Business & Peace

Peace is a powerful concept. However, the notion of peace and its value in the world economy is not well understood.

Although there are economic studies on the cost of war, there is little study on the economic benefits of peace. This is easily demonstrated by attempting to find research that identifies the industries that thrive in peace and the relationship between these industries, their market size, their costs and improved peacefulness.

One of the key findings of the Global Peace Index, the first study ever to rank the nations of the world by their peacefulness and to identify the key drivers of peace, was that there is a strong relationship between peace, business and national wealth. This provides a platform for further groundbreaking research.

Business and peace go hand in hand. The great majority of business needs peace to prosper, and peace is strengthened through entrepreneurship and business development. George Russell, Chairman Emeritus of Russell Investment Group

A starting point in understanding the economic benefits of peace would be to define the 'Peace Industry'. The 'Peace Industry' simply comprises those industry segments and companies that thrive in peace and whose markets and cost structures are adversely affected by violence or war. Initial research indicates that there is a strong relationship between a nation's ranking in peacefulness and the size of its retail sector, stock market and tourism industry, and changes in peacefulness can be used to calculate changes in market sizes.

At the beginning of the 21st century peace has become pivotal to the survival of society as we know it. The major challenges facing humanity today are global – climate change, lack of fresh water, ever-decreasing biodiversity and over-population. It is hard to over-state the devastating effects that these problems will have on business unless global actions are taken that have the agreement of most nations. No nations or individuals will be untouched.

Global challenges call for global solutions and these solutions will require cooperation on a global scale unprecedented in human history. Peace is the essential prerequisite because without peace we will be unable to achieve the levels of cooperation, inclusiveness and social equity necessary to solve these challenges, let alone empower the international institutions needed to address them. Historically the competition between nation states has served their citizens well but at the beginning of the new millennium the worst of our combativeness is now rendered counter-productive by globalization and a planet straining through over-utilization.

War is not inevitable nor a natural state of the human condition. Contrary to popular belief the number of wars fought worldwide has decreased and the number of negotiated settlements has increased. This is in part due to the fact that wars are becoming more difficult to win and society is becoming increasingly aware of the global negative consequences of conflict. The private sector is one of the most affected parties.

Businesses can play a decisive role in creating global peace. However, today there is no clear understanding of the impacts of peace on their markets, their costs and their profits.

Without a clear understanding of why it's in their shareholders' best interests to help create peace it is hard for business to act in a decisive manner.

It seems intuitive that peace creates more economic benefits to a society than violence or war. It is also evident that in most circumstances businesses wish to invest in areas where there is minimal violence.

Only through the study and the understanding of peace can we achieve peace. Yet in the academic world the study of peace has not reached far beyond the borders of 'Peace and Conflict' studies. Peace is not a subject of study that is considered essential in Economics, History, Literature, Political Sciences or International Relations. One discipline that would substantially benefit from the study of peace is Business and Economics.

The fields of Business and Economics look at the pragmatic and sustainable approaches to increasing the mercantile flow of an economy, yet there is a lack of research into the factors that also affect the way peace impacts an economy. By defining the industries that comprise The 'Peace Industry' it is possible to place a value on the size of GDP that is positively affected by peace, in the same way that we measure the size of the Defense Industry. By defining the Defense Industry, many of the impacts the industry has had on the economy have become known. Similarly, by understanding the positive impacts of peace on an economy, business, government leaders and civil society will be able to better steer society to create wealth and social harmony.

There is no doubt that investment and business benefit from more peaceful and less violent environments. Sound and transparent business practices, coupled with careful consideration of the social consequences of our businesses, can contribute to growing peace. Sir Mark Moody-Stuart, Chairman, Anglo American plc & Chairman, Foundation for the UN Global Compact

There are many industries that prosper in peace and are adversely affected by escalating levels of violence. Some of these industries are: insurance, retail, financial services, tourism and commercial aviation. These examples are illustrative of the potential size of The 'Peace Industry' and many more industries could be labelled as members of the 'Peace Industry'.

When industries realize that creating global peace is in their shareholders' best interest, they will become a powerful force for positive change. The Institute for Economics and Peace is creating an alliance of academics, business people and other interested parties to develop an economic understanding of what can be termed The 'Peace Industry' and the economic impact of peace on business.

The aim is to engender the development of economic models that demonstrate the increase in the size of the selected industries markets, their reductions in costs and increase in profit that will arise with improvements in peace.

The outcome of such studies will impact the public agenda by demonstrating the clear relationship that exists between economics, business and peace.

Once conclusions about the economic benefits of peace are drawn, it may be possible to transform the world through business-led initiatives, thereby helping to achieve peace and creating the environment that will make future sustainability possible.