By Nika Salvetti and Prof. Andre Nijhof.
Is there a positive connection between these two terms? Especially when we hear news about the wrong doing of companies operating in complex contexts?
There is a very simple answer also supported by vast research findings, which is a positive answer, just because today companies cannot afford to do bad without having been noticed thus without facing serious consequences which would undermine their image, reputation and overall legitimacy.
The role of business in society has changed. On one side businesses are expanding their operations and activities outside the traditional markets, along a more complex global supply chain which increases unpredictability and uncertainty increasing business risks; on the other side society is more aware of their actions and impacts and it is demanding more responsible behaviours and practical solutions to address common social, economic and environmental challenges (Prandi and Lozano, 2010).
As the McKinsey report (2010) stresses, busineses today are challenged by the changing context in which businesses operate, from traditional and established, to non traditional and complex business environment; by a progressive stress on natural resources (i.e. water) which threaten their availability; by the increasing complexity of socio-economic and environmental global problems, i.e. climate change, structural unemployment, disproportionate urbanization, insecurity, which raise the societal pressure on businesses to act and provide innovative solutions (McKinsey, 2010).
While operating in complex settings, such as conflict affected areas and fragile states[1], businesses are more exposed to issues related to human rights, sustainable development and peace building (UNGC, 2010).
Usually businesses operate in complex settings due to the opportunity of the easy access and exploitation of natural resources, cheap labour and a new and large market, often ignoring the high costs and risks associated to the increase of uncontrolled insecurity, lack of good governance and abuse of human rights (Anderson, Markides and Kupp, 2010).
If we look at the textile industry, for example, the famous Western brands have no interest to get trapped in a negative campaign which boycott their operations caused by the irresponsible behaviours of their local providers to not respect the basic rules and regulations in relation to labour and/or environmental rights.
The recent accident in Turkey, forecasted by BBC worldwide, denouncing local garments’ factories to exploit Syrian refugees’ girls by providing very bad working conditions, had an immediate reaction internationally prompting one of the retailer companies to adopt a remediation plan with also the option to terminate the contract, if immediate labour adjustments would not take place.
This is just an example of how today the communication becomes a clear weapon against irresponsible behaviours. But the point to address is another. Why should we wait for these ‘accidents’ to occur to prompt a more responsible reaction of the companies? What about preventive and conscious business measures to establish the foundation of peaceful and responsible relationships?
Recognizing that the primary responsibility of restoring stability, security and promoting development lies with the legitimate Government, we believe that a more active and responsible participation of businesses in contributing to peace and sustainable development in complex environments is expected. Businesses are today seen as a potential partner for building peace while contributing to sustainable development and stability (UNGC, 2010). To fulfil such exigent tasks, businesses have to recognize the relevant role they can play in such complex environment, ensuring sustainable economic growth while concurrently mitigating social and environmental impacts. In fact they are the engine for jobs’ creation, local economic growth through the potential promotion of inclusive and local businesses.
They can promote better relationships between different stakeholders and guide and support local governments in addressing and solving social and environmental problems. Moreover they can contribute to the national economic growth through their capital investments and tax revenues. However if their contributions are not aligned with the principles of responsible investments as stressed by the UN Global Compact (2010), the OECD guidelines for Multinationals, the ILO convention on labour rights, the Business & Human Rights nexus promoted by the Ruggie Report[2], they can easily contribute to the exacerbation of conflict manifested by violent societal upraises, workers’ strikes and boycotts, societal polarization which might lead to a worst case scenario of civil conflict. Getting to know the local context, its challenges and opportunities, the roles and level of influence played by the different stakeholders, might be a first step to review business strategies in order to gain long term financial returns by joining collective efforts to address the major local socio-economic and environmental challenges (Davis and Franks, 2011)[3].
Overall businesses have to realize that the costs related to conflict and instability is much higher than the ‘costs’ of building and keeping peace thus sustainable development (Institute for Economics and Peace, 2012).
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About the authors:
Phd Cand. Nika Salvetti, Nyenrode University. Email: N.Salvetti@nyenrode.nl
Programme Leader Business & Peace. UPEACE Centre The Hague.
Email: nsalvetti@upeace.org (for more information about the programme on Business & Peace please check our website www.upeace.nl)
Prof. Andre Nijhof, Nyenrode University. Email: A.Nijhof@nyenrode.nl
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[1] A fragile state is a low-income country characterized by weak state capacity and/or weak state legitimacy leaving citizens vulnerable to a range of shocks. Conflict affected areas are those in which significant socio-economic disruptions lead to weak governance, extensive damage to infrastructure, and disruption of social provision. ADB, 2012.
[2] United Nations Global Compact (UNGC)’s principles; OECD
[3] Davis, R. and Franks, D.M., 2011. The costs of conflict with local communities in the extractive industry. Published for the first international Seminar on Social Responsibility in Mining. Oct. 2016. Santiago de Chile.
