The CMO Survey - Highlights and Insights Report - Spring 2024
Peaceful economies 1
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
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.
20. 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 "
21. 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”
22. 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”
23. • 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"
24. 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"
25. 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”
26. • “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”
27. 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”
28. 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”
29. 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"
30. 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”
31. 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”
32. 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”
33. 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"
34. Community-business partnerships for
peace
• "Communities can engage with businesses
depending on what kinds of measures the latter
take with regard to community development“
• “It’s 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"
35. 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
36. • 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.
37. • 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
38. 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
