Some options to empirically measure the contribution of companies to peace is their annual donations to peace activist programs and charities. Many public companies donate to foundations or grants and this information is readily available to the public through their financials and their websites. When a company does choose to donate some of its profits to an organization that promotes peace, such as habitat for humanity, they directly contribute to peace by donating to the cause but also gain brand awareness in the consumer's eyes. This may in turn cause more consumers to choose their product/service because of its societal impacts. This positive impact on their operations generates a cycle where more donations can be given to a peace promoting organization and again increase the number of consumers the company transacts with.
This is a fantastic idea and study that has been conducted. I can not commend you all enough for putting this together. However, I am interested in a couple answers to various thoughts and potential snags (that I am under the impression have been considered but, not discussed yet).
A large part of the unease and lack of peace would be located in more impoverished areas, however, these impoverished areas generally have a larger portion of smaller and less profitable companies. How can you get these companies involved in more ethical behavior and particularly behavior that promotes peace?
Leading more into my concerns, it has been known that the government in these areas can be corrupt and also can be in charge of some of the leading companies (potentially entire industries) in that area. If these corrupt governments (or companies) thrive in an environment that lacks ethics and peace, how can one overcome this and achieve the solutions proposed by Business Fights Poverty? Particularly (thinking about it from a more economic perspective) if external companies doing business with these unethical companies have a monetary incentive to cheat on being ethical and be the ones to conduct business with these companies and governments for their own benefit without 'directly' doing the wrong?
Not that I see these as detrimental or inevitable, I am simply curious on the thoughts from others to see if these problems are indeed relevant and if so, what are potential solutions?
I agree, however, this then leads into the more challenging question on how one would get a company to do this? A couple simple solutions would be mandate it (which most do not like and can easily be argued on why this could cause mass inefficiencies) or incentive it. My take away from some of the studies that are highlighted in this discussion is that there is already an incentive in terms of reputation, cost savings, productivity and so much more. Given most companies positions with a decision this simple they would all act as outlined from this discussion. However, it clearly is not. There are many factors that stand in the way. The ones I see most pressing are getting companies to see the benefits and agree that they are indeed there and then to act on them (resistance to change plays a part). The second one would be the large incentive for companies to revert to other ways of conducting business that would benefit them in the short run yet damage many others (accountability for third parties).
Kabir Bhullar said:
When it comes to business. One has to see the position they are in. Large business are in a position of power. If they say something people will hear it and it they do something people will react. With this, they are in the perfect position to make a difference. Specially in business there is alot of connection with people. This makes sense for businesses to affect and make a change in poverty around the world.
I'd like to share some opinions about the third question. I would say it is better to certify companies against some standard rather than rank them regarding to contributions to peace.
Ranking is a good thing but sometimes it raises unnecessary competition and distorts the purpose of the behavior. If we rank companies, it is not doubt that company will try to win the best place in raking when making decisions. While putting a lot of efforts on this, they will also consider to earn back what they give from some other sources. Gradually, company will only focused what they are ranked and what they can earn form it rather than the purpose behind the ranking, which is encourage contributions to peace.
And in my opinion, there is no difference between being made public and being used to inform internal management decisions. Because the final result of internal use is making it public when companies advertise themselves.
I like how you bring up about the viewpoint about how business actually decrease cost to increase profit or they are truly honest about being supportive of world peace. We cannot really say that all business are purely honest but I can say that we cannot truly judge about their intention in the first place. I believe that both thing can happen simultaneously, that a business can be a good thing for the society and be beneficial to their own profits. However, I also can see few businesses in real life that might use the word of supporting peace that turns out to be more of a selfish intention. Yet, I think that as long as the business has the real effort to help the world peace and fight poverty, we can be neutral and support them.
Vijay Kamath said:
I am looking at the second question in the discussion, “What are some of the issues involved in measuring the contribution of businesses to peace?” One issue that arises is that many businesses have different views on peace. A business in the oil industry may view peace differently than a business in the clothing industry. Both businesses may think that they are contributing to peace, but their view on peace may not resonate with the public.
If a business wants to be environmentally friendly, there are many standards and examples that they can employ. However, the first question in the discussion also brings up another issue. Without having some kind of empirical measurement or benchmark that businesses can look at to view their contributions to peace, it is hard to know where they can start and what exactly a business should do.
Another point to consider is if a business is actually trying to contribute to peace. For example, if a business that produces plastic water bottles wants to be environmentally friendly, it may reduce the plastic needed to make the water bottle. On the other hand, by reducing the plastic needed to make water bottles, the business saves money by using less plastic per water bottle. The question then becomes, did the business have the intention to reduce costs in order to increase profits or was it to be environmentally friendly? This question will also come up when a business tries to contribute to peace. Do businesses actually want to contribute to peace or is their motivation to find a way to increase profits?
Regarding the first question, I believe there are many ways companies can contribute to peace. The most basic way is to just following the rules. By abiding to the laws and regulations, companies do not violate the public and peace will be made between the companies and the regulators. The second way is to apply some values which align with peace to the companies strategic objectives. This way, the main objective would still be likely to be profits, but the companies contribute some of its profits to organizations which promote peace. As an example, some companies provide discounts to military members, and also donate their profits to the military to promote global peace. Lastly, the most I can think of would be organizations whose main objective is to promote peach, such as the United States Institute of Peace.
Regarding the third questions, the current trends with companies can easily answer whether or not contribution to peace be made public or exclusive internally. Many companies took great corporate social responsibilities today. For example, Starbucks with their fair trade coffee beans, and Patagonia with their sweatshop-free labor practices. Companies are likely to promote their contributions to society as it would raise their image and attract more consumers. That is fair as the increased customers will be an important factor for other companies to also promote justice. Regarding the role they should play, I mentioned in my previous post that this can be achieved in three ways: by simply obeying the laws, support peace, and set the corporate target into mainly promoting peace.
Regarding to the second question, I couldn't agree more with Vijay Karmath and his idea which peace means differently towards different companies. Usually, a small firm wouldn't care much about developing its effort into maintaining the peace because of its limit resource. Nevertheless, a company will start to pay attentions in making this world a better place once it grows into a certain size. Generally it has two reasons to contribute to peace, one, company needs to build a good publicity; two, companies are looking for governmental supports, and certainly their contribution to the society will somehow win the trust of government officials because government is looking for the balance between the conflict and peace instead of eliminating all conflict-related projects. Overall, the final goal for a company is to generate more revenues that are less than what they spend, therefore, they might target at a different peaceful goal that is not directly related to its own benefits. For example, a company from diamond mining industry wouldn't stop to exploit diamond mines even though the general public is seeking for the stableness of the conflict area. Blood Diamond still exists today because people will never stop fighting for money. However, these big companies might put a lot of efforts in solving the poverty and hunger in these conflict areas, in which case their contribution to the peace is different from other companies.
I agree with you, Vijay. Many businesses have different views on peace. Therefore, it's hard to set up a standard to measure the contribution of businesses to peace. Furthermore, even if a standard had been established, it's hard to quantify the contribution of businesses to peace. For example, the company A donates $10000 to help poor people in the conflict zone. The company B Hired 200 employees in the conflict zone and paid each of them $1000/month. Are their contributions equal? If the contributions are not equal, then which one is greater? Those questions are difficult to answer because it is hard to quantify the contribution of businesses to peace.
Vijay Kamath said:
I am looking at the second question in the discussion, “What are some of the issues involved in measuring the contribution of businesses to peace?” One issue that arises is that many businesses have different views on peace. A business in the oil industry may view peace differently than a business in the clothing industry. Both businesses may think that they are contributing to peace, but their view on peace may not resonate with the public.
If a business wants to be environmentally friendly, there are many standards and examples that they can employ. However, the first question in the discussion also brings up another issue. Without having some kind of empirical measurement or benchmark that businesses can look at to view their contributions to peace, it is hard to know where they can start and what exactly a business should do.
Another point to consider is if a business is actually trying to contribute to peace. For example, if a business that produces plastic water bottles wants to be environmentally friendly, it may reduce the plastic needed to make the water bottle. On the other hand, by reducing the plastic needed to make water bottles, the business saves money by using less plastic per water bottle. The question then becomes, did the business have the intention to reduce costs in order to increase profits or was it to be environmentally friendly? This question will also come up when a business tries to contribute to peace. Do businesses actually want to contribute to peace or is their motivation to find a way to increase profits?
Speaking of the first question about options of measuring, people usually measure the contribution that a company devotes to the peace by how much money it donates, yet I assume such idea as a terrible misleading. However, I believe that putting the exact amount of money, writing down how it helps and how much people a company has helped on its website would be one way to measure the contribution of companies to peace. From my point of view, the measurement of the peace contribution should actually depend on the aspects such as the size of the company, the efficiency of its contribution, and the quality of its contribution. Let’s begin with some simple calculations. Which one donates more money, a company that donates one million dollars to fight poverty when it has an annual revenue of 10 billion dollars or a company that donates the same amount of money while it only has annual revenue of five hundred thousand dollars? It is true that more money could help more people, yet we should also be grateful to people who dedicates his/her life to contributing to the society. Meanwhile, the efficiency and quality of contribution to peace are important as well since these two factors will decide whether or not a company could use a limit resource to contribute to the peace.
I think both Victor and Alec made a valid point that by investing in poorer countries the firms are actually bringing peace to the countries. For the countries as a whole, these firms helps to improve their infrastructures and help to economically develop the countries. Individually, more citizens in these countries are employed and they can finally afford to provide for their families. GDP, spending and living standard would increase and these effects foster a positive cycle together with the macro economy. However, the only concern I may have is whether these firms are developing the countries or just exploiting favorable governmental policies as well as the cheap infrastructures and labors. If this is the case, despite some of the positive changes the companies may bring to the less developed countries, its is still very unethical. I think sometimes the firms should exercise equally and stop exploiting the venerable people in the poorer countries. One of the examples is simply paying the workers according to the national standard of that country. I think only when big companies are able to do this then they are helping in promoting peace in poorer regions.
Just checking in. Hello to all!
Welcome to the live segment of this discussion. This is the third and final discussion in our Business and Peace Challenge. You can find the previous ones here (on the why business might contribute to peace) and here (on practical examples and lessons). This week we turn our attention to how the contribution of business actions on peace can be measured. We're joined by a great panel.
Let me start by asking them to introduce themselves.
This is Tim Fort (again) from Indiana University
Hello to all!
And may I say, Phyllis is an awesome contributor to this field! Great to dialogue with you!
Let's kick off with question 1:
Q1: What are some of the options for empirically measuring the contribution of companies to peace?
I noticed some of the contributors before we began indicating that the definition of peace is an issue since different companies may think of peace differently. I am sure we will get into that, but I do think that knowing what it is we wish to measure is important. For example, if we are looking at how a business contributed to a peace settlement between conflicting parties, that raises one set of issues. If we are looking at how businesses works in conflict-sensitive (but not conflict itself) that may raise other issues. And if we are looking at more incremental culture-building issues, then there is a yet third set of issues.
To bootstrap answering this question, I must really point us to Economicsandpeace.org, the organization that for the past 10 years has measured the economics of peace from many metrics: http://economicsandpeace.org/
Then turning to the business sector's unique contribution, we know its exponentially impactful because the one area that brings the most peace according to the Indexes of Economic Freedom maintained by the Fraser Institute and the Heritage Foundation is jobs, jobs jobs.
We see when more people are employed in conditions of economic freedom (rule of law, property rights, access to capital and markets), the literacy in the community increases, health care, cleaner water, longevity, and education for girls are take dramatic leaps up along with peace and violence reduces
I agree with Phyllis that a first step in measuring companies' impact will be job creation. Clear correlations between poverty and violence for a number of reasons. Of course, we don't want the jobs created by colonialism or other oppressive mechanisms, but providing economic development, especially outside of extractive work, is a big first step. That is not, by the way, to say that extractives are bad, but if an economy is differentiated, one adds in an additional peace building factor