1. Peaceful Economies: The Role of the Private Sector in Pakistan Safwan A. Khan Economic Growth Unit

2. Objectives of the study Explore perceptions of business as 'Agents of Peace Assessment of individual and institutional capacity- building needs for businesses with regards to Corporate Social Responsibility (CSR) Explore peace-conducive business practices that prevent conflicts in the society Identify economic drivers of conflicts Identify nexus/cartels that keep conflict in status-quo mode Explore the role of formal and informal institutions in keeping conflict in status-quo mode

3. Perceptions on businesses as agents of peace Main socio-economic issues that businesses could/should address The role of business in internal conflicts in Pakistan Conflict sensitive business practices and their affect on communities

4. Analysis of economic drivers of conflict Internal drivers of conflicts External drivers of conflicts Business practices driving conflicts

5. Network analysis Identification of nexus/cartels (from within business or communities at large) which keep conflict in status-quo mode Role of formal and informal institutions in keeping conflict in status-quo mode

6. Corporate Social Responsibility According to the ISO definition, CSR should consider issues such as: Human rights Workplace and employee issues, including occupational health and safety Unfair business practices Organizational governance Environmental aspects Marketplace and consumer issues Community involvement Social development

7. From the literature The Sadakhlo Market in the South Caucasus is a startling example of businesses contributing to peace. Economic ties between Armenia and Azerbaijan are severely restricted. However, the market is a neutral territory between the two countries and is used for trade of goods between Azeris and Armenians. This way, the market allows for business to business and people to people interaction between the two countries even during periods of heightened volatility (Poghosyan, 2011)

8. Some of the important channels through which businesses can contribute to conflict-prevention, crisis management, and post-conflict peace building can be: Business operations (that enhance shared value along the value chain) Social investment and philanthropy programs Engagement in public policy dialogue, advocacy, and institution building

9. Household-level survey 800 households from Balochistan, KP, Punjab, and Sindh Districts covered: Quetta, Peshawar, Multan, Faisalabad, Karachi, Sukkur

10. Issues affecting society 54.60% 45.40% Lack of Social Services High Cost of Living

11. The role of business in local area development 55.5% 34.8% 1.0% 8.8% Agree Somewhat Agree Disagree Not sure

12. Top-most issues where businesses can help 3.8% 2.3% 1.0% 3.3% 3.5% 3.5% 4.5% 21.0% 1.6% 9.3% 5.0% 5.8% 9.8% 3.6% 7.0% 6.5% 3.0% 1.3% 4.5%

13. Issues contributing to internal conflicts 64.4% 67.0% Lack of Employment Lack of Social Services

14. Is business expansion beneficial for communities? 63.4% 29.9% 1.9% 4.9% Agree Somewhat Agree Disagree Not sure

15. Will increased business lead to conflict? 2.5% 3.4% 65.4% 28.8% Agree Somewhat Agree Disagree Not sure

16. Business activities with regards to peace-building 13.8% 13.8% 6.5% 8.6% 3.3% 16.0% 2.3% 16.9% 17.0% 2.0%

17. Network analysis Primarily a sociological tool, NA has now found extensive use in other disciplines, including economics Focus on 'Actors' and 'Relations' (Nodes and Edges in NA terminology), and not on 'Actors' and 'Attributes Basic premise: that social phenomena can best be explained in terms of relations and patterns formed by these relations Causation best explained by prevailing social networks

18. Network analysis Relations: Directed and Undirected Ties The network approach assumes that power and influence are relational Assumptions for our NA: from Focus Group Discussions and Key Informant Interviews

19. KIIs: The role of business in community development "If businesses do not take care of communities, people will somehow react in an unwanted way (leading to conflict in the society) "The objective of profit maximization converges to welfare maximization in the long run. Those businesses which have long term objectives shall be committed to the community affairs "

20. The role of business in community development As institutions, markets have a leveling affect on the society. They are inherently secular in nature. However, markets create individuals and make certain individuals that are wealthier than others. In a market, the transaction that occurs does not consider the background of the individual, but it creates and empowers certain individuals in a distinct way. Thus, certain individuals become influential because of how markets operate. These individuals are conservative, unlike transactions that are actually secular in nature

21. Responsible business practice Businesses should adopt a framework for Corporate Social Responsibility because it is built-in approach and makes their contribution to the society inter-related with their own systems Responsible business practice should be something that contributes to the public good. Something that is continuous, unlike charity. For instance, the contribution of businesses to The Citizens Foundation and organizations like Edhi

22. According to the PCP, up to 52% public listed companies in Pakistan are involved in giving of some kind or another "It needs to be mentioned there is no regulation for CSR in Pakistan. In 2009, a regulation was drafted voluntarily by businesses. Since then, nothing much has been pursued. In 2012, the Securities and Exchange Commission of Pakistan called a round-table conference to finalize a CSR framework"

23. KIIs (contd.) In the Hattar area in Haripur, there are a number of factories that employ the local labor force, but continue to add to environmental and health degradation in the area" "Many of the CSR initiatives in Pakistan cater the urban clientele, whereas most of our population is rural "Exploitative business practices are present all across Pakistan with varying degrees"

24. Business motivations for CSR There is a human-level motivations but the private sector fails to see the perpetual suffering of people from being underdeveloped Companies seek to ensure an enabling environment for their business through these contributions

25. Businesses do want to help communities and contribute towards their welfare but as businesses, they do not have the mandate or capacity to do so. They contribute by supporting civil society organizations instead Vision of long term commitment by a few businesses, while contributions from the rest come at the pressure of civil society, media and other similar forums to keep the integrity intact

26. Business and conflict By not contributing to community development, businesses are contributing to conflict somehow Businesses contribute to conflict so as to prevent competition. Needless to say, it is the communities that suffer "The media is causing conflict. They sensationalize and also propagate certain mindsets that amplify the divide in the society

27. Business and peace Smaller businesses are more closely connected to the local communities and play a very significant role in community development, thereby preventing conflicts Green Star is working with many NGOs in Sindh and Punjab for sexual health awareness and education. The company provides contraceptives to the poor free of cost. This way, it not only accomplishes its social responsibility but also gets to market its products and thus create new revenue streams

28. Risks involved The threats from elite club of the local community and especially the insurgents in Baluchistan, target killers and bhata mafia in Karachi, suicide killers in KPK are impeding business to grow. And there is a different premium to risk for different areas based on intensity and gravity of an issue "Businesses are vulnerable to conflicts and any potential role in a conflict situation can have a price in terms of money and time"

29. Peace-friendly and conflict-inducing businesses Businesses that may be contributing to conflict have close connections with influential groups (such as local landlords). On the other hand, businesses that are more peace-friendly maintain a closer connection with communities on their own Community development on part of businesses that can reduce conflicts, is very rare in Pakistan. In terms of peace-building, the biggest contribution that business can make is prevent further conflicts

30. Conflict sensitive business practices Land lords and feudal groups do not allow community empowerment or development since they view it as a threat to their own interests Due to the lack of safety standards in many factories, fires erupting in KHI have caused many lives. Businesses have failed to ensure worker safety in many other industries a few milk producers have been selling expired milk in the rural areas of Punjab and Sindh

31. Community perspectives on business "It can of real help if businesses are taken on board for development programs. But that would also depend on who will be the real beneficiaries of businesses' contribution While smaller businesses contribute in the form of faith-based charity, large businesses, operating from their head offices located in cities, evade taxes CSR is a largely abused fund in Pakistan

32. Business expansion "Having no business expansion is not an option "Business expansion can reduce conflict (it will create opportunities) if it is proper and businesses fulfill their social responsibilities "If there is investment, there will be a trickle- down effect that will benefit communities too"

33. Community-business partnerships for peace "Communities can engage with businesses depending on what kinds of measures the latter take with regard to community development Its a win-win situation. It helps businesses to grow by having enabling environment and with close coordination communities can make businesses better understand the gaps in the social welfare and roots of the conflicts. With that knowledge businesses can run customized CSR programs"

34. Policy implications and recommendations A more powerful model for businesses is to create and enhance livelihoods for communities. This could be done by creating employment opportunities for constituents. Smaller business from the area could also become part of the supply- chain. This will prevent community alienation and is likely to make reward-sharing more equitable Peace-process in conflict-stricken areas should be accelerated. Business can help in post-conflict peace-building by investing locally and offering more employment opportunities to the local population There is a need for having regulations on implementation of clearly defined CSR activities by enterprises

35. Businesses can contribute to peace-building measures by mediating and promoting dialogue between conflicting parties. As organizations with manpower from all sections of society, they can help create an atmosphere of mutual respect, trust, and hope In areas where conflict is known to be driven by lack of education and poverty, businesses can contribute a great deal by promoting education and empowering underprivileged groups Regulatory and financial institutions will have to step-up their efforts to implement government regulations on responsible business practices and monitor compliance to these laws.

36. CSR initiatives by businesses, along with development work by NGOs, help expose government inefficiencies in many areas and set lessons for government to learn. Government can thus use these programs as prototypes for its own interventions and projects that have a broader theme to cater and are more focused to address community issues Businesses can also help in conflict-prevention by ensuring that their CSR activities are unbiased and non- partisan There can be provision in the law that sets a certain percentage of profits to be invested for the community's welfare. This percentage can vary with the scale and local supply-chain footprint of each business operating in any area. This can ensure better sharing of profits generated by local resources

37. Areas for future research Reforms in the regulatory structure for Corporate Social Responsibility Political influences hampering community- business partnerships for peace Conflict and peace: the role of international markets

38. Thank you safwan@sdpi.org