression to a failure in establishing rule of law and the pillars of well-functioning economies. As the forthcoming report “Enabling Economies of Peace” argues, governments should strive to create enabling environments for “conflict-sensitive business”, through the ratification and implementation of relevant international conventions, expansion of public-private partnerships, and the creation of incentives to encourage businesses to undertake comprehensive impact assessments and implement codes and other voluntary initiatives.
The way that business acts can make a big difference. Tools are becoming increasingly available for companies as they navigate this rather daunting course. For example, International Alert has just published a resource, “Conflict Sensitive Business Practice: Guidance for Extractive Industries”, which takes forward the concepts previously developed in the Global Compact’s "Business Guide to Conflict Impact Assessment and Risk Management". There are plans to extend this new guide into other sectors.
Peace, then, must be seen as a requirement for development, which in turn must have business as a primary engine. It is, after all, the absence of business activity that condemns so much of humanity to suffering, rather than its presence.
Where the climate is supportive, a growing body of evidence shows that with a willingness on the part of business to engage with governments and civil society (and vice versa), progress can be achieved. One example, as illustrated in this issue of the Compact Quarterly, is The Omanhene Cocoa Bean Co. in Ghana, a company that succeeded in introducing value-added technology and manufacturing to the country’s cocoa industry.
Another noteworthy example is the Global Compact-inspired Growing Sustainable Business initiative being implemented by UNDP. This program is catalyzing a host of for-profit initiatives that are already delivering tangible development benefits in some of the world’s poorest countries. As one participating business executive in Tanzania said, “The business case for us is to grow our future markets”. Of course, projects and principles must be two sides of the same coin.
These types of initiatives are inspiring and need to be replicated broadly. The challenge for all of us is to scale up such efforts in order to achieve greater impact. Through the Global Compact, we have a historic opportunity to work together to reach this goal.
Sincerely,
Georg Kell
Executive Head
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Spotlight on: Private Sector in Zones of Conflict
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Impact Assessments: Preventing Slow-Burn Issues from Bursting into Flames
by Donal O’Neill, Retired - Royal Dutch/Shell Group of Companies
Business changes the environment it operates in. The issue concerns every commercial undertaking from the corner store to the major production plant, yet in none is it as dramatic as in relation to the extractive industries – mining, oil and gas. These undertakings represent enormous investments – with budgets of billions of dollars – and generate vast revenues over many decades for host governments and large profits, as well as risks, for the investors. Such undertakings impact massively on the host societies and economies – and some of the impacts carry the seeds of potential conflict – some immediate, some “slow-burn” that may smoulder for years before bursting into flames. If these problems can be foreseen, then imaginative solutions, including social, economic and environmental impact assessments, can be put in place as an integral part of any industrial development.
[VIEW THE FULL STORY]
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Enabling Economies of Peace
Government Action for Conflict-Sensitive Business
by K. Ballentine, FAFO, and V. Haufler, Univ. of Maryland
A growing number of companies have come to recognize that their activities have profound impacts, for good and for ill, on the communities in which they operate. However, private sector initiatives alone cannot manage the challenges that companies, host governments and affected communities face in zones of conflict. Whether positive or negative, the behaviour of companies is not simply a function of their own corporate cultures, but also and fundamentally a function of the broader playing field in which they operate. For corporate efforts to succeed, they need to be supported by a wider public policy framework. An upcoming report from the Global Compact explores the existing policy framework and makes recommendations regarding what governments and international organizations can do to overcome the gaps in existing private sector initiatives and to support conflict-sensitive business.
[VIEW THE FULL STORY]
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Corporate – Community Relations in Zones of Conflict
by Luc Zandvliet, Corporate Engagement Project
The Corporate Engagement Project (CEP) assesses management options for companies concerned with establishing and maintaining constructive relationships with stakeholder communities in challenging working environments. The article contains general observations based on CEP’s on-site experience and interviews with stakeholders, including local communities, opposition groups, NGOs, government officials, religious groups and others in countries including Nigeria, Colombia, Nepal, Myanmar/Burma and Indonesia.
[VIEW THE FULL STORY]
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“Hear No Evil, Speak No Evil, See No Evil” Spells Complicity
by Jenik Radon, Corporate Lawyer, Adj. Asst. Professor, Columbia University
In zones of conflict, where war, civil war or serious lawless turmoil is the order of the day, from Liberia to Aceh in Indonesia, the basic assumptions, norms and standard ways of conducting business are challenged to the extreme. If the issue was only that it was a “challenge” to do business, then life could proceed apace. However, businesses in zones of conflict that just act as the three mythical monkeys who hear no evil (Kikazaru), speak no evil (Iwararu) and see no evil (Mizaru) - closing their eyes to the mayhem and turmoil of the immediately surrounding world, and continue working as if nothing was happening, do so at their peril. Even if businesses are constructively engaged in a zone of conflict, it may well not suffice. But businesses, in particular international companies, invariably under the public spotlight, and, even more so, those in the extractive industry, that stand on the sidelines doing nothing, risk being branded as complicit - complicit in human rights violations that occur in such a zone.
[VIEW THE FULL STORY]
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Private Sector Perspectives on Post-Conflict Reconstruction
by John Bray, Control Risks Group
The role of international companies in post-conflict reconstruction is an essential complement to the work of multilateral aid agencies and NGOs. Aid contributions tend to tail off four or five years after a conflict ends. By contrast, if all goes well, private sector investment should increase once stability returns—thereby compensating for the decline in aid. One of the main challenges for policy-makers is therefore to create the conditions most conducive to domestic and international investment, and to ensure that it has the most positive social impact. Success demands an understanding both of the concerns that companies share in common and the diversity of the private sector.
[VIEW THE FULL STORY]
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Issue Focus
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The Right to Health: A Duty for Whom?
by Klaus M. Leisinger, Novartis Foundation for Sustainable Development
The economic, social, and cultural human rights catalogue, including the “right to health”, gained increasing importance with the rising popularity of the “rights-based” rhetoric permeating many political and social movements. Rights-based development policy concepts place the respect, protection and fulfillment of all human rights in the center of the development debate. In the context of corporate responsibilities for the right to health, it is important to point to the fact that rights for which there is a legal obligation for a state may constitute a moral obligation for a non-state actor. For many business enterprises, the nature of a human rights obligation that includes affirmative steps to respect, protect and fulfill human rights in their sphere of influence remains uncharted territory.
[VIEW THE FULL STORY]
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Compact Conversation
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Kojo Hayford on Private Enterprise in Ghana
Private Sector is the Engine of Growth for Africa
Cocoa beans have a long and important history in Ghana as the livelihood for millions of small family farmers. Until the 1980’s, cocoa beans were farmed and then exported to foreign companies for processing into ingredients and finished products – an approach that neglected to tap into additional value for the Ghanaian economy that is generated only after the beans are manufactured into products. In an effort to shift this paradigm, The Omanhene Cocoa Bean Co. was founded in 1991 with the goal of producing chocolate in Ghana – and thus bringing value-added business to the country. Ten years after producing its first chocolate bar in Ghana, Omanhene’s success has shown Ghanaian farmers, workers and the government that it is possible to both extract more value from cocoa through additional downstream processing and produce a finished product that is demanded in international markets by discerning customers – a real accomplishment in a historically tightly-controlled industry where farmers could only sell beans to the government for export. From his office in Accra, Kojo Hayford talked with the Compact Quarterly about Omanhene’s socially-progressive business approach, as well his belief that “the private sector really is the engine of growth” for the African economy.
[VIEW THE FULL STORY]
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Principles in Action
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Promoting Equality in the Workplace: A Look at Adecco Group
Adecco S.A. is a group of Human Resources Companies which is present in more than 70 countries around the world. Adecco is committed to the fight against discrimination in the sphere of employment and occupation, as called for in the Global Compact’s sixth principle. As an employment company, Adecco has extensive knowledge of the complexities of the labour market which places it in a good position to battle the discrimination that exists against various disadvantaged groups including: people with disabilities, older people (40/45 years up to retirement age), primary care providers (mostly single mothers), disadvantaged young people and people who have been absent from the labour market for a long time (such as former career athletes).
[VIEW THE FULL STORY]
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Communications on Progress
The number and quality of Communications on Progress (COPs) is increasing steadily – more and more companies are communicating with stakeholders on their progress in implementing the Global Compact principles through their annual reports, websites or other means. In the coming weeks, the Global Compact Office, in collaboration with the Global Reporting Initiative, Instituto de Empresa, Instituto Ethos, PricewaterhouseCoopers and Telefonica, will release the “Practical Guide to Communication on Progress”. The COP guide will provide simple advice and examples for Global Compact participating companies of different sizes, industries and geographic origins. Also included in this article are good examples of COPs by BHP Billiton (Australia), Calvert Group (US), Danfoss A/S (Denmark), Eskom (South Africa), Mabuhay Vinyl Corporation (Philippines) and Pentland Group Plc (UK).
[VIEW THE FULL STORY]
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Local Compact
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Local Network Highlights
Local network highlights include Global Compact roundtable meetings in Cameroon and Malawi, the addition of Jamshedpur (an east Indian city) to the Global Compact Pilot Cities Program, a regional Global Compact conclave in South Asia, and more.
[VIEW THE FULL STORY]
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"Let us choose to unite the power of markets with the authority of universal ideals. Let us choose to reconcile the creative forces of private entrepreneurship with the needs of the disadvantaged and the requirements of future generations".
-- Kofi Annan, Secretary-General of the United Nations |
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Spotlight on: Private Sector in Zones of Conflict
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"We have to focus on what it is that we have to do internally in Africa to generate value and get onto a path out of 'poverty'. The so-called invisible hand of the private sector is crucial. It is the entrepreneurs who must see the value and a profit-motive which will ultimately improve the community and people's lives. But you also need a strong public-private sector initiative where government is a great facilitator of entrepreneurs". -- Kojo Hayford, Ghanaian entrepreneur, on the key to economic growth and stability in Africa |
The Global Compact's ten principles in the areas of human rights, labour, the environment and anti-corruption enjoy universal consensus and are derived from:
• The Universal Declaration of Human Rights
• The International Labour Organization's Declaration on Fundamental Principles and Rights at Work
• The Rio Declaration on Environment and Development
• The United Nations Convention against Corruption
[View the 10 Principles] |
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About the Compact Quarterly
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The Compact Quarterly endeavors to provide Global Compact participants, stakeholders and observers with a range of thought-provoking articles, interviews and updates on topics related to the initiative, as well as to corporate citizenship and CSR generally. The Compact Quarterly, produced by the Global Compact Office, will be published four times a year -- at the beginning of each calendar quarter -- and will appear in electronic form only. It replaces The Global Compact E-Newsletter, the bi-monthly bulletin of news items.
In the spirit of continuous improvement, we encourage readers to provide us with feedback, comments and suggestions which should be sent to Carrie Hall, editor, at hallc@un.org.
Editor's Note
For more information on the Global Compact, please visit our website at www.unglobalcompact.org.
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