by Moira Feil, Research Fellow, Adelphi Research

Sustainable peace needs sustainable private sector investment – and most businesses strive towards a stable working environment. In recognition of these facts, the discussion about business in conflict zones is increasingly highlighting the role private corporations could play for conflict prevention, peacekeeping, and post-conflict peace-building. However, many examples show how businesses have also contributed to violent conflict - by financing it, triggering it, or extending its duration. In particular business activities exploiting natural resources – oil, gas, timber, minerals, diamonds, etc. - in predominantly poor and unstable countries have given rise to many justified NGO campaigns of naming and shaming transnational corporations. Not only NGOs, also the 'Report of the Panel of Experts on the Illegal Exploitation of Natural Resources and Other Forms of Wealth of the Democratic Republic of Congo’ (DRC) to the UN Security Council attached an annex with a list of businesses that are connected to violence in the DRC through the illegal exploitation of natural resources.

As a consequence of such exposure, have business leaders become more aware of the connection between natural resources and violent conflict? Do businesses that do not directly exploit or trade with natural resources have a perception of these conflict dynamics? These are some of the questions asked in a research project carried out by Adelphi Research for the German Ministry of Environment, Nature Protection and Nuclear Safety. Taking a special interest in German businesses, the researchers investigated whether different business sectors understand dynamics of conflicts related to the environment and natural resources - and if so, how they deal with them.

To shed some light on these questions, the research followed three different approaches: first, an analysis of international codes of conducts revealed that such conflicts are not covered explicitly as a distinct category, though conflict related issues, such as human rights and social cohesion are frequently considered. Second, a review of public-private partnerships (PPPs) between German businesses and development agencies equally did not indicate a specific interest for environment and natural resource-related conflicts. Neither the content nor the process of the selected sample of PPPs revealed any particular sensitivity towards resource-related, violent conflicts. However, more detailed research and in particular interviews with PPP project managers would be necessary to further explore whether PPPs, in particular those related to the environment, are designed and carried out in a conflict-sensitive way. On the level of international dialogue and networks, there are examples of public-private platforms that deal with the topic of environment and conflict, notably the Global Compact’s Policy Dialogue. These could provide an initial step towards implementing such PPPs at a local level.

Finally, the researchers compared different sectors using the extensive data of a sustainability rating agency and project partner, oekom research. The aim of this approach was to systematically analyze the empirical evidence of whether and how the four sample industry groups are connected to violent conflicts. Only the 'oil and gas’ and 'minerals and mining’ groups showed a direct connection to actual violence. The German finance sector and DAX 30 group revealed an indirect connection to driving forces of violent conflict, such as investments in countries governed by corrupt regimes with a record of human rights abuses. The trend across different industry sectors showed that German businesses tend to refrain from investment in unstable markets and insecure regions.

These insights could largely be confirmed in interviews with representatives of a dozen large, German, internationally operating companies from different industrial sectors. In these interviews, high-level representatives mainly from sustainability departments explained how their companies deal with environmental considerations and violent conflicts - without explicitly linking the two aspects. The interviews revealed that companies without direct links to conflict zones are nevertheless very aware of indirect connections. Such companies are extending own social and environmental standards to their entire supply chain. They understand that reputational risks are not reduced to the first company in the chain but rather harm the largest brand. In the finance sector, with its highly sophisticated risk analysis and evaluation mechanisms, environmental and social considerations are already widely applied and lead to the rejection of project support. Other sectors are not that developed regarding risk analyses and prevention mechanisms. The tourism industry for example has excellent crises management tools but appears to have not yet developed strategic prevention mechanisms. Other sectors also consider decentralized, local solutions the best way of dealing with conflicts. They trust in their local management, without any particular strategic support from headquarters.

The research project therefore revealed that businesses apply numerous responsible, though predominantly passive do-no-harm approaches. In recognition of this, International Alert has developed a toolkit for the extractive industries that promotes conflict-sensitive business practice. Beyond such toolkits for 'conflict-prone’ sectors, there is a lack of systematic research on whether businesses already engage responsibly in conflict zones, why they engage, and with what impact. These are the main research questions guiding a new project at the Peace Research Institute Frankfurt, which aims to analyze how different sectors and types of corporations engage in security governance in conflict zones. A closer analysis and international comparison of PPP development projects, as mentioned above, would be another interesting thread to explore in this context.

For more information on the research project, please contact feil@adelphi-research.de 

For further information on International Alert’s toolkit 'Conflict-Sensitive Business Practice: Guidance for Extractive Industries’, follow this link  

For further information on the Peace Research Institute Frankfurt project the “Role of Transnational Corporations in Conflict Zones“, follow this link

Published in: ECC-Newsletter, February 2006