When a major company invests in a fragile or conflict-affected region, the instinct of many observers is to see it as self-evidently good: jobs are created, infrastructure follows, and communities gain a stake in stability.[1] It is a reassuring story. But is it true?
Research suggests we should be cautious.[2] Business operations do not automatically generate peace-positive outcomes. Local conflicts always involve a power dynamic, and the introduction of external finance can all too easily further entrench existing power structures that may be an underlying factor to conflict. In some cases, companies arriving in fragile states import new pressures such as competition over land and resources, influxes of outside workers or revenues captured by elite groups. These can deepen tension. The question for responsible investors then, is not simply whether their investee companies have clean hands in conflict settings, but whether they are making deliberate choices to contribute to building social and economic stability.
Knowing the ground you stand on
The starting point is conflict-sensitive business practice. This involves an understanding of the specific conflict dynamics of the communities in which a company operates and a commitment to ensure that this understanding shapes business decisions. Too often businesses have tried to ensure that they are neutral in a conflict setting and that they do no harm. But in conflict-sensitive regions, businesses will rarely be neutral in their impact. It is likely that their operations will have both positive and negative impacts on conflict dynamics and if the negative is significant and unavoidable then a company must be prepared to walk away even when a project might be financially attractive.
On the positive side of the equation, companies can effect change in numerous ways. We briefly discuss here the role of empowerment, transparency and business alliances in a conflict environment.
Empowering those who are marginalised
Companies that make the greatest contribution to stability tend to be those that share economic power rather than concentrate it. Economic marginalisation is reduced when hiring across ethnic or communal lines, establishing local procurement, and supporting small enterprises. International Alert highlights many instances where business development is combined with empowerment and the building of alliances across conflict divides, with documented examples from Nepal, Bosnia, Burundi and other diverse places. The research noted that these outcomes required well-targeted interventions and third-party support and did not occur automatically.[3]
The transparency imperative
Secrecy around contracts, land agreements and revenues is one of the most reliable accelerants of conflict. Therefore, companies that openly report what they pay to governments and engage meaningfully with transparency frameworks, reduce the suspicion that fuels unrest. International companies are often alert to their responsibilities to counter corruption. The UK Bribery Act and US Foreign Corrupt Practices Act extends company responsibility to operations anywhere in the world. International companies should refuse to do business with agents, joint venture partners or primary suppliers unless they also subscribe to verifiable anti-corruption standards. Being transparent engenders trust and sets an example of good practice.
Working with wider stakeholders to build peace
Beyond their own operations, companies have an opportunity (some would argue, a responsibility) to contribute to the wider ecosystem of peacebuilding. In conflict-sensitive environments this can take many forms. At the most visible level, business leaders carry a voice that governments and civil society sometimes cannot. More quietly, companies can commission or co-fund sector-wide conflict-impact analyses in partnership with specialist research institutes. They can direct philanthropic resources towards education, particularly for girls, and institutions that promote and support empowerment. They might provide sustained support to local civil society organisations that have the community trust and local knowledge that no outside actor can substitute.
The investor's role
For ethical investors, addressing conflict head-on is crucial. At Epworth, when we asked our clients what aspects of Environmental, Social and Governance matter most to them, we found that peace and conflict was at the top of the agenda for many. Companies that take peacebuilding seriously will manage long-term operational risk more effectively. However, we expect companies to be motivated by more than risk-adjusted returns. One mistake would be to assume that your company’s positive mission would naturally contribute to stability. But it is quite feasible to provide finance, offer employment opportunities and make profits, while simultaneously entrenching conflict; indeed, warlords, militias and some belligerent governments do just that. In our dialogue with investee companies we want to learn how they are researching and understanding the contexts in which they have an impact and how they are making decisions to contribute to a more secure future for all.
[1] FriEnt “Business and peace: It takes two to tango” https://peacenexus.org/wp-content/uploads/2024/05/Business-and-Peace-Nov-2020.pdf
International Alert “Local Business, Local Peace: The Peacebuilding Potential of the Domestic Private Sector, 2006” (see page 1), https://www.international-alert.org/app/uploads/2021/09/Local-Business-Local-Peace-XSum-EN-2006.pdf
[2] Joseph, J., et al. (2025), Business, Conflict, and Peace: A Systematic Literature Review and Conceptual Framework. J. Manage. Stud., 62: 1779-1810. https://doi-org.uoelibrary.idm.oclc.org/10.1111/joms.13139
Meyer, M. et al. (2020), It takes two to tango, FriEnt & CDA Collaborative Learning, https://peacenexus.org/wp-content/uploads/2024/05/Business-and-Peace-Nov-2020.pdf
[3] International Alert “Local Business, Local Peace: The Peacebuilding Potential of the Domestic Private Sector, 2006”
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