How might one empirically assess the contribution of business actions to peace?

This written discussion is part a new month-long Challenge with Indiana University around the question: “What role can business play in pursuit of peace?”  The Challenge consists an online programme of written articles and online discussions, available on the Challenge homepage.

 

Despite the fact that broad macroeconomic connections between business and peace have long been acknowledged more needs to be done.  This Challenge aims to deepen understanding around the role that business can play in peacekeeping, peace making, and peace building.

This discussion focuses on how one might empirically assess business actions and how such quantification might be valuable for businesses and society alike.  A one-hour live panel will take place on Wednesday 26 October from 10am ET / 3pm UK.

The discussion will focus on three questions:

 

  1. What are some of the options for empirically measuring the contribution of companies to peace?
  2. What are some of the issues involved in measuring the contribution of businesses to peace?
  3. Some argue that we should rank companies on their contribution to peace, or alternatively certify them against some standard.  Which might be better and should they be made public or used to inform internal management decisions?  What role should business play in developing these approaches?

 

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Ranking of companies would not be a good idea. There is not a level playing field to measure unless it was country specific but within country different industries will have different levels of impact potential. Those of us dealing with smallholder agriculture face significantly higher challenges than those working with plantations for example.

A wider issue is whether business should do more to encourage better local governance which in itself can significantly impact upon peace if communities are receiving the kind of support in improving quality of life - often the lack of a vision of a positive future leads to other situations including urban drift and flight of capital. It may be that business has to convince other governments and institutions to engage with the government of the country in question to see how gaps in SDGs can be addressed between private and public sectors. Too often the difficulties are presented just to the private sector to address. This is not correct as a worse position will arise if that business decides to move away from wrongly assignable reputation risk and hence the economy of the country in question suffers

That brings us to the end of the live segment of this discussion.  We'll leave the discussion open, so please do continue to post your comments.  Thank you so much to all of you who joined us!

This discussion is part of a Challenge on Business and Peace that we are running with Indiana University.  For the duration of the Challenge, you can have free access to articles from a new publication from Indiana University, via the article links above.

What I like about your thoughts Begona is the measures are about businesses and their impact on peaceful outcomes like the SDGs as a place to start rather than rating businesses between themselves.  Like Tim, I go back and forth on this.  Competition is healthy but I would want to be sure that the rating kept it's eye on the goal of peace rather than having companies act only to out-compete another company.  And I do see companies and business leaders openly recommending and commending their peers and competitors when merited, fostering healthy relationships. So, a rating system that rewards merit frankly while not putting others down in the doing of it..that would be an ideal setting.  Something like the way we feel when people get the Nobel Peace Prize...for the most part, everyone shares in their achievement in good spirit.

Hi all,

One of the things I mentioned earlier were the problems with measuring peace including endogeneity and causality.  The basic issues here are that we can't claim to know that it was our responsible management action that lead to peace or was it actually something else?  Or was it a combination?  So when we empirically meausure one variable on one side of the equation and then measure the other we can't claim that it directly leads to the other.  There are ways to minimize this in empirical research and I try to explain that in my article.

Another limitation to consider is intention ... aren't there many actions historically that businesses have taken (United Fruit company, British East India Company, etc.) that have in fact incited violence but yet can we be sure that the company didn't think they were doing what was best for society?  So even if a company's actions may be directed at peace, how can we determine if it actually resulted in a reduction of violence or conflict?

Zahid Torres-Rahman said:

Thanks for sharing all comments and insights so far - let's move onto the next question!

Q2: What are some of the issues involved in measuring the contribution of businesses to peace?

Q3:

In my opinion some aspects are public and compulsory as they are based on legal standards (i.e. Human Rights), but most aspects are voluntary commitments for businesses.

It could be useful to take the most advanced companies (i.e. by UN or any international body) and present their initiatives as cases for inspiration for other companies. I believe companies mainly work on emulating each other as it happened before with CSR policies.

Business Fights Poverty could present successful business cases (i.e. in a publication)

Yes, I completely agree with Professor Fort - the benefits may be good to motivate businesses.  On the other hand, businesses can use this to their advantage, and we are certainly not ready to evaluate businesses to give them a ranking quite yet. Perhaps a certification of sorts would be interesting, but again, how would we measure this?  I believe that at times when we do certification, it is only the companies that are aware/in need of something like this apply for it. We need to be careful that the goal is always peace and that we don't get muddled along the way with recognition as the goal instead.  Thanks!


Zahid Torres-Rahman said:

Let's move to our final set of questions:

Q3: Some argue that we should rank companies on their contribution to peace, or alternatively certify them against some standard.  Which might be better and should they be made public or used to inform internal management decisions?  What role should business play in developing these approaches?

This is all so useful for my research- thank you for your insights!

In response to the third question, the best approach seems to be a combination of both ranking the companies on their contributions as well as, certify them against some standard. As mentioned in The PACO Index, “business people are inherently competitive”, therefore, creating a ranking system incentives the companies to promote peace through their activities. However, rankings alone do not do much besides comparing companies against each other. Should all companies decide to adopt the minimal standard, even the topped ranked companies wouldn’t be contributing much towards peace. Therefore, rankings should be complemented with some standards, to specify which areas companies can make more efforts. While creating standards, a one size fits all approach would not work. Every company is inherently different; it is difficult to create a universal criterion for all companies to follow. The PACO index does seem like a good starting point.  

When it comes to question 3, there are indeed some advantages of ranking companies on their contribution to peace. Ethics have been more and more essential to a company's social image. Apart from profitability, innovation, or business strategies, how much ethical is the firm is another measure for assessing a company. A firm contributing more to peace will bring more reputation to its brand images, which can definitely boost its performance. However, I deem there is no need for certifying companies against some standard because ,as we discussed in class, if the company does not violate the law, we should not force it to contribute to peace. For some newly-started companies, they need more retained earnings for growth and temporarily have no excess resources to contribute to peace. If we force them to be contributive, first it would be inadequate humanitarian, second it will strangle some new little companies. As for whether making public, I think they should because it can make them more under monitor of public, which incentive them not to be unethical.

Ranking companies may certainly have the effect of making companies contribute to peace more but others might do so in a less obvious way than can be measured. As Tim Fort mentioned in his introduction to this event, there are some businesses who contribute to peace in overt ways but there are others that contribute to peace in small and incremental ways. By ranking them, these businesses would either devote more capital to such practices and thus fundamentally change the purpose and structure of that specific business, whether that is a negative or positive will be up to the customer. 

For question 2:

First of all, I concern that measuring the contribution to peace is very costly no matter in monetary aspect or in implementation aspect. The first question is what kind of criteria should we use for measuring contribution. It is clear that only measuring contribution by how much money a company contributes is not appropriate because a big company can have excess cash to do it, instead, a small company probably cannot contribute so much money like that. Additioanlly, if assessing contribution by many immaterial perspectives, it would involve much ambiguity. Collecting data from many different companies from different industries would be very costly and time-consuming. To be honest, for most companies, they would not take into as much consideration to profitability ranking as ethics ranking. Therefore, there still remains much to ameliorate in measuring contribution to peace.  

I agree with Zijian Wang about how this could strangle new businesses as there is a lot of capital needed to contribute to peace, but either the business does not have access to or could be better used elsewhere in the growing business. This could also deter people from forming small businesses ( a vital part of the US economy). While contributing to peace is beneficiary to society as a whole, it lead to wider economic effects by placing a burden on businesses. 

Zijian Wang said:

When it comes to question 3, there are indeed some advantages of ranking companies on their contribution to peace. Ethics have been more and more essential to a company's social image. Apart from profitability, innovation, or business strategies, how much ethical is the firm is another measure for assessing a company. A firm contributing more to peace will bring more reputation to its brand images, which can definitely boost its performance. However, I deem there is no need for certifying companies against some standard because ,as we discussed in class, if the company does not violate the law, we should not force it to contribute to peace. For some newly-started companies, they need more retained earnings for growth and temporarily have no excess resources to contribute to peace. If we force them to be contributive, first it would be inadequate humanitarian, second it will strangle some new little companies. As for whether making public, I think they should because it can make them more under monitor of public, which incentive them not to be unethical.

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