Business and human rights in fragile states: 2 dilemmas and 2 opportunities

Implementation of global standards on human rights is hard in fragile states as they are not tailored to the specific complex contexts. Another dilemma is that companies would rather refrain from ‘playing politics’ as human rights are often perceived by host governments. However an opportunity is the increased synergy between NGO’s and business to work together on this right where it is needed most: in the areas of operation. And above all, new young local companies in fragile states, confronted with old practices, use these standards as a vehicle to make a difference. Business for peace as a new business model?


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Governments and NGOs increasingly focus on business, stepping up their investments in fragile environments, such as in the Middle East and in Africa. In these risky environments international companies are expected to respect a number of principles and norms, as to not have a negative impact on human rights. The Hague Conference on ‘Business and Human Security’ on 2 September 2014, organised by The Hague Institute for Global Justice and SPARK went a step further. It looked at business’ contribution to peace-building. Since this is not a topic that usually attracts many participants from the business sector, the organisers presented a good number of speakers and moderators with a business background, which provided interesting insights.


There are plenty of dilemmas, but also opportunities around this ‘Business for Peace’ concept, based on the following questions:



  • What are the main hurdles to turning these principles into action, especially in fragile and conflict affected environments?

  • What works for companies, both international and local?


 


Dilemma 1: making standards context specific in fragile states


The work of the UN Global Compact was introduced by Melissa Powell, who as head of strategy and partnerships has played a major role in getting 12.000 corporate and other stakeholders from over 145 countries come on board. Former prime minister of the Netherlands, Ruud Lubbers, lauded her efforts as he played a role at the inception of the initiative, in an effort to have business, NGO’s and governments work together better and complement each other. Local chapters played an important role in contextualising the principles. This is where the first dilemma was touched upon: this proved to be a challenge in conflict-affected environments, as international companies tend to suspend their operations or leave all together during crisis. Iraq was mentioned as an example. However the working group ‘Development of SMEs’ (see opportunity 2) demonstrated that many local companies continue operating and wish to operationalise these standards, so the UN Global Compact could build on these networks of SMEs, even in fragile and conflict affected environments.


Dilemma 2: human rights are political but businesses are no political players


One of the elements that businesses know, but do not like about working in fragile environments, is that everything seems political. Whatever choice an investor makes, to hire personnel from a certain ethnic or religious group, to expand the market or operations to a new area, is being viewed by the host country as political.


However, businesses want to be perceived as impartial, as Nick Allan of Control Risks rightly stressed. Impartial or perhaps in line with what host governments want? They provide investors with a license to operate. One of the main incentives of business when engaging in fragile states, is to protect their license to operate, as loosing it would obviously be bad for business. However, acting on human rights – not even through advocacy but just compliance – often implies changing the status quo, of which the host governments in fragile states might not be in favour, to put it mildly. In that sense, business, even if they would want to promote social change, would rather not to rock the boat. This can as such exacerbate existing power structures which in fragile states tend to be unfavourable for large swaths of society. In order to mitigate this effect, business serves the ‘bottom of the pyramid’, including the youth bulge as they are called in the Middle East and Africa, as well as women through Corporate Social Responsibility projects. Small and medium sized (SME) investors have the same dilemma at another level, as a recent study has shown. The veterans among them are often relatively well versed with their environments as they have gone through the motions. They learned how to ‘play politics’ behind the scenes. In these cases, no single principle or standard can guide on how to do that best, it is the practice that is guiding.


Opportunity 1: rapprochement of businesses and NGO’s


In challenging environments NGO’s and businesses increasingly need one another to operate effectively. Director of Spark Yannick du Pont stressed the uniqueness of discussing business and human rights in an open dialogue manner with all different stakeholders around the table. Only 5 years ago NGO’s and businesses rarely engaged with one another.


It should be granted that governments played a key role in bringing these sectors together. By lowering ODA budgets for NGO’s having to look for alternative (private) funds and making aid available for private sector as implementing partner, new alliances have been forged, such as between Heineken and SPARK local sourcing with sorghum farmers in Burundi. This innovative way of promoting local entrepreneurship was facilitated by the Netherlands Ministry of Foreign Affairs. These kinds of alliances could help address the first challenge: how to make standards context-specific in fragile states. And this is only one of the potential synergies between NGO’s and business, where the real gains are in the field: how to make standards work for companies who operate in fragile environments.


Opportunity 2: new businesses use it to make a difference


The most enlightening session was on development of small and medium sized enterprises (SME), moderated by Steven Evers of Triple Jump, responsible for implementation of that part of the Dutch Good Growth Fund.


While discussing obstacles for their entrepreneurship, businessmen and women from Rwanda, Palestine, Bangladesh and Nigeria explained how the system works; as a young or female led company, it is difficult to build up a viable business. One of the ‘old’ practices, corruption and bribery, is an important business barrier; different in each context but very alive to their daily operations. Raniah Ghneem of Anoud Educational Games mentioned how her company refrains from engaging in tenders for business, since the costs of bribing are too high to cope with. Others stressed the politics of doing business: how the so-called ‘gatekeepers’, at or through government, make sure that certain companies win the tender. One way is through manipulating the procurement procedures, geared towards those companies ‘whose turn it is to eat’ (paraphrasing from John Githongo’s book: It’s our turn to eat). This is common practice not only at government level, but also with international organisations and companies, who tend to have limited knowledge of local power dynamics.


However Selima Ahmad of the Bangladesh Women Chamber of Commerce and Industry and winner of the 2014 Oslo Business for Peace Award gave a clear example of how these practices can be countered: by not giving in, and to push this point in a collective manner, by returning to the civil servants office with six more business women, not giving in to the demand for a bribe. Jeroo Billimoria of Child and Youth Finance shared a piece of advice for all international organisations and companies operating in fragile environments: make a policy of investing in young professionals who keep to the norms. That is an important function of the UN Global Compact and other standards and principles: when you are new in business, these can be used as a vehicle to make a difference vis-à-vis other companies: business for peace as a new business model, to whichSPARK and its partners will continue providing the right kind of backing.


 


This blog was published on the website of Spark on 3 September 2014

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