CIAO DATE: 10/2012
September 2012
United States Institute of Peace
The business sector can promote prosperity and stability in conflict-prone and conflictaffected regions through good corporate citizenship, but operating in these high-risk, high-reward environments is fraught with great difficulty. Many firms develop risk mitigation strategies designed to minimize exposure and cost without accounting for costs to the country, its population, and the environment. Poor risk management strategies combine with endemic corruption and myriad market failures and distortions resulting from weak economic governance to reinforce aspects of the political economy that could trigger and sustain violent conflict. Effectively addressing these failings could reduce business costs, increase efficiency, and improve governance and livelihoods in fragile regions. U.S. government policy documents, such as the Quadrennial Defense Review, Quadrennial Diplomacy and Defense Review, and National Security Strategy, allude to a potential role for firms in furthering stability and promoting peace but do not clearly analyze the complexities such endeavors entail or identify workable solutions. Strategies to capitalize on the immense potential of the business sector to foster peace must account for the size of firms, whether they are state or privately owned, which industries they are involved in, and their interconnectedness within supply chains. Key components of effective strategies include crafting incentives to reward investing firms that espouse good corporate citizenship, strengthening international initiatives that promote transparency and contain corruption, developing initiatives to more fully incorporate the local economy into global value chains, and introducing mechanisms to forge global consensus on appropriate conflict-sensitive business practices.
Resource link: How Business Can Foster Peace [PDF] - 320K