A discussion moderated by Timothy Marshall, Chairman, International Institute of Peace Through Tourism

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How can business handle the key issues in conflict zones?
This session focuses on flashpoint issues that arise in conflict sensitive zones. While some issues are common in any business settings, certain issues recur that businesses must address as part of their overall strategic focus.

Presentations:
Key Issues in Doing Business in Conflict Zones
Watch the three videos and join the discussion with presenters below.

Igor Abramov, Counsel, Heenan Blaikie LLP

"Building Peace in Fragile States: Building Trust is Essential for Effective Public-Private Partnerships"(5:48)

Don Mayer, Professor of Business Ethics and Legal Studies, University of Denver

"Peace Through Commerce and Private Militaries"(3:36)

Tara Radin, Wharton School of Business, University of Pennsylvania

"Justice and Reconciliation in Post-Conflict Markets"(6:10)


Working Papers




Discussion: How can business mitigate the key issues in conflict zones?

- While some issues are common in any business settings, which issues recur that businesses can address as part of their overall strategic focus?

Views: 447

Replies to This Discussion

Dear All,

Businesses can indeed undertake a number of measures to mitigate key issues in conflict zones:a number of them:

1.Undertake comprehensive risk assesments and always base key investment decisions on those assesements.

2.Resonably and with sufficient safeguards and constraints explore any mechamisms if available that could go towards building peace,conflict resolution or even helping to mitigate the suffering of the victims for example civilians.This can creatively be inlcluded in CRS programmes like for example a compony that mines minerals in a conflict zone somewhere undertaking to buy guns from demoblized combatants and instead of leaving them jobless, offering them some jobs in its plants.

3.In the same way, a compony can invest in pre-emption by for example ensuring that there is minimal interference with peoples' livelihoods which could trigger conflicts over scarce resources.

4.Mechanisms for compensation can also be contemplated.

5.In worst case scenarios, a decision not to invest, to divest,scale down or pull out the investment altogether can be contemplated if the risk cost benefit analysis determines that the continued operation of a compony somewhere does not serve its interests of that of the locals.

6.In certain isolated cases, it would be prudent to invest through local frinchises,subsidiaries,nominees,partners or even enter into strategic mergers with local componies or governments as a way of spreading risks and also ensuring better efficiency in understanding the anatomy of conflicts.If this happens perhaps there is a better inclination to honuor CSR.

Mpapale,

London.
You raise some very important and interesting issues. I would particularly stress the need to work with local partners in all stages of a CSR program. I would add that in considering CSR companies should consider closely the needs of the community in which they operate. Too often multinationals have their own notions of CSR instead of targeting the specific needs.

I would also add to your list the need for capacity building, empowerement, and education that companies can engage in much more effectively than governments.

Igor Abramov
I agree with the idea that corporations need to work with local partners in "all states of a CSR program." Targeting the needs of a specific community takes into consideration the fact that different countries have different norms so it would be imprudent to try to impress your own ideas on such countries. Working with local partners is engaging them every step of the way in order to ensure that their basic rights are protected, and they receive the benefits. With that in mind, what is the best way to get the local community involved in the CSR process?
I agree with this completely. past experiences have caused MNC's to portray an unethical, and as Professor Fort has iterated before an evil business mentality. You just have to recall companies such as Enron and De Beers, who are/were considered some of the most unethical companies in the world, but who also had a tremendous impact on our lives. MNC's have so much power, and it is up to them to use that power in the right way. This is my opinion anyway. If companies with this power are able to use CSR to identify with their communities then we really could see an overall improvement in all forms of business. Not just ethical business decisions, but the relationship we hold as a community vs. global business power.

However, how does a company with an existing reputation for low CSR turn it's image around. Does it just lay with the CEO, or does it have to filter through to every employee? Plus how do you certify that your local partners will also be on board to promote these new ethical behaviors?
I think that a company with low CSR could turn its image around by doing what is suggested, working with local communities. By responding to these communities' wants and needs, their efforts will be best received and most effective. Additionally, by implementing action that will ultimately help these areas, citizens will inevitable reposition their judgments of these MNCs. Of course, this will take time. I believe that its essential for the MNCs to establish a trust worthy and enduring relationship with these communities. It will take time to regain an element of respect, but with time and continuous efforts it is possible.

I would suggest in addition to these higher level initiatives, the MNCs should institute company wide programs/charities that work to help such areas. This will help to produce a cultural change. Additionally, PR and marketing would need to accompany to fully initiate a change of brand image. In my opinion, a company image can be transformed, it however requires cooperation from local partners, employees, and upper management.
I think that this is a very interesting issue. When a multinational company comes into a conflict or post-conflict zone, who is to say what their motives are? Are they there to increase their reputation or to truly help the local community? I thought your is discussion in the paper, Building Peace in Fragile States begins to tackle this issue. I really enjoyed the discussion of how to deal with obstacles to the peace building process such as corruption and weak law mechanisms. These relate directly to problems when considering how focused the CSR efforts of multinational companies are toward the needs of the local community. A multinational company, as you mentioned, can sometimes be worth more than the entire value of a conflict country. If that is the case, these companies have unlimited influence opportunities in these zones, but little regulation to ensure their influence is being properly utilized.

The partnership that you discuss at length in the paper is an interesting way to limit the amount of problems associated with corruption and the MNC not focusing on local needs and the corruption possibilities. In the US, there is a similar partnership that is currently being developed to help rebuild the financial system. This is called the Public-Private Investment Program (PPIP) and is utilizing both private investors' capital and the government's stability to rebuild the amount of capital in the financial system. This is exactly the type of partnership you described in your paper. Do you think that this will be as successful as the examples you have seen in the past? Will the problems of corruption and misuse of funds go away if there is a partnership established or is there still more work to be done? Finally, in many countries that are currently in conflict have corrupt governments or public sectors, how do you think this partnership will address these problems?

Thank you for your wonderful research,
Lily Goldstein
I totally agree with this idea. I learned a lot from the video lectures posted before and the papers written especially about the peace through tourism that most people who personally experience the culture from traveling and communicating with local people will have postive impression about the country and people.

The businesses, therefore, can be the middle manager who can tell how their cultures are different from the local cultures to the communities while the corporates can go back to their country and show people what they have experienced and how the real local communities are different from the stereotype. By understanding each other through communication, they can reduce the cultural gap between those two countries, which will ultimately lead to the efficiency. Furthermore, the corporation can help promoting education in the local citizens. and even economic growth.

However, as it is mentioned in the building public private partnership, all these can be achieved only when the corporation listen to the local citizens about their issues and learn domestic cultures. Therefore, developing trust between them will allow the business to naturally transform themselves into a domestic business ethic group.
I am curious to know how shareholders can ensure that the multinational they are invested in is maintaing the proper corporate responsibility within the conflict zones they do business in. This mainly pertains to companies in the mining, oil exploration, and manufacturing industry as they seem to be the most abundant in conflict zones. As a shareholder of such a company, I would like to know if multinational companies are required to publicly announce or reveal what actions they are taking in conflict zones to either reduce or prevent conflict in their respective area.

I would think that if shareholders were to find out that the company they are invested in is not doing enough or is in fact worsening the situation, they would think twice about their investment in that business. Any feedback would be greatly appreciated.

Steven Sciuto
Congratulations for identifying a milion dollar question. Your question goes to the complex and difficult question of corporate law of ownership and control. While, a shareholder may be an"owner", a shareholder has virtually no say in the decision making process. The strategic decisions -investment, ethical standards and risk management decisons are made by the board of directors. I am not aware of any regulation requiring the decisions of the board or the management be publicly available.

However, increasingly there is a strong movement towards "shareholder activism", where a shareholder seeks to influence or seek changes in the company's strategy. I am afraid that the United States is somewhat behind on this than our European friends. In the U.S., "shareholder acitivism" tends to be undertaken by institutional investors rather than individual shareholders. This is not to say that individual shareholder is left completely in the dark. A shareholder, for example can demand access to documents, decide to sell shares in a company it believes involves in unethical practices, and through voting.

A very simple response to a complex and good question.

Thank you.

Igor Abramov
I just wanted to point out that in Britain there are now laws that require publicly held companies to report not just financial liabilities but environmental and political ones. Presumably this would include reporting on their operations in conflict affected areas. It is not quite the detailed reporting on specific decisions that you are looking for, but it could be provide the first steps towards better information.

Along the same lines, initiatives such as the Extractive Industries Transparency Initiative (EITI) and some of the work by Transparency International and the Publish What you Pay Coalition may provide more information about companies that operate in weakly governed territories.

Virginia
This British law seems to be progressive and definitely a step in the right direction. However, I think it would be more effective if one or more of these companies involved in industries within conflict zones took the initiative to provide this information not for legal compliance purposes, but as a part of their CSR practices. This proactive approach could attract shareholders that are concerned about the practices of MNCs within conflict zones. If several large companies choose to engage in these practices, it may become a industry standard without government intervention.

Also, providing this information before a law is passed requiring this information is a way for businesses to address this concern before it becomes an issue that merits regulation. Avoiding formal regulation would be beneficial to businesses because it would allow them to distribute this information how they choose to, instead of being required to comply with specific regulations or information requirements.

Should it be a legal requirement or the decision of the business to provide this information? Which is more effective and complete? Do the benefits of voluntarily providing this information outweigh the negatives, or vice versa?
From watching this week's video lectures, I realized many important aspects of business society. According to the video from Mr. Abramov, he mentioned that there are many conflicts in trusting other partners in doing businesses and corruptions in between companies and governments.
Way I view this business world, those conflicts cannot be avoided unless unconcious, no thoughts of robots are working. We are humans. It is very difficult to trust someone because individuals thrive to make their own profits.
Therefore, in those cases, we cannot expect to gain other party's trust completely. They might deceive you to make it look like they trust you, thus get your trust and betray you.
In dealings with other parties, we always should try to make win-win situation. We are there to make profits of your own, and no one wants to give up their hand to others.It will be ideal if we can find a benefitial point for both parties.

In my opinion, Conflict zones are inevitable. But also, solutions can be found always since we always have room for negotiation, thus we can keep our peace in commerce.

Thank you for Professor Fort for this great opportunity.

In Je Yeo

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