Private sector activity – including both licit and illicit trade and business – is a significant factor influencing the shape and intensity of many conflicts. With a few significant exceptions, however, there has to date been little effort (from public, private and civil society sectors alike) to engage different types of private sector actor systematically in conflict prevention. The basic thesis of the report ‘Transnational Corporations in Conflict Prone Zones: Public Policy Responses and a Framework for Action’ is that conflictsensitive business, and its promotion by public policymaking institutions, could become an important part of a collective and multiactored effort to create a more peaceful world. Public policy attention to harnessing this potential is urgently required.
The report focuses on one group of private sector actors that plays a major role in many conflicts – Northern-based transnational corporations (TNCs) that are foreign to the conflict context. The focus on this group is not intended to suggest that such corporations have a more significant impact on conflict than other types of actor, but is chosen because there appear to be clear opportunities to influence its behaviour. This includes through exploring options for public policy actors in the North to help catalyse a new approach.
TNCs have over the last decade begun to pay attention to human rights, the environment and other areas of ‘corporate social responsibility’ (CSR), but typically their understanding of conflict and corporate–conflict dynamics remains under-formulated, and constrained by a lack of skills and experience. For their part, ‘home’ governments (of countries where TNCs are listed or based), international financial institutions (IFIs) and multilateral organisations, while moving towards increased partnership with TNCs and other private sector actors across a range of policy areas and public life, have yet to explore possibilities for engaging companies to meet their policy targets in conflictprone zones. Yet, in many countries around the world (Colombia, Indonesia, Nigeria and Sudan, to name a few), TNCs continue to exacerbate conflict, at the cost of local populations’ security and prosperity, international stability, and both company and home government reputations.
From the public policy perspective, the task is to identify and develop measures that directly or indirectly seek to: (a) minimise the negative impacts of companies operating in conflict-prone zones; and (b) maximise companies’ contribution to peacebuilding. The report aims to inform policymakers in key institutions that have influence over major TNCs with insight into options for addressing the issue of conflict-sensitive business abroad more effectively.
The report offers an initial definition of the boundaries of ‘TNCs and Conflict’ as an issue for policymakers in key Northern governments that are home to major TNCs, and multilateral institutions. It starts by highlighting the practical implications of the changing nature of the environment in which TNCs are now conducting business. The report describes the direct and indirect ways in which companies can affect conflict situations, both at a local/micro level, through their security arrangements, employee relations and community relations, and at a national/macro level, through their impact on uneven development and inequitable wealth, bribery and corruption, commerce, human rights and democracy, and the environment. It points to the need for an evolution in the approach of foreign investing companies and policymakers alike, to respond positively to the challenges arising in conflict-prone zones.
A further complicating dimension affecting the relationship between companies and conflict relates to the degree of a company’s agency in the conflict, or the level of violence that pre-exists its engagement. This underlines the importance of developing more effective analytical methods for understanding the country context. These are crucial to a conflictsensitive business approach. Additional strategies for managing corporate-conflict dynamics range from ensuring compliance with relevant legal frameworks, to adopting a ‘do no harm’ approach that seeks to minimise harmful impacts, to a peacebuilding approach, that seeks to maximise positive potential and address conflict factors. Figure 1 depicts this range of options.
Figure 1: Strategies for managing corporate–conflict dynamics
Key findings
Two crucial areas of policy action intuitively present themselves as the likely location of policy responses to TNCs and Conflict. These are: (i) conflict prevention; and (ii) CSR. By surveying the Canadian, German, Norwegian, Swedish, UK and US governments’ current activity in these areas, as well as that of the EU, the OECD, the UN and the World Bank, the report maps actual and possible policy action on promoting a conflict-sensitive and peacebuilding approach from companies.
Conflict prevention
The report shows that conflict prevention has become a central feature of development policy since the end of the cold war. However, while commitment to mainstreaming conflict prevention across policy areas is articulated by most of the institutions surveyed, little has been done to extend this to policy that influences private sector activity. While there has been some important policy action emanating from recent interest in the relationship between natural resource exploitation and armed conflict, there is an ongoing need both to strengthen resultant initiatives, and to mainstream conflict prevention and conflict sensitivity across other areas – above all across policy areas that influence the behaviour of corporations (eg, promotion of foreign direct investment, trade policy and CSR).
Corporate Social Responsibility
Meanwhile, policy initiatives to promote ethical TNC behaviour in developing and transition countries have also increased in the post-cold war era. In addition, the concept of the private sector having a role to play in supporting development goals through publicprivate partnerships and pro-poor investment has also now become common currency among the institutions surveyed. Initiatives have emerged to influence corporate behaviour in certain component ‘TNCs and Conflict’ issues such as transparency, or corporate security arrangements, or with regard to specific commodities. But further inquiry into means of promoting ethical conduct from companies operating in conflictprone zones is not yet high on policy agendas, where it should be if policy commitments to CSR are to be fulfilled.
An initial typology of policy responses
The report’s analysis shows that despite the range of activities across institutions, and their commitment at the highest level to both conflict prevention and CSR as policy goals, in most cases basic questions about the role of TNCs in conflict-prone zones, and both their negative and positive potential, are typically not being asked. Some institutions are beginning to make certain connections between the two areas, in ways that reflect the increasing volume of research into the issue, and that create opportunities for a more coherent approach to corporate activity in conflict-prone zones. In other cases, work is being done that could and should logically be extended to address the issue. Together these ‘responses’ provide important groundwork for moving the issue forward.
The report presents an initial typology of the kinds of responses that have emerged, or that based on the findings could emerge, at the policy level. These include:
1) Regulating TNC activity in conflict-prone zones – the principal means by which policymakers can influence private activity, but as yet there is no clear international regulatory framework (voluntary, mandatory or mixed) for regulating TNC activities as they relate to violent conflict, though some important initiatives have emerged.
2) Engaging TNCs as partners in delivering conflict-prevention targets as part of development policy – an increasing trend among the institutions surveyed has been to engage the private sector in meeting development goals. This offers long-term opportunities, but at present little is being done as part of this trend to understand the linkages between TNCs and conflict and/ or peace, which represents a major gap.
3) Influencing TNC behavior in conflict-prone zones through project finance and other forms of support to FDI in developing countries – export credit agencies and related actors are increasingly moving towards addressing the environmental and social impacts of projects but as yet for the most part pay little attention to conflict. Project finance provides governments and IFIs with an opportunity to promote greater conflict-sensitivity among companies, for instance through building conflict impact assessments into their procedures.
4) Convening and facilitating multi-stakeholder dialogue to address TNCs and Conflict or component issues – dialogue is a key component of conflict prevention and peacebuilding. Policymaking institutions at both headquarter and ground level can play an important role as facilitator or convenor, and several initiatives have been launched in recent years that are relevant to TNCs and Conflict.
5) Creating enabling environments for conflict-sensitive TNC activity abroad through development assistance – the multifaceted relationships between Northernbased policymaking institutions and conflict-prone countries offer opportunities for indirectly promoting conflict-sensitive business, for instance through strengthening states’ capacity to cope with TNC investment.
6) Supporting and disseminating research into TNCs and Conflict – policymaking institutions provide financial support to relevant research that is the necessary antecedent to policy development. Civil society activity in related areas also exerts normative pressure on companies themselves, and is itself an indirect instrument of change.
A framework for action
The report assesses the possibility of the convergence of conflict prevention and CSR policy frameworks on the issue of TNCs and Conflict – a convergence that is crucial if policymaking institutions’ commitment to either goal is to be fulfilled. Clearly by virtue of their different mandates, IFIs, multilateral organisations and governments (including their development-assistance departments, trade departments, foreign offices, and local embassies or field offices), are each more suited to some kinds of response than others, and have different opportunities available to them for promoting conflict-sensitive business in conflict-prone countries. The report offers a generic framework for action, drawn from the surveys, which could enable policymaking institutions from their different vantage points to promote a more conflict-sensitive and peacebuilding role for TNCs:
1) Ensure that institutional commitment to mainstreaming conflict prevention is fulfilled across all policy areas, and that CSR policy frameworks and instruments are cognisant of both their function in conflict-prone zones, and opportunities for promoting greater conflict-sensitivity among TNCs.
- Appoint a high-level working group to conduct a thorough review of all relevant existing policy instruments and capabilities relating both to CSR and conflict prevention.
- Engage in dialogue with other policymaking institutions to identify where added value might be, and to ensure complementarity at the global level.
- Develop clear institutional priorities on coherence between CSR and conflict-prevention frameworks, in consultation with relevant stakeholders.
- Design strategic and operational frameworks to promote these, including through addressing institutional blockages where they exist.
- Review best practice as evidenced in other institutions.
2) Influence TNC activity in conflict-prone zones through regulation.
- Support and ensure implementation of relevant regulatory instruments (see Figure 3 on p.56).
3) Engage TNCs as partners in delivering conflict-prevention targets as part of development policy. Review opportunities for engaging TNCs in support of conflict-prevention policy frameworks.
- Actively engage companies though dialogue and other mechanisms in supporting conflictprevention work.
- Where experience is developing in this area, document, analyse and disseminate learning.
- nsure that public-private partnerships for development are both conflict sensitive and cognisant of the peacebuilding potential of TNCs.
- Ensure that when engaging in partnership, public policy goals are safeguarded from distortion by corporate interest agendas.
4) Influence TNC behaviour in conflict-prone zones through project finance and other forms of support to FDI in developing countries.
- Develop guidelines for TNCs investing in conflict-prone zones with regard to TNCs and Conflict, and strategies for conflict-sensitivity and peacebuilding.
- Ensure that all relevant instruments and agencies promote these.
- Introduce conflict impact assessment as part of export credit and other lending criteria.
- Require greater transparency regarding operations as a condition for project finance.
- Promote greater understanding of the links between FDI and conflict.
5) Convene and facilitate multi-stakeholder dialogue to address TNCs and Conflict or component issues.
- Explore opportunities for convening TNCs and other actors to address conflict-prevention and peacebuilding strategies and component issue areas, at both strategic and operational levels in specific conflict-prone country contexts, including at headquarter/ministry; embassy/mission level.
6) Create enabling environments for conflict-sensitive TNC activity abroad through development assistance.
- Develop strategies for enhancing host country environments for conflict-sensitive TNC activity.
- Encourage exporting countries to accept independent experts to monitor for illegal trade in conflict commodities.
7) Support and disseminate research into TNCs and Conflict.
- Dialogue with stakeholders to identify research priorities.
- Develop research into internal institutional role on TNCs and Conflict, including through existing CSR research programmes, review of internal institutional gaps and opportunities, and collection of existing practice and evidence of institutional activity in this area.
- Support and extend the capacity of existing institutional work in this area.
- Support others’ research in this area and proactively engage in dialogue on the practical implications of findings.
- Use convening power to raise the profile of the issue and disseminate research findings.
