Memorandum from The Prince of Wales Business
Leaders Forum
The Prince of Wales Business Leaders Forum (PWBLF)
is an international educational charity funded in 1990 and supported
by major international businesses from Europe in 1990 and supported
by major international businesses from Europe (including the UK),
America, Asia and the Middle East. The Forum's mission is to promote
socially responsible business practices that benefit business
and society and which help to achieve social, economic and environmentally
sustainable development—with a particular focus on developing
and transition countries.
The Forum works strategically around the world
with leaders in business, civil society and the public sector
to—encourage continuous improvement in socially responsible
business practices, develop geographic or issue based cross sector
partnerships to take effective action on social, economic and
environmental issues, and help create an enabling environment
which provides the right conditions for social responsible business
practices and cross sector partnerships to flourish.
The PWBLF is not representative of its supporters,
members and partners—the points in this memorandum are observations
and conclusions of staff, based on our experience of working with
business in international settings in over 30 countries over some
eight years.
1. PERSPECTIVE ON
THE ISSUES
OF CONFLICT
PREVENTION AND
RECONSTRUCTION
1.1. The Forum does not claim in-depth or specialist
knowledge of conflict prevention and post-conflict reconstruction
and the part that business plays. We are aware that business has
been engaged in areas of conflict and its aftermath ever since
international trade began, and plays a role in many ways. Public
expectations of good business behaviour have risen recently. Advances
in communications technology, particularly the internet, have
increased the capacity of interest groups and the media to monitor
and campaign against what is perceived as unacceptable business
activities. This has imposed new pressures on business, particularly
international public companies, to operate in ways which are and
are seen to be socially responsible. In addition, where governments
and factions are unresponsive to pressures to cease conflict and
to respect human rights, international business which is thought
to have economic influence is often expected to exert this influence
for the common good—often imposing dilemmas when public
opinion runs against governments. The presence of conflict and
its aftermath also imposes high costs on business from disruption,
instability and the demands for security. There is therefore a
clear case to be made in our analysis for business to be part
of action for conflict prevention and resolution.
1.1.2 Corporate involvement in conflict
and reconstruction
Many of the international companies with
which we work (including leading corporations in the oil and petroleum,
natural resource industries, and the travel and tourism industries)
have a presence in countries affected by conflict. For example,
of the 34 countries listed by the Carnegie Commission1
as locations of major armed conflicts in the 1990s, 30 are countries
where companies associated with the Forum are known to have some
direct business interests, and a few are locations of significant
investment such as in the Caucuses, North Africa, West Africa,
Central America, and SE Asia. The existence of valuable natural
resources or potential profitable markets which draw business
into physically and politically challenging areas are often a
factor in economic development pressures which can contribute
to conflict where territory and ownership rights are disputed,
or where lawless factions see opportunities from conflict. Conflict
is a root cause of many threats to and abuses of human rights
which affect business operations.
Many companies in areas of conflict are
also engaged in reconstruction—through the maintenance of
infrastructure and supply systems or in support of public authorities
or civil society organisations and NGOs working in relief and
resettlement. Some companies are also engaged in the direct supply
of goods and services (such as telecommunications, engineering
services, water and power supply and distribution) associated
with reconstruction.
There are of course also significant commercial
interests in the supply of arms, equipment and other goods which
are used directly or indirectly in armed conflict as well as security
to combat it—although the Forum does not have experience
of working with companies in this sector.
1.1.3 Effects of conflict on business
activity
Conflict imposes high and often unpredictable
costs on business—not least due to the demands of security
and protection for employees, sub-contractors and capital investment
which are exposed to risk. A combination of higher standards being
adopted by international business and heightened public anxiety
and scrutiny of business practices has put the response to human
rights challenges on the management agenda for many international
companies. Several leading companies (though only a few to our
knowledge) have quite recently reviewed their policies and practices,
backed up by action to improve management preparedness and accountability,
focussed on continuous improvement of performance, respect for
human rights and human security and open review of dilemmas.
1.1.4 Interest within the development
community on the role of business
Over the past three years, companies associated
with the Forum and many others have started increasingly to collaborate
with international development agencies and Inter-Governmental
Organisations (varying form DFID, the UN organisations and World
Bank) in development issues and the promotion of public/private
partnership. The Forum has taken a lead in organising dialogue
and joint action. Interest has also grown quite recently amongst
these organisations—within the past 12 months alone, the
UN Secretariat, UNHCR, UNHCHR, WHO and World Bank have initiated
joint working with the Forum and others to engage business far
more in their objectives, recognising past deficiency in their
policy and experience in this area. DFID, in its International
Development White Paper and linked new policies, have also shown
new and significant interest in partnership with business in these
areas, have drawn extensively on the experience of the Forum and
developed a range of innovative partnership policies with which
the Forum is collaborating.
1.1.5 Emerging dialogue between business
and NGOs on issues of conflict
Several countries in which the Forum operates
to promote partnerships between business, civil society and public
sector are affected by actual or threatened conflict (including
countries in SE Asia, Eastern Europe and the FSU and parts of
Latin America). Amongst the initiatives taken by the Forum to
explore levels of business interest and response has been the
initiation of dialogues in both London and the USA between leading
international human rights organisations and business (including
organisations such as Amnesty International, Human Rights Watch,
Oxfam, CARE and International Alert) and also exchange of experience
on partnerships to improve community policing and public security
in South Africa and Central Europe.
1.2 Positive engagement of business is at an early
stage
Overall, the assessment from our own experience
is that, in spite of the impact of conflict on business and business
operations and levels of public concern, joint action by private
and public sectors to understand, define and develop a positive
role for business in conflict prevention and post-conflict reconstruction,
and prepare managers for this, is quite new. Even the leaders
are in a "learning phase". There is however wider recognition
that business has a role to play, though this is not a substitution
for government action. Response by business to conflict and associated
human rights abuses is highly complex, not least when operating
in countries where the response of governments and the international
community is ambiguous towards sources of conflict, where business
operations are legally sanctioned yet there are operational challenges
and public disapproval. A briefing note issued by the Forum on
these points is included as an annex to this note2.
1.3 The need to differentiate between types of
business
In addressing the role of business in conflict
and reconstruction it is important in our view to differentiate
between types of business which will have different interests,
incentives and capacities to respond:
(a) national/local businesses and SMEs
in areas of conflict which are affected, but not exposed to international
pressures, including private and state owned companies which have
less or at least different pressures for accountability;
(b) manufacturing and assembly companies
and hotels whose investment may be more medium term (3-5 years)
and who are more mobile in terms of leaving a location, selling
up or writing off investment if business conditions deteriorate;
(c) trading and sub-contracting companies,
services and licensees who make minimal investment and can
avoid risk by withdrawing contracts, distribution, sub-contracting
and representatives at relatively short notice (there are also
companies who themselves are legally engaged in the supply chain
for goods and services which can be used in conflict);
(d) companies which trade in and manufacture
arms and equipment used for defence and conflict—operating
within international law (and those who operate outside);
(e) financial investors and financial
traders who have short-term scope for rapid disinvestment
and redeployment of investment to more profitable locations;
(f) major international companies with
long-term capital investments—such as oil and gas, mining,
major process industries (cement, chemicals, refining), infrastructure
(power, water and large buildings)—which have long-term
investment commitments and are those which have the greatest stake
in long-term stability as well as having high exposure to public
pressures.
Clearly, the long-term investors and traders
have greater motivation to be a positive force in conflict prevention
and reconstruction and could be far greater partners with the
public sector and civil society to tackle issues in a positive
way.
2. THE POTENTIAL
ROLES OF
BUSINESS IN
CONFLICT PREVENTION
AND RECONSTRUCTION
2.1 The key role of business is through sound
mainstream business practices
Business can play several roles in conflict
prevention and reconstruction, and there are existing good practices
of companies on which to draw. First and foremost is through the
mainstream business activities and practices of companies when
they conform to high standards of responsible business, such as:
— adequate risk assessment which anticipates
potential conflicts and social issues to be addressed positively
in advance of business operations, recognising that conditions
can change;
— avoidance and elimination of bribery
and corruption which itself contributes to conflict;
— contributing to human resource development
and institution building in the education and training sector;
— contributing to livelihoods through
sub-contracting and local purchasing policies;
— active engagement with business partners,
suppliers and sub-contractors to raise and maintain business standards;
— commitment to addressing security
issues in a sensitive way which reinforces the rule of law and
promotion of human rights, often in difficult, complex and adverse
circumstances.
2.2 Business can reach out to assist communities
Companies can also operate community outreach
to build local capacity and sound community relations:
(a) Sharing skills and know-how with public
officials—there are many examples of companies sharing
management experience with the public sector to improve administration
and service delivery (examples include the oil and petroleum industry
in Colombia assisting local government, South African companies
assisting in the training of local government officials and collaborating
in the improvement of public safety with the police, public authorities
and NGOs, or assisting teachers and educational administrators,
and hospital managements).
(b) Support to civil society and civil
society organisations (CSOs)—a vital action is work
to support the building and strengthening of civil society which
is a key strategy for tackling conflict. Again there are many
and well established examples of businesses assisting CSOs through
donations of funds and help in kind, management assistance and
joint working in partnership projects, support for agricultural
extension, literacy, primary health care and economic development.
(c) Support for community development
partnerships—apart from direct assistance to CSOs and
NGOs, there are examples of companies supporting community development
organisations and foundations which are locally based partnerships
with comprehensive programmes for economic improvement. These
models which can be seen in parts of Latin America (such as foundations
supported by the oil and petroleum industry in Colombia, or mining
industry in Southern Africa and seen at first hand by the Forum)
offer a real opportunity for some of the fruits of development
to be shared directly with communities affected in a strategy
of economic "inclusion" rather than passing them by.
(d) Engagement in dialogue and conflict
resolution/mediation around human rights issues—there
is some involvement of business in organisations which can play
a direct role in conflict resolution and mediation, whether through
churches, NGOs or other civil society organisations—the
best examples of which were seen in South Africa, where business
played a key role in constitutional change.
(e) Support of relief operations—companies
can provide support for relief through donations of cash, product
(such as health supplies, vehicles and telecommunications), technology
(power generation and water purification), expertise and a wide
range of logistical assistance. However, this should always be
seen as a less effective investment of resource than effort contributed
to conflict prevention, resolution and sustainable development.
(f) Sharing information and intelligence—while
a sensitive area because of the real dangers of misuse and abuse
of information, or misunderstanding of reasons for its collection,
companies can also share information in appropriate and open ways
with public authorities and civil society organisations on their
assessment of potential conflict and possible remedies. Companies
are often well placed to make assessments of issues which are
developing.
2.3 The case of Indonesia—a possible case
for partnership approaches
An example of an analysis of the role that business
might play in the prevention of conflict and promotion of development
could be in a recent assessment in which the Forum has been involved
on the potential role of business in crisis and reconstruction
in Indonesia. Here the business community has a credibility problem
due to its role in the support of the former regime and the business
practices associated with it. Together with the World Bank, and
Indonesian and international companies consulted, the Forum has
outlined ways in which the more co-ordinated engagement of business
in open partnership with civil society organisations and International
Agencies might take place focussed on both dialogue and action,
based on existing good practices in other countries, in:
— offering management skills to the
public sector to improve the effectiveness of administration and
services;
— assisting with the logistical challenges
of distribution of basic commodities;
— promoting action for livelihoods
and enterprise;
— offering assistance in corporate
governance training;
— providing direct support to community
based partnerships for social and economic development.
2.4 Business involvement—no substitute but
key factor
As the Carnegie Commission clearly states in
their report—involvement of the private sector cannot be
expected to be a substitute for government action, or a solution
in its own right. It is however an essential part of risk reduction,
conflict prevention and reconstruction which has often been overlooked
in the past. From our own experience, we would suggest that the
approach must be one of partnership—with business working
in cross sector approaches with civil society organisations and
the public authorities where this is possible.
3. FRAMEWORKS FOR
ENCOURAGING BUSINESS
TO RESPOND
3.1 While there is good practice on which to
draw, and a changing inclination within the business community
and international agencies for business to be engaged as a positive
force in conflict prevention and reconstruction, we do not believe
that this will happen to any great extent without an "enabling
framework" which encourages this.
3.2 Much can be done by the UK and other governments
in this sphere, directly or through the stimulation, reinforcement
and support of action by their partners such as the following:
3.2.1 Good practice exchange and promotion
should be encouraged to identify, analyse and spread good practices,
linked to efforts to build capacity in business, business organisations
and civil society partners for collaborative action. The emergence
of guidelines and codes of practice are useful.
3.2.2 NGO and civil society dialogue
with business and public authorities should be encouraged, which
often requires "mediators" who help bring the sectors
together.
3.2.3 Inter-governmental organisations
(including UN organisations, World Bank and EC) should be encouraged
to recognise the role that business plays in conflict prevention.
The UK DFID partnerships approach should be strongly endorsed
in this respect as a bold and pioneering approach within the international
development assistance field, which should also be pursued vigorously
within the UK membership of the OECD Development Assistance Committee
(DAC).
3.2.4 British Embassies and High Commissions
play an influential role with business and should be fully briefed
and engaged on the role that business can play, as well as the
sensitivities around this, drawing on good practices and a good
measure of existing knowledge amongst missions—waiting for
a crisis is always too late to consider these ideas.
3.2.5 There might be further alignment
between DFID, DTI and FCO in the assessment of the potential
for business involvement, and how this can contribute to development
and business competitiveness as well as to British interests.
3.2.6 UK based organisations concerned
with trade and investment should be fully engaged by DTI and
DFID in these issues, within the context of a broader partnership
for development.
Notes
1 "Preventing
Deadly Conflict" Carnegie Commission on Preventing Deadly
Conflict, New York, 1997.
2 "Business Impact
of Human Rights and Development—Background Note for Informal
Dialogues on the Business Response to Human Rights and Development
Issues", PWBLF London, April 1998.
Robert Davies
Chief Executive
The Prince of Wales Business Leaders Forum, London
12 October 1998
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