Theme 1: The Role of Business in Advancing Peace Through Commerce

[Peace Through Commerce]

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A discussion moderated by Cindy Schipani, Professor of Business Law, Ross School of Business Visit Biographies for more about presenters

How can business contribute to sutainable peace?
In this session leaders from business and NGO institutions provide their understanding of the ways that commerce and peace link together. The presentations focus actual experiences of institutional leaders and empirical testing done of the relation of business and peace. The speakers range from groceries to tourism to technology to international development.

Presentations:
What do leading business and NGO leaders see as the contribution business can make to sustainable peace?
Watch the four videos and join the discussion with presenters below.

	Steve Killelea, Australian Entrepreneur and Philanthropist, Founder of Global Peace Index "The Compelling Case for Business to Embrace Peace"(6:41)			Walter Robb, President & Chief Operating Officer, Whole Foods Market "How We Do Business Matters: the Case for Conscious Capitalism"(5:34) Presentation slides Full Presentation Video

	Roger Dow President & CEO Travel Industry Association of America "Peace From The Perspective of the Tourism Industiry"(9:28)			John Sullivan Executive Director Center for International Private Enterprise "The Center For International Private Enterprse's Public-Private Partnerships and Peace"(8:37)

Resources

• Global Peace Index 2008 and GPI Country Rankings 2008
• CIPE Overseas Report CIPE Executive Director John Sullivan speaks with CNBC Pakistan about the importance of strong corporate citizenship within the modern business model.
  
• Walter Robb's presentation slides from "How We Do Business Matters: the Case for Conscious Capitalism," including Whole Foods stakeholder map (page 4).

Discussion: How can business contribute to sutainable peace?

1. Is asking business to contribute to peace an extension of corporate social responsiblity or is it something different?

2. Each speaker provides a concrete, positive example or set of examples where businesses have made a contribution to social harmony. Do you think the kinds of businesses and NGOs they represent in these industries can replicate what these organizations have done? Are there other busineses that you think could also play a leading role in promoting peace?

3. What impact, if any, do you think the recent global economic downturn will have on these efforts?

[Donald Scott Wilde]

So, okay, Dolly and Nancy. I agree with you both 100% that women are the ones who realize these negative impacts. Absolutely correct! Usually have deeply sensible answers, too. Unfortunately, women -- especially in places where conflict is rife -- have little power. How can women "go on strike", so to speak, without getting the crap beat out of them, or worse in some uncivilized nations?

I would suggest that this would be a good project to pursue to dramatically improve conditions. It seems to me that with the Internet and video it is easier to publicize violence, but it is not easy enough that violence does not happen. There is still a long way to go and publicity is only a small piece of the picture.

I do think you have a great seed of a powerful idea!

[Sean Callaghan]

One more overarching comment - relating to the topic of the day: "How can business contribute to sustainable peace?"

The obvious point is not to be part of the problem - in other words not to fuel conflict or instability by their business practice. I am sure that very few corporates set out to fuel conflict but I wonder how many make strategic decisions based on conflict potential analysis that is based on a real understanding of the drivers of conflict in a particular region. For example land access, or exclusion of certain groups, or access to limited resources.

I could go on but am really interested to hear others perspectives.

[Andres Recalde]

Very interesting points.

What I have seen from field experience is corporations not always able to "read" the social context in proper time horizons. I mean, being able to positioning strategically in an scenario where their investment activities could positively correlate with peace promotion. By this last one, I mean for example, base their purchasing decisions in promoting local economies. Investing in a value chain of suppliers will not render results in few months. The analysis perhaps would start with increasing literacy or vocational skills education opportunities. These examples will take years to render positive value in constructing social and human capital that corporations could use and promote peace at the same time.

Corporations should be able to present themselves as another stakeholder with a clear and consistent message. They should know how to wisely use their rights as corporate citizenship among the host communities. In this last case, there were many cases of guilty by association in countries where there is tension between civil society and central governments. The social license to operate is a clear example.

Conflicts are not caused by overnight reasons. There is always a trend that could be measured by some qualitative indicators as I think is the message in the Global Peace Index or other similars. There are interesting tools in the area of social analysis in regards to conflict prevention. The challenge perhaps is that corporations perceive the risk prevention actions too big or complex to be tackled by their sole participation. This is the moment where instead they must have access to a good stakeholder analysis and start interventions aiming to promote peace within the large influence of all the stakeholders involved.

I hope this helps in this interesing discussion.

[Steve]

Andres I think you have made some good points here. Business struggles with knowing why engaging in peace is in the best interests of their corporation. It is our role to develop compelling research which relates to their bottom line as to why they should engage in peace. Most companies still only see CSR in terms of their narrow self interest and by showing that there is a quantifable relationship between peace, the size of their markets and their bottom line then they are more likely to work with governments and other institutions to enable the conditions that will improve their business interests.

[Sean Callaghan]

Well said - I absolutely agree.

[ODJADA OMESSIRI]

Hello Every one,
I write from the Niger Delta part of Nigeria.I want the Oil majors doing business in that region to join this forum and tell us how they have contributed positively to the peace or conflict in that region.its safe to say that unless home govenments starts holding their countries foreign subsidiaries accountable for their actions,MNCs operating in that region will by their stand-aloof atitude.inaction,direct connivience and Divide and rule policy continue to disrupt the peace in that region.
I wait for more sugestions on this topic because I hope to learn alot from the recommendations of other more experienced reseachers/captains of Business to show Us how.

[Sean Callaghan]

Well said Odjada.

I am sure that Shell (and others) dont set out to create conflict in the Niger Delta - but the fact is that they have become a contributing factor.

Oil has a particularly bad reputation for creating conflict - esp in Africa - and it worries me that so many African countries are finding oil.

[Sean Callaghan]

There is a comment by Victoria further down this conversation that refers to Shell: Below is an extract from her comment:

"On another note, I have recently read Shell's guidelines for example in applying a "conflict lens" to every operational decision that they make in order to evaluate it for whether that decision contributes to peace or to conflict. It is quite an impressive piece that they have put together - although the challenge of course lies in disseminating and implementing these guidelines/policies at the ground level."

If anyone has access to these guidelines - please post a link

[Sean Callaghan]

Ok I have found the document online - I will post some extracts from it later today. The link to the document is: www.ipieca.org/activities/social/downloads/publications/conflict_gu...

[Beli Acharya]

I wanted to start off first, by stating how great it was to hear thoughtful business people stand up and promote peace and business. As discussed, in today's world, these two words have been viewed as contradictory, which is something that needs to be stopped. Being a student in the business school, it has almost become a taboo to show interest in entering the corporate world because of all the greed and corruption that has been occurring for decades. Although companies have started to become more "socially aware", my concern is that many of them are merely doing so because they understand that it is the "trendy" thing to do. For instance, there are still companies out there that have laborers working in sweat shops, while concurrently trying to "go green". How can consumers differentiate a business that actually cares about this new movement of business and peace vs. a company that is solely doing it in order to reap the economic benefits?
Thank you!

[Milena Ristovska]

Dear Beli,

I wouldn't completely agree with you that companies are becoming socially aware just because it is a cool and trendy thing to do. Theory and practice show that the application of the concept of corporate social responsibility enables several benefits for the companies:
• increased reputation and stronger, better recognized brands and trade marks;
• increased productivity and quality;
• lower operational costs;
• better financial performances;
• increased sales and customer loyalty;
• increased ability to attract and retain the quality workers;
• easier access to financial resources etc.

So, it is obvious that it is not only the community that benefits from the companies’ involvement, but it’s also the companies that add new value from the conscious operations.

Another issue is the way in which the companies will get involved in the solving of the problems of the community in which they operate. There are several types of socially responsible involvement of the business within the society:
• Ethical corporate social responsibility – involves fulfilling the firm’s ethical duties. This is “social responsibility” in the sense that a corporation is morally responsible to any individuals or groups where it might inflict actual or potential injury (physical, mental, economic, spiritual, and emotional) from a particular course of action;
• Altruistic corporate social responsibility – means that the companies should be good corporate citizens by “giving back” to society, furthering some social good, regardless of whether the firms will financially reap what it has spiritually sown. It demands that corporations help alleviate “public welfare deficiencies”, such as urban blight, drug and alcohol problems, poverty, crime, illiteracy, lack of sufficient funding for educational institutions, inadequate moneys for the arts, chronic unemployment, and other social ills within a community or society. The business has no moral obligations, only alleged social obligations.
• Strategic corporate social responsibility is done to accomplish strategic business goals—good deeds are believed to be good for business as well as for society. With strategic CSR, corporations “give back” to their constituencies because they believe it to be in their best financial interests to do so. This is “philanthropy aligned with profit motives” – social goals might be profitable in the long run since market forces provide financial incentives for perceived socially responsible behavior. Stakeholders outside the stockholder group are viewed as means to the ends of maximizing shareholder wealth.

Unfortunately, the engagement of the companies in my country (Republic of Macedonia) in the area of corporate social responsibility lacks a strategic focus. CSR is mostly understood as an add-on to the core business operations. It has been established that almost 46% of companies do not have a CSR strategy nor do they envisage to develop one. CSR is not an integral part of their business strategy nor is it seen as an instrument for achieving their strategic goals. Most companies haven’t made any substantial organizational changes that integrate the CSR principles of work, nor have engaged operating management in processes that identify and prioritize social issues based on their salience to business operations and their importance to the company’s competitive context. So, companies must shift from a fragmented and defensive posture to an integrated, affirmative approach.

Since there are numerous social problems in the environment, the companies should focus on the most important ones or at least the ones that they could really solve. This means making some short term expenses that will result in a shared value on the long run. This should actually be seen as a long-term investment in the company’s future competitiveness. The companies should build focused, proactive and integrated social initiatives in concert with their core strategies.

Unfortunately, despite the recognized benefits that the companies could receive from their involvement in the society, there are several obstacles that prevent their more serious positive impact on the society. These impediments are:
• Lack of understanding of the concept of CSR, its scope and the business case for CSR – the CSR activities are mainly seen as add-on to the business and not as a tool for supporting and achieving the strategic goals of the company. The companies, also, fail to see the economic justification of their CSR involvement;
• Volatile business climate – companies are more short-term focused as opposed to the long-term focus in their business strategies and practices due to the instability and the uncertainty of the business climate;
• Lack of socially responsible investors that could act as major drivers to raising awareness for promotion of the practices of CSR in the developing countries;
• Low level of awareness and weak enforcement of the consumer rights and lack of consumer activism – companies pay little attention to the observance of the consumer rights, while the enforcement capacity of the government in this area is also weak. The consumer considerations are generally price-driven and instances where the companies pay attention to the social or environmental impact of products or companies are practically non-existent;
• Weaknesses in the corporate governance – although there have been major changes in the model of corporate governance due to the new company law, there is still a need for resolving the principal-agent problem that arises in terms of establishing effective mechanisms for managerial responsibility and accountability towards shareholders. Also, a lot remains to be done for improving the corporate transparency;
• Lack of dominant model of corporate governance

[Steve]

You are correct in that many companies talk CSR but are only interested in their image. An exercise that I do is to look through activities to asses whether what they are doing is substaintial or a fringe issue. Another way is test whether the company is saving money by taking the initiative, also estimate the cost to the company of the initiative.

I spend a lot of time in hotels, today I am staying in one that adds a dollar to your bill if you sign a special item at the bottom of the bill. The dollar goes towards planting cherry blossom trees to save the environment. The exercise is marketed throughout the hotel. They are hardly serious.

One initiative that I came across in London turned out to be very successful, the organisation Trucost took each of the ethical fund managers and calculated the carbon footprint of each of the investments and found that many funds were investing in heavy carbon footprint businesses. Trucost published their findings and many of the funds rebalanced their portfolios.