Sunday, 6 April 2014

Regulating business for peace

Failure by business to implement socially responsible practices also represents a failure of public policy.

Where business falls short, blame is swift but such failures are ultimately regulatory failures, the failure of public policy to reach in to business and open it to the influence of public values, as Parker argued in her excellent Open Corporation (2002).

The pace of business engagement on social and infrastructural development bottlenecks in Africa is welcome. Given business impatience with public sector planning and delivery, and firms' long-term risk exposures and opportunity costs if development imperatives are not met, this enhanced engagement is also somewhat inevitable. Often business is ahead of policymaking in assessing and seeking development gains that align with business interests.

Yet the state still matters in Africa, perhaps more than ever, and excitement about the role of business in development can obscure this.

It is short-sighted to believe that business sustainability efforts can be sustained without relying, ultimately, on the powers of the regulatory state.

A previous post made this case, pointing to recent research by Rory Sullivan and others (here). A related post noted that implicit in the (much-hyped) concept of public-private partnership is a capable state, one not only fit for partnering but able ultimately to steer the development agenda from a basis of duty.

We talk of business 'responsibility' for human rights and other issues, but for governments these are questions of 'duty', a concept of a somewhat higher order.

In this sense, PPPs are not truly equal partnerships. The state must lead, and must bear the ultimate responsibility. Business should not want it any other way, however impatient it might be.

The fact that many of these practices are not subject to mandatory regulation can obscure this fact. Despite all the rhetoric on partnerships and public-private convergence on development issues, governments and business have both legitimacy-features and obligations of a fundamentally different level and kind. Again, despite welcoming the new pragmatism and engagement on public-private cooperation for development, business leaders would not, in the long term, want it any other way, and nor would a democratic society.

I write this because this week I speak on a panel on the social and governmental factors of long-term investment in Africa. The audience wishes to focus on what business can or should do more or less of to find local or national development synergies. All good and well, and the topic of next week's high-level meeting on global partnerships for effective development cooperation (see recent posts). Yet such conversations sometimes tend to gloss over the state, which is inconsistent with the idea of 'long term' thinking. A previous post made this point.

So business-led initiatives on a range of issues from peace to sustainable development are to be welcomed. Many of their issues lie beyond what is likely, possible or desirable for public regulation, or are necessary because regulatory impact is weak. But the state's role cannot be side-stepped.

Consider the various 'business for peace' initiatives. The UN Global Compact launched its one recently, and this week (for example) an international conference takes place in Belgium on 'Business for Peace'. Business-led schemes are, as said, both welcome and somewhat inevitable (if not always satisfying or universally subscribed too). Yet the proliferation of guidelines now available to business on conflict-sensitive practices should not be seen as a substitute for a regulatory or pre-regulatory strategy on the part of policymaking. Public policy can (and often should) promote self-regulation by business on such issues, but this is conditional or supervised, the regulation of self-regulation.

Recently, Anette Hoffmann made the point that whether business is able to adopt and implement conflict-sensitive business practices will depend on much more than the business alone. There is low risk that business 'captures' this regulatory space, retarding more effective public regulation; there is perhaps a greater risk that policymakers see these issues as running themselves, without the need to 'reach in' and stimulate, support, or require these behaviours of private sector actors.

For this reason, my forthcoming book is called 'Regulating Business for Peace' (CUP). The private sector shares with policymaking many of the latter's interests in peace and prosperity. But the process must be influenced, steered, shaped (ie, 'regulated'), even if sometimes only lightly, by the public sector. Africa's development is too hard, too important, and too strongly underpinned by profound duty to be considered a true partnership.

All who are partners are not equal: some partners hold a higher duty than others, and the private sector will be the first to agree that the public sector must lead.


For a previous post distinguishing 'duty' and 'responsibility' see here.

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