Seminar on “The Role of the private sector in supporting the New Deal” Apr 09

Sthlm Policy Group · Comments: 1
In conjunction with the 2014 Stockholm Forum on Security and Development ‘Freedom from Violence’, organized by Stockholm International Peace Research Institute (SIPRI) on 27 March, Stockholm Policy Group (SPG) led a seminar on “The Role of the private sector in supporting the New Deal”. The seminar raised the issue about that the increasing expectations of the private sector to partake and contribute to the management of global challenges. We asked the questions: Is this a realistic role for the private sector? If so, in what capacity? 
SPG invited the International Council of Swedish Industry to share its perspective on the role of the private sector in contributing to peace- and statebuilding in the most fragile states in the world. In particular, we were interested in hearing about the role that multinational corporations could contribute to economic growth to promote peace and security in the most fragile states in the world.

The event was part of the 2014 Stockholm Forum on Security and Development ‘Freedom from Violence’. At the event, representatives participated from development, foreign affairs, trade, defense and finance ministries from European and g7+ countries; the European Commission and United Nations; civil society and private sector actors; and research institutes, and contributed to the discussions. 

The Role of the private sector in supporting the New Deal
There are two common opposing views on the role of international companies in countries that have been affected by violent conflict and political turmoil. The first view is that international companies in these contexts represent resource-grabbing foreigners who are happy to leave the host country destitute. While there are plenty of individual examples supporting this view, there are also many examples of the opposite. The second commonly held view is that investments and engagement of international companies in these contexts is a ‘silver bullet’ that will automatically lead to development and prosperity in host countries. There is a clear link between responsible investments and engagement of international companies and the potential for economic development of host countries, but this effect is not automatic and there are many other factors involved. In the discussion about the potential of international companies in supporting the New Deal, it is important to thoroughly understand the drivers of international private sector investments and engagement in complex environments, as well as the circumstances under which such engagement is constructive.

The seminar aimed to explore under what circumstances international companies are ready and committed to invest and operate in a complex environment, and in particular how these companies identify drivers of long-term financial success in these environments. What business models lend themselves to be sufficiently adaptive and context-sensitive to complex socio-political dynamics enabling the integrated management of technical and social performance?

The seminar emphasized the opportunities for local governments, communities and local companies, to benefit from international investments and the operations of international companies. Investments often hold the potential for direct effects such as employment opportunities and improved livelihoods, as well as indirect effects through stimulating and energizing local markets, providing business opportunities for local entrepreneurs, and sometimes strengthening local infrastructure. At the same time, it should be acknowledged that there are clear limits to what can be expected from international companies in terms of social programs beyond their core business. Where is the limit for what can be expected of international companies? How can expectations of benefits for local communities and/or national development plans be calibrated to what can realistically be achieved?

It is increasingly recognized that companies, along their value chains, can and should seek opportunities to address social challenges and support local development through their business operations – to create shared value. This has both reputational and operational aspects. Social performance is also increasingly interesting to stakeholders closer to home; i.e. investors, consumers and employees. The links between technical and social performance become very real to operational management when problems arise; an import permit denied or a protest by neighbours blocking roads. Creating shared value gives national and local stakeholders a real stake and interest in the success of a company’s operations and brings social benefits in society at large.

Investing in fragile states and seeking ways to be a positive force for development in such environments requires a significant leadership investment to sensitise staff to risk factors in the operational environment, mitigation strategies and the company identity and values. How can a company, through its operations, help solve social problems and create value in local communities while at the same time maximising its growth and productivity potential?

The seminar aimed at facilitating the start of a dialogue on how we can link international companies’ business operations in complex environments with the socio-political needs and challenges facing the g7+ countries and better match the expectations of host governments and local communities.

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