RBI PBPP Business Research Dec 2012 (F)

EUROPEAN
UNION

Business as a Bridge
to Peacebuilding:
Voices from Pakistan

Findings of the Business Mapping Study for the
Plural Business Partnerships for Peace project

December 2012
Ambreen Waheed

Project is funded by
EUROPEAN UNION

Business as a Bridge to Peace building:

2012 International Alert and Responsible Business Initiative
All rights vested as defined in the project document.

Citation: Ambreen Waheed Business as a Bridge to Peaceauilding: Voices from Pakistan
Findings of the Business Mapping Study for the Plural Business Partnerships for Peace
project funded by European Union implemented by International Alert,
December 2013, Responsible Business Initiative, Lahore-Pakistan

Study commissioned by International Alert, UK
as part of the Plural Business Partnership for Peace project
funded by the European Union,
conducted by Responsible Business Initiative, Pakistan

Responsible Business Initiative PBPP Business Mapping Study

2

Contents

Acknowledgements...........................................................................................................................4
Summary ..........................................................................................................................................6
Overview...........................................................................................................................................7
National Context.............................................................................................................................8
PBPP and Business Mapping.........................................................................................................11
Methodology ................................................................................................................................13
Analysis...........................................................................................................................................20
Stakeholder Perspective................................................................................................................23
Business Feedback ........................................................................................................................35
Sectoral Review.............................................................................................................................48
Recommendations ........................................................................................................................63
Towards an Integrated Response .................................................................................................65
Annex ...............................................................................................................................................70
Annex............................................................................................................................................72
_Toc348478438

Acknowledgements
This business mapping study is perhaps among the first of its kind in Pakistan. Designed as a
snapshot of the context, challenges and opportunities that surround the relationship between a
dynamic enterprise sector and an equally dynamic notion of peace, this mapping
study aims to situate potential peace-building initiatives in a realistic, current paradigm for
stakeholders. In conducting the questionnaire-based survey with thirty companies, interviews
with over seventy key informants and focus groups with more than fifty participants, the RBI task
team faced three distinct challenges.
Firstly, the relatively tight timeline imposed by the project work-plan, which impacted the
studys approach, its design and the extent and level of triangulation possible during the analysis.
Secondly, the subject being new to conventional day-to-day management for decision-makers in
business, government, citizen sector organizations, as well as in the media, significant time and
effort had to be allocated to introducing the topic of research, and building a level of conceptual
understanding among respondents so that information could be collected in a meaningful
manner and issues of confidentiality addressed. Thirdly, the diversity and sectoral span of the
respondents made the task of gleaning cross-applicable findings and converting them into
practical recommendations relatively complex.
None of these challenges could have been addressed by RBI on its own, had it not been for the
confidence given by the chair and members of the project advisory committee, the openness
demonstrated by colleagues at each of the respondent organizations, the financial resources
provided by the European Union, the trust reposed in the exercise by Alert as the sponsoring
partner, the enthusiasm displayed by the study task-team, and perhaps most important, the
personal encouragement received from several of the nation' most eminent thought leaders who
gave of their time and wisdom.
This report would be incomplete without gratefully recognizing all this support. The RBI team, led
by Ambreen Waheed, and Dr. Faiz Shah, and comprising Hussain Tariq, Amina Anwar, Marriyum
Khan and Talal Sadiq express our sincere thanks.
It is a pleasure to share all this accumulated insight in the confidence that it will inform the Plural
Business Partnerships for Peace project in creating significant impact through its aims.

Responsible Business Initiative

Lahore-Pakistan, December 2012

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Business and the United Nations might seem to have different purposes...
But many of our objectives are the same: Building and supporting strong
economies and communities, providing opportunities for people to pursue a
livelihood, and ensuring that everyone can live in dignity.
Business cannot survive or thrive if societies fail or if people feel that their
security is threatened.

Ban Ki-moon
Secretary-General of the United Nations

Summary
This mapping study aims to ascertain the readiness of business in engaging with peace-building
initiatives by gauging their understanding of the various kinds of conflict and the issues that
emerge for companies and their key stakeholders as a result. It further aims to review sectoral
perspectives that drive specific responses, and perhaps most importantly, the attitudes and
awareness that would drive effective utilization of peace-building knowledge, tools and
processes necessary to identify and respond to challenges borne of conflict.
Given the short time prescribed and the scope and geographical span of the study, the research
team designed a trans-sectional methodology that sought to cover as effectively as possible,
various regions, sectors and stakeholders. A three-tiered regime e-survey, focus groups and key
informant interviews collected data for an analytical framework comprising four grids.
Thirty companies were surveyed, based on regional and sectoral spread. Seventy-six key
informants, reflecting stakeholder range and seniority were interviewed, and five province-level
focus groups were conducted. Triangulation was achieved through in-depth participant-level
interaction within six identified businesses. The narrative of findings ensures that voices of the
respondents are conveyed instead of the researchers interpretation. A twelve-point action
agenda and the proposed vehicle to implement it emerged from this multi-layered discussion.
The study confirms the obvious reasons of conflict, such as absence of the rule of law, inequity,
intolerance, poverty, and a lack of education, political will, coordination and collaboration.
The key finding is the unanimity among regions, sectors as well as stakeholders, for integrating
conflict mitigation and response mechanisms within management decision-making. This
translates into a demand for information, guidelines and tools that allow companies to detect,
identify, analyze and manage risk and conflict situations. This emerges from a realization that:
Companies continue to struggle, often on their own, with conflict borne of insecurity and
instability of the business environment, even though the nature of threats may vary. There is a
well-articulated desire for long-term conflict mitigation and response strategies that can be
implemented in collaborative ways, yet be flexible to specific locations and business contexts.
Companies need to adopt proactive and innovative approaches in reaching out to key
stakeholders that move beyond traditional appeasement to productive engagement and
shared success. This includes formal and informal alliances with peers, opinion leaders,
security service providers, professional groups, government, and citizen sector organizations.
Companies recognize that demonstrating social responsibility through community investments
or ongoing engagement with stakeholders, establishes a viable foundation to build social
capital inside and outside the company that can help pre-empt as well as react to threats or
conflict situations. Peace-building skills for staff and outreach to stakeholders are required.
Companies understand the drivers of conflict, and frequently react appropriately to threats.
However, the high cost of miscalculation and the absence of effective skills and preparation is
felt strongly when companies act on their own. A consistent strategy and a common resource-
pool to draw on in times of need must be built and managed as a risk management device.
Ideas coalesce around a 9-point strategy that can be developed and rolled out through an
independent, professionally run resource-group seeded and guided by key stakeholders. The
proposal calls for this resource-group to be specialized in conflict mitigation and peace-building,
charged with developing and offering a portfolio of action research, trainings, advice and
network linkages reflecting local experience as well as international insights to companies,
chambers, business associations, labour, media, academia, government and the citizen sector.

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Overview
Pakistan these days, finds itself often in the headlines because of its unfortunate intersection
with what has come to be known as the "war on terror". The national media constantly refers to
over 35,000 lives lost in continuing violence across communities as well as the battlefront, and
the political failure of its national institutions to respond effectively to the situation.
The Pakistan Economic Survey 2010-11
estimates that this loss of peace has
cost the country almost 67.9 billion US
dollars since 2001. Add to this the cost
ordinary people continue to pay through
loss of livelihoods, shrinking business
opportunities, and sharply affected
economic growth from the spill-over of
expanding conflict, and the cost looms
even larger, permeating quality of life in
every aspect.
The business sector suffers most clearly at two levels. Firstly, the cost of doing business in an
insecure economic environment rises in response to increasing threat perception among clients,
devaluing currency, higher investment needs for process-level security, and greater workforce
instability to name a few key factors causing loss of competitiveness.
Secondly, the general collapse of order
magnifies threats to management controls
that would otherwise operate normally
within business environments. From
supply chains to business processes, to
distribution channels, companies
whatever size or sector they represent
become more vulnerable to internal
conflict that impacts quality, work
processes, decision-making, and outcomes.
The situation was not always like this. In fact, right through the first years of the new millennium,
Pakistan remained among the regions four fastest growing economies alongside China, India and
Vietnam. Its average annual growth rate approached 6% between 2000 and 2007, with budget
deficits limited to around 1.5% of GDP. The Pakistan Economic Survey 2006-7 indicated robust
growth in agriculture, manufacturing and services over half-a-decade of strong, stable, resilient
and broad-based economic growth. The contribution of Services climbed to 60% of the
reported economic growth during this period, with domestic demand and investment (53%)
exceeding consumption (50%). Food prices remained among the lowest in the region, with job
growth and an expanding middle-class making Pakistan a high mean, low variance economy.
This economic stability began coming under stress as violence in neighbouring Afghanistan spilled
over more and more, first into Pakistan's tribal borderlands and then into major cities like
Peshawar, Quetta and Karachi. Today, Pakistan's economic indicators show a downturn,

matched in equal measure by deteriorating quality of life. The most important effect has been
on livelihoods, particularly in the informal and SME sectors that sustain a significant proportion of
jobs and buttress economic resilience.
Exacerbating this trend has been a succession of cataclysmic natural disasters. The 2005 Kashmir
Earthquake was followed by massive flooding of the Indus Basin during 2010 and 2011
successively. These disasters have cost Pakistan 22.4 billion US dollars, according to estimates
from the World Bank, Asian Development Bank and the US State Department. Damage from the
earthquake was estimated at 5.2 billion US
dollars. The 2010 floods left behind 10.8
billion US dollars in losses followed by
another 6.4 billion US dollars in 2011.
Disasters have on occasion tested the
resilience of Pakistans densely packed
population, but nothing has sapped the
country's economic potential as much as
the snowballing impact of violent conflict
that manifests itself in prolonged military
operations, just as it does in systematic but
random terror attacks in heavily populated
urban centres. Pakistan Human Rights Commission reports 2.7 million people internally
displaced by war, and another 7 million by the floods. For the first time since 1979, internally
displaced citizens outnumber foreign refugees from the Afghan war. This influx has strained the
already fraught civic infrastructure as well as inter-communal relations. Peshawar, Karachi,
Quetta and cities that have received refugees, also report violence, particularly between
culturally or religiously diverse communities.
More ominously, the
combined effect of violent
conflict and natural
disasters breeds a feeling
of helplessness in the
average citizen who relates
the ineffective government
response to various crises
to an absence of the rule
of law. This, as well as
aspect has implications on
the business environment.

National Context
Major Conflicts and Their Risks
Pakistan has increasingly become vulnerable to conflicts that are essentially external to the
business sector itself, but risk economic well-being because of their impact on the countrys
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business environment. A number of writings identify two fundamental and persistent factors
that contribute to disrupting peace in Pakistans diverse regions, which have plagued the country
since independence in 1947, and often appear entwined with its fight against militancy.
The first such conflict emerges from Pakistans increased demand for water, while having to
negotiate common water sources with India. Ideally, given their respective needs, it would be
pragmatic for both countries to cooperate in developing and sharing the benefits of Himalayan
water resources, but given their crisis-prone relationship and unresolved border dispute, this
remains elusive, and adds enormous socio-economic cost to both countries.
The second one stems from what is generally seen as marginalization of less developed regions
and provinces by an over-centralized federal framework, particularly in Balochistan where an
insurgency continues to enfeeble democratic institutions and fuel anti-national sentiment. This
has direct economic implications apart from the human and material cost of battling insurgents
or providing security to vulnerable populations, because the significant mineral wealth of the
region cannot be utilized for development. In fact, analysts identify the competition to control
mineral wealth as a key contributor to the risk of conflict in Balochistan.
Laid over these two primary underlying conflicts are other intractable ones, which are frequently
conflated to further confound any attempt for peace-building. One is the worsening relationship
between religious extremists and a traditionally secular state apparatus, stemming from the
interpretation of Islamization efforts that Pakistan has experimented with throughout its history
and its relationship with western countries. This attritional relationship is easily exacerbated by
concurrent geopolitical influences, such as US drone attacks, and continues to feed militancy,
inter-ethnic disharmony and helplessness of state institutions in the face of such complex
threats.
Another one is the unresolved settlement of millions of Afghan refugees who came in the wake
of the Russian invasion, but have not gone back because of the continued instability in their
country. A number of domestic conflicts have been attributed by researchers to issues either
faced by refugees or created by refugees, having led to social unrest. These range from property
and resource disputes, employment and participation in economic activities to criminal activities
and militancy.
A third pervasive threat of conflict surrounds environmental security. Research points to
macroeconomic instability, low social sector allocations, policy neglect, low allocations for
natural resource conservation and low use of environment-friendly technologies as conflict risks.
Similarly, food insecurity, linked closely as it is to poverty and disease lowers quality of life and
increases risk to conflict by creating vulnerabilities that have economic, political as well as
strategic ramifications.
Effect of National Conflicts on Business and Business Role

It is difficult to see how the business sector can remain immune from the multifarious and
complex factors fuelling the risk of conflict in Pakistan. Because a large part of the discontent
that is evident flows from unequal and inefficient distribution of critical resources from water
to energy to supplies caused primarily by poor governance and an entrenched patronage
system, there are bound to be interests at play that work to skew level playing field for genuine
entrepreneurs. Unfair allocation and exploitation of resources is woven closely with corruption

and tax evasion, which scare away businesses that cannot operate in such environments. It
affects investments in business development, hampers day-to-day operations, and affects human
rights and labour standards. It further compounds a vicious cycle that contributes directly to civil
strife, poor human development, and in a number of cases has instigated communities to revolt.
Available research indicates a focus on youth and their role as catalysts in nation-building. There
is discussion on how best to engage young people through giving them awareness and tools that
enable them to create dynamic pressures upon national development. This emphasis is not new,
but previous large-scale initiatives have had limited business sector involvement. A number of
small-scale programs that are referred to may not have had sufficient long-term impact. Given
that policy interventions for youth have been limited in both vision and substance, there appears
room for further discussion on practical steps that work towards a greater understanding of the
complex issues that young people face in a traditional society, surrounded by modern
technology, but beset with limitations emerging from isolation, lack of representation,
deteriorating educational standards, insecure livelihoods, and diminished options for self-
actualization. Based on such discussions, there appears to be a strong case for businesses to
invest in human development, focusing mainly on occupational trainings that create economic
opportunity for youth, but also emphasizing the importance of peace-building for realizing their
potential.
Over the last decade, particularly, there is rising acknowledgement within civil society,
government and community organizations of the important role that the business sector plays as
an agent of socio-economic and political change. The expanding relevance of initiatives clubbed
under corporate social responsibility (CSR) indicates the readiness of businesses to participate in
activities that are not strictly in their core domain, but strengthen a companys licence to
operate. These activities that were traditionally confined to welfare contributions or
sponsorships continue to evolve into more sustainable social investments driven by fundamental
shifts in business values that now emphasize social responsibility as integral to profit-making.
More and more such examples are now visible.
Research also points to companies showing a readiness to play a conflict-mitigation role at the
community level. There is appreciation of the how stable private sector promotes peace building
and conflict management simply by establishing common stakes between a business and its host
community. In a conflict affected region, private businesses may often be able to promote peace
at two levels. At macro-level, this could include increasing economic activity, investing in
security, supporting better governance, and by developing infrastructure (ibid). At the company
level this would mean promoting equal and efficient opportunities to members of the local
community, creating a culture of respect for law and positive values, and actively trying to
mitigate any sense of disparity between locals and expatriates by adopting effective negotiating
techniques and reducing the likelihood of conflict by cementing business relationships and long-
term social investments.
The experience of businesses that adhere to sustainable strategic practices, contribute to induce
social welfare, and help improve socio-economic activity is increasingly positive, and documented
evidence supports the view that these approaches reduce risk from conflict. While such reports
showcase larger businesses, there is reason to believe that small and medium enterprises (SMEs)
have an even greater stake in insuring their business and their host communities against conflict.

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There is also evidence that business that promote ethnic, social and cultural diversity,
demonstrate concern for the natural environment, implement practices that ensure equality and
stability within the workforce, operate with accountability and invest in strategic lobbying, tend
to suffer less from conflict and may even have a role in mitigating it. The UN Global Compact
promotes the notion that businesses should be promoting business along with peace. A key role
for business articulated in such discussions is the role of business in aiding economic recovery in
a post-conflict area by creating jobs and livelihoods and through social investment strategies.
There is not enough research to show how SMEs are affected by conflict in their area, or how
they are able to help participate in peace-building. However, it is safe to assume that small
owners of SMEs are more likely to be local and thus more embedded in the community fabric.
And even though they may not have the resources or the knowledge to match the strategic
interventions in conflict management that larger companies are able to afford, their stake is
much larger, and their mobility much less. As such, any investment in strengthening the SME
owner, through improving knowledge of sustainable practices, incentives for business growth, as
well as preparation for appreciating and using effective conflict management techniques would
be a serious consideration in enhancing resilience against conflict.
Security Measures and Socio-Economic Vulnerability

The socio-economic impact of increased social unrest, political instability, and intra-state conflicts
towards weakening the socio-economic conditions in a country is well documented. However,
not much data are available on how preventive or screening measures taken in response to
security threats relate to socio-economic vulnerability. However, it is a fair assumption that the
inhibitory effect of security measures
would limit mobility or free access to
suppliers as well as markets, complicate
operating processes or transportation, and
enhance checks or compliance
requirements for even the most basic trade
activity. All together increased security
screening should on the one hand increase
the direct cost of operations and market
processes, while on the other, it should add
installation and compliance costs that
amount to a significant add-on to the
overall cost of a business transaction.
What is clear from a review of the available resources is that the security measures designed to
counter the effects of violence may actually have increased socio-economic vulnerability. This
turn tends to hamper human development and economic opportunities, and impact livelihoods,
leading to more potential for conflict and thus escalating risk for the average business.

PBPP and Business Mapping

As indicated in the previous section, a considerable amount of research is available on Pakistans
experience with various forms of conflict. However, this most often covers assessments of the

societal or economic impact of the recent conflict. Not as freely available, but well-documented
still, are the factors that determine the cost to society of an absence of peace, whose impact
upon businesses in turn leads to more localized measures of economic wellbeing.
There is also a dearth of material on the reverse aspect of this relationship, which means that
little is known about how businesses can, or have been able to positively or adversely affect the
state of peace in Pakistans communities. This paucity of reliable information has led to a relative
lack of appreciation about the role that businesses and private investment have played, or can
play in mitigating or even exacerbating conflict risk. However, it is clear that understanding
the nature of the relationship between business activity and peace holds the key to strategies
that may set Pakistans fragmented communities back on the path to recovery and accelerate
their drive towards future prosperity.
The Plural Business Partnerships for
Peace (PBPP) project has among its aims,
developing such understanding, and
through it finding tangible opportunities
for businesses to act as non-state
catalysts for peace-building. PBPP
recognizes the comparative advantage
that business enjoys in confronting
conflict risks through injecting
responsible business practices within a
society and by actively pursuing peace-
building partnerships.
PBPPs project concept is centred on stakeholder engagement, identification of practical steps
and their implementation through dialogue, training and advocacy. It begins with building an
understanding of the relationship between conflict and business, particularly in a Pakistan-
specific context. Using process-led stakeholder engagement, this study attempts to find out:
What are ways in which conflict or an absence of peace impacts businesses in Pakistan?
Is there interest among the business community to engage in peace building? and
What specific capacities and enabling environments exist for this?
How conflict, or the absence of peace, impacts businesses.
Mapping Study
In an ideal world, a responsible business would, by its conduct, help reduce conflict. Even in less
than ideal circumstances, the business sector is uniquely placed to promote social cohesion
because of its direct transactional relationships with individuals that comprise a community.
These relationships between businesses and their suppliers, customers, regulators are often
crucial to maintaining harmony and shared perceptions of well-being among communities.
The PBPP project is founded on the assumption that equitable distribution of economic
opportunity reduces vulnerability to conflict stemming from what may be perceived as unjust
distribution of wealth. Hence the need to understand the various economic drivers of conflict

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and contributing contextual factors such as governance and economic policy, business practices
and challenges to them, as well as key stakeholder perceptions.
This business mapping study is the
first step towards understanding
the context of business and peace-
building in Pakistan, amid the
various local efforts to integrate
conflict-sensitive practices within
business operations. Based on its
findings, the PBPP project will
proceed to define specific
interventions within its established
framework for action.
This study is premised on a definition of responsible business which recognizes that viable
enterprises drive development and that companies exist to make a profit. A responsible
business, however, clearly decides how it makes profit, not how much. Such a business not only
acts responsibly, but can demonstrate that decisions in six key operational areas are taken with
due regard to recognized standards of ethical business and that its practices cause no harm to
society or the environment. A responsible business is mindful of the resources it takes from its
surroundings human, financial, material, and intellectual and has mechanisms to give back or
share the reward in equitable and sustainable ways. The Responsible Business Framework1,
which is described in the ensuing section, describes variables and stages.
The terms of reference for this business mapping study define its objective as being, To map the
interest, capacities, and enabling environment of the business community to engage in peace
building. More specifically the project will aim to 1) Distil the reasons for conflicts and non-
existence of peace in different geographical areas; 2) Collate the effect of national and regional
conflicts on Business; 3) Understand how business can mitigate conflicts and generate economic
activity in collaboration with other stakeholders; 4) Document business conflict resolution
processes and Best Practices in dealing with various kinds of conflicts; and 5) Identify to what
extent security measures can result in higher levels of socio-economic and/or physical
vulnerability.

Methodology
The broad nature of the study requires both quantitative and qualitative methods to collect and
analyze data pertaining to business perceptions and practices that span internal and external
stakeholders, as well as the wider community. Because of the specific constraints imposed by the
larger project design, the methodology chosen for this mapping study relies heavily on key
informant interviews, augmented by a detailed questionnaire. This method allows for rich
contextual texture emerging from the personal experience of key respondents, which because of
its variety of perspectives serves to triangulate findings, and even cross-validate presentations


from archival references, feedback from reviewers as well as personal observations. The
methodology thus, allows for multiple levels of analysis, with the added strategic benefit of
conveying to business leaders the importance of their peace-building role, and securing their
buy-in during and beyond the project period.
During the roll-out phase of the

Sector Services Industry Agriculture Transport study, an additional layer of
Region triangulation was added
Serena through focus groups and
Balochistan
Hotels individual interviews with the
Trade Development Authority of
Kohat Pakistan (TDAP), the SME
Khyber-PK
Cement
Development Authority
(SMEDA), Employers
Fauji
Punjab
Fertilizer Federation of Pakistan (EFP),

Global Compact Local network

Sindh Indus (GCPLN), Chambers of
Motors Commerce, representatives of
Trades Associations.
The business mapping terms of reference called for choosing a broad-based sample of at least
four multi-national or large national companies (MNCs/LNCs) representing each of Pakistans
four provinces spanning manufacturing, agriculture, transportation and services, which have
clients or communities that are directly affected by the state of peace surrounding their business.
The four companies finally included in this report have been chosen for their wide impact on the
national economy, and also because of the cost that disruptions in their operations add to the
daily lives of citizens. Each of these also represents a unique variety of conflict that may respond
to the interventions anticipated from PBPP project.
Some important sectors spanning Mining, Chemical , Food and Beverage, IT, Telecom, Oil & Gas,
,Banking & Finance and Textile ware are also included in the study, primarily because of their
wide impact on the national economy and secondarily, because of the cost that is added on to
the daily lives of citizens because of disruptions on their operations. Twenty-four companies from
Eight sectors were included in this review, and analyzed collectively. Four additional sectors
were added to the four initially planned for Sector discussions.
A number of companies who participated in meetings, responded to questionnaires and
attended focus groups, declined to be named or quoted by name, particularly multinationals. The
six companies chosen for inclusion in the mapping narrative include:
Pakistan International Airlines: the flag-carrier with a near monopoly in-country
Kohat Cement: working in close vicinity of the military operations now are underway
Serena Hotels: having properties in conflict zones in Gilgit and Baluchistan
Fauji Fertilizer: largest chemical fertilizer plant in the country
Indus Motors: makers of Toyota and Daihatsu vehicles in Karachi
Packages Limited: producer of paper & pulp and packager of consumer goods

14

Process
As designed, the mapping study proceeded through the following steps:
1. Review of documents and resources available on business and conflict
2. Informal meetings with the key stakeholders in government, business and academia
3. Review with the project advisory committee, representing business and industry
4. Design of data instruments and pre-testing
5. Data collection through e-questionnaires, scheduled interviews and follow-up
6. Data analysis and feedback / clarifications from respondents
7. Draft report preparation and submission
The online survey, interviews, and focus groups sought from senior decision-makers or
operational managers, the following information:
1. Company Profile, comprising basic company information including but not limited to firms
history, finances, human resources, size, sector, networks, associations and geographical
location.
2. Company Guidance, including values, policies, business practices and mechanisms geared
towards understanding and responding to difficulties arising from conflict situations
3. Specific Interventions, in identifying and resolving conflict-related issues as well as
suggested solutions and known best practices to tackle them with examples.
Limitations
The principal constraint, which has influenced the design and presentation of this study, was the
relative shortage of time allocated. Especially when considering two critical externalities.
The first one was the continuing political uncertainty in Pakistan, which often disrupts normal
schedules, including those of the studys respondents. Being close to year-end, a number of
senior managers had very busy schedules, and their teams charged with completing online
questionnaires were occupied in close-of-the year deadlines such as annual reports. It was
election time for the chambers of commerce, and amid the prevailing uncertainty, disruptions in
power, gas and mobile communication services, ongoing armed violence in at least three of the
four interview locations, and travel schedules of a number of decision-makers, appointments
were often delayed, or re-scheduled. A number of them had to be completed in parts or over the
telephone.
As such, more than customary time spent on planning for and completing this activity. An
associated constraint within this one was the unusual delay in getting back responses to the
online questionnaire. In a number of instances, the questionnaire was filled in by respondents in
stages spanning a number of days. In a number of cases, an RBI team member remained online,
addressing to queries from the respondent in real time right through to the end of the
questionnaire. This was a time-intensive task which the study design had not factored in.
The second externality was the relatively uneven understanding of the topic itself among the
decision-makers interviewed. This was anticipated, but not to the degree experience by the RBI.
The PBPP concept note was circulated ahead of the interview, but even then much time during

interview slots were used to build awareness about the topic and to fill in the context of the
mapping exercise. A subsidiary discussion that almost invariably took up time was about the role
of International Alert and how the findings of the study would be utilized. Coming in the wake of
the fake polio-immunization campaign in which an international NGO was implicated, this was a
time when INGOs were facing a severe lack of credibility. The interview process therefore,
expanded much beyond schedule. The decision to add focus groups was in response to the need
to proceed rapidly through the data collection phase, and also to overcome the variable quality
of inputs provide in the online questionnaire.
Another limitation that emerged during the data collection process relates to reporting and
disclosure of company data, in cases where the respondent considered it outside the public
domain. As such, while companies were open to sharing company profiles and information that
can otherwise be accessed from public sources, their representatives often had to double-check
with superiors in sharing data about geographical location of plant sites or personnel, as well as
details of negotiations with community representatives or on one occasion, political rivals. In
some cases, permission to use information collected during the data collection process was
withdrawn afterwards.
Conflicts involving legal

proceedings were mentioned
but because of restrictions on
public comment on cases under
hearing in courts of law, the
interviewer was asked not to
report on them. Communal
sensitivities, especially relevant
to the chosen companies,
because each of them has
business interests in active
conflict zones, also led to
requests for not naming
specific parties to the conflict.
In the end, while the interviewers were able to find out useful information from the companies, it
can only be represented in this report at a general level. This particular constraint can be
overcome, however, during discussions with the program advisory committee, and can therefore
still be used to inform the next phase of PBPP.
A final constraint emerged from RBI not having the required budget for hosting focus groups and
for repeat travel in cases where interviews had to be re-scheduled at the last moment. This was
a constraint that could not have been planned for, and therefore, despite its inhibitory effect on
the momentum of the study, RBI re-organized its resources to address it.
In the final analysis, none of these constraints pose a critical treat to the outcome of the mapping
study. It can be argued that a research such as this might have benefitted from a larger sample
representing a wider range of companies, and perhaps more opportunities for direct observation
and engagement with a greater range of stakeholders. However, given the limitations described

16

above, the methodology adopted, seems defensible from the perspective of accuracy, relevance,
reliability and validity.
Inquiry Framework
Poverty and Power are considered key drivers for a disruption to peace. The archival review for
this study and discussions with key stakeholders consistently indicate that the prevailing
insecurity and major conflicts, including what is manifested as terrorist attacks have their roots in
perceptions of injustice, class difference, lack of power, access to resources, unemployment,
and illiteracy or lack of skills that drives the under-privileged deeper into poverty.
It is also clear to respondents that
poor governance, manifest
corruption, political instability,
inconsistent trade policies and major
shortcomings in the application of
justice reflects a apathetic ruling
apparatus that lacks the political will
to resolve underlying issues that
cause most of the conflict situations
Pakistan faces today. Add to that the
general tendency towards impatience
and intolerance that hinders
negotiations and collaborations for
conflict mitigation, and the situation
is further aggravated.
This study uses the above analysis as a point of reference for determining the role business can
play in addressing the root causes of conflict, by taking active steps towards eliminating poverty,
improving productivity, enabling a culture of tolerance, and developing strategies and
collaborations including those for lobbying for creating political will.

The objectives of the mapping study excerpted from the terms of reference, seek to:
1. Distil the reasons for conflicts and non-existence of peace in different geographical
areas.
2. Understand how business can mitigate conflicts and generate economic activity in
collaboration with other stakeholders.
3. Document business conflict resolution processes and Best Practices in dealing with
various kinds of conflicts.
4. Identify to what extent security measures can result in higher levels of socio-
economic and/or physical vulnerability.
Based on the above needs of the mapping study, it was found appropriate to array factors being
studied into analytical grids that would allow for structuring inquiry instruments, check for
completeness of data against each such factor, and examine observations within the prescribed
frame of reference. The analytical grids presented below were designed to cover the study
factors in a concise, relational format:
Mapping threats of conflict against the Responsible Business Framework
Responsible Business Threat of conflict Response to threat

Framework Pillars
Internal External Internal External
Management & Governance
Values & Policies
Compliance & Disclosure
Consumer & Product Focus
Stakeholder Involvement
Financial Viability
Mapping impact of conflict on Key Stakeholders, and their response
Stakeholder Conflict Impact Response
Government
Media
Security Company
Law & Justice

18

Mapping impact of conflict on Identified Sectors, and their response
Sectors Conflict Impact Response
Textile
Chemical
Telecom
Mining & Material
Food & Beverages
Banking & Finance
Oil & Gas Hydrocarbons
Information & Technology
Mapping impact of conflict on Key Stakeholders, and their response
Institutions Conflict Impact Response
FPCCI
PBC
OICCI
Chambers
SMEDA

Analysis
Businesses are typically exposed to two types of conflict
environments, namely, internal and external. Internal conflict is Poverty and Peace
created by forces within, and their control lies inside a companys Somali pirates were
fishermen too perhaps.
management mechanisms such as organizational structure and When there was no fish
workforce relationship. Remedies, such as improving workplace left they become pirates.
Farrokh Captain
conditions and labour practices, and creating an environment of Captain Industries
safety and productivity, depend on the management.
On the other hand, external conflict results from factors that a company may not be able to
control, such as negative public image, market downturns or regulatory policy. What happens
inside a company can often be remedied by its management through effective decision-making
and resource use. However, the external socio-economic environment exerts pressures that a
company may not always be able to effectively resist. Conflict arising from external causes, is
therefore, has a higher risk potential for a company.
Drivers of Conflict
Key socio-economic issues contributing to conflict for business include illiteracy, poverty,
unemployment, social and political unrest, lack of equality and weak administration of justice.
All these have a cumulative effect on the efficiency of the businesses.
In addition, key respondents interviewed for this study have made specific reference to the
following:
Inadequate understanding of the various types of conflicts relevant to business
Lack of appreciation of the importance of diversity and inclusion in the workplace

Conflict of interest that unduly influences professionalism in decisions
Poor capacity to for resource utilization
Rent-seeking 2 strategies that aim to maximise, but not grow company profits
Isolated pockets of well-being created by companies, set apart from host communities
General lack of education leading to poor risk appreciation and resistance to new ideas
Poverty & ignorance compounded by poor productive capacity

Each of the above issues has a direct impact on business because of its potential to create or
perpetuate conflict between a company and its employees, typically representing its host
community. A majority of these issues remain relevant to effective governance and the
prevailing law & order situation, and as such, are outside the realm of corporate management.
Faced with external uncertainty, companies often adopt management strategies that exacerbate
the risk of conflict. These include attempts to gain concessions through uncompetitive behaviour
or corrupt practices. While companies may justify such behaviour ostensibly to counteract risk

2 Conybeare, John A. C. (1982). The Rent-Seeking State & Revenue Diversification, World Politics, 35(1): 25-42.
20

from external threats, what it leads to is often further alienation of key constituents, and
therefore, an increased risk of conflict. This aspect is important in understanding the cause of
external conflict in business environments, and how keeping business practices transparent and
accountable actually mitigates conflict and reduced cost of business.
When businesses choose to ignore their primary responsibility towards fair practices and
encourage disparity of resource distribution, it leads to socio-economic consequences such as
unemployment, hazardous working conditions and improper support infrastructure, triggering
restlessness and negativity amongst immediate stakeholders. Wider prevalence of illiteracy and
lack of poor health facilities, also add to these conflicts. All these factors are of high priority,
affecting and lowering the tolerance level within the community.
Remedial Approach
In situations where companies are faced with an uncertain external environment, they can
mitigate conflict by promoting and practicing behaviours designed to demonstrate equity and
fairness in day-to-day management. Industry-specific codes of conduct, best practice models and
independent assessment or certification programs are often available for companies to build on.
The Responsible Business Framework a framework, which when embedded in a corporate
decision system, helps demonstrate a companys intent, policy and practice towards fair and
ethical business.
Conflict arising from management decisions in companies can often be remedied through four
major actions:
Empowerment and participation in workplace decisions
Equity and fair processes for hiring, staff development, promotions, and HR decisions
Disclosure of company performance preferably in line with international standards
Inclusion of localized priorities and community interest in decision-making
The approach to adopt towards implementing the above remedies is through creating an
atmosphere of reasoning and dialogue, particularly among the younger members of the
companys workforce and preparing them with tools to spearhead exchanges with opinion-
leaders in host communities.
Mechanisms of engagement include participation in, and contribution to, local events and
holiday celebrations primarily, but also through meetings, workshops, seminars or projects
organized around specific topics relevant to the community. It is through this process-led
engagement approach that companies may best participate in finding peaceful and just solutions
to issues and conflicts.
This is also a way to bring awareness and mutual respect among key stakeholders such as youth,
scholars, businessmen, and prominent individuals from different backgrounds. This awareness
and respect requires time and persistence, but remains a crucial ingredient of the peace-building
approach. It is at the root of the so-called three Ps of the development continuum, namely,
peace, progress and prosperity, which drive all efforts for alleviating economic disparity,
exploitation, social injustice, environmental deterioration, rights violation and unequal access to
resources.

Recommended Action
The following actions reflect possible implementation modalities of the inclusion approach
described above. The list is neither exhaustive nor prescriptive, but indicates specific actions
seen by companies and their stakeholders to bear results:
Identify and fill gaps in awareness and knowledge about all stakeholders
Identify and develop, through measurable programs, soft and technical skills
Establish mechanisms to attract youth and provide need-responsive career guidance
Reinforce positive cultural traditions that bring together people with diverse opinions
Encourage entrepreneurship through training, tools, market linkages and role models
Establish platforms for moderated dialogue based on facts and mutual respect
Support and engage local think-tanks to identify and propose solutions to problems
Identify and train enthusiastic and capable local persons to facilitate dialogue
Invest in a strategic program of civic and professional capacity-building for the workforce
Establish merit-based career paths, matched with guidance and counselling
Participate actively in policy advocacy that builds on local needs of business
Prepare to demonstrate compliance with the UNs 10 Principles on Human rights
All the above, taken from business experience, as well as similar initiatives designed for particular
communities and locations, are firmly rooted in the principles of CSR and responsible business.
Perhaps an important message is that simply directing resources into actions such as those listed
above, alone may not be enough. Communities immediately sense commitment and sincerity,
and investment in direct personal contacts at the grassroots, despite its complexities, are
immediately understood by local communities. And even though it is often a complex and
demanding challenge, effective stakeholder engagement will ultimately have a positive influence
on businesses too.
Opportunities that the businesses interviewed have successfully leveraged to enhance
engagement and contribute to conflict mitigation include:
Promotion of, and association with local social and cultural activities
Sponsoring and actively organizing or funding sports events, particularly traditional sports
Benefitting from traditional conflict resolution mechanisms such as the jirga
Building modern management systems around a core of traditional systems

Contributing to, and utilizing available peace curricula and tools developed for Pakistan
Policies that businesses have successfully adopted towards an inclusive approach to conflict
management include:
Clearly worded expectations with respect to roles and responsibilities among workforce
Specific, regularly scheduled activities to learn and demonstrate sportsmanship and tolerance
People friendly language in policies to promote respect, positivity and harmony
22

Challenges
That businesses are driven by profit maximization is clearly understood. However, value-led
companies that recognize their social responsibility also recognize their role as key contributors
to sustainable societal values. They understand that promoting social harmony and peace create
a strategic advantage that comes from market stability and prosperity.
The clarity and vigour with which business are able to implement activities to promote social
harmony and mitigate conflict varies, also because each business environment is distinct and
closely woven into each social context. This creates challenges that a business that is looking to
actively promote peace inevitably faces. The understanding and interest exhibited a companys
management in relation to a particular issue or potential cause of conflict is a key determinant in
the companys ability to surmount such challenges, which arise irrespective of the quantum of
business, budget constraints, or behaviours at play.
Based on feedback from respondents from this study, businesses who choose to invest in peace-
building as well as conflict mitigation initiatives find that they are able to:
Have a higher probability of securing their investment
Pre-empt or devise solution to confrontational situations

Determine accurate financial budgets for such activities in advance
Compensate for absence or weakness of local initiative and leadership
Create mechanisms, such as committees, to monitor the situation as well as projects
Introduce or re-introduce hitherto missing or inadequate dispute resolution experience
Induct outside knowledge through examples or trainings from experienced resource-persons
Facilitate exposure and exchange of views and diverse experience to build tolerance
Counteract existing feudal mindset through promoting local voices and empowerment
Predict political shifts and interlinked issues so as to prepare effective responses
Stakeholder Perspective
Stakeholders such as the community, government,
The major reasons that conflict
investors, media and labour unions, each have an effect disturbs peace are bad governance
on, and are affected by the absence of peace. Data and selective law and order, which
collected from various meetings and surveys can be used aims not to protect the people but to
but to protect Politicians.
to understand the risks faced by these entities and their

responses to mitigate the impact of any plausible risk. Syed Babar Ali
Former Minister for Finance
Government Founder, Packages Limited
The government is a prominent actor, whether it is generating causes of conflict or mitigating

them through policy, regulation, enforcement and redress of g rievance. A governments inability
to deliver on its obligations to maintain peace is reflected through corruption, poor governance
and a lack of long-term planning which can in turn give rise to conflicts in society. This has also
often resulted in large economic losses, increased security risks and an overall rise in conflict and
disharmony.

In addition, an unstable government and inconsistent trade policies can be said to have added to
investor insecurity and have contributed to significant dips in both FDI and local investment. An
improved transparency and accountability mechanism, along with the rehabilitation and
reconstruction of human rights is imperative if conditions are to be improved.
Businesses have often successfully formed pressure groups and effectively lobbied for improved
governance structures, responsive, transparent and accountable institutions, while government
has effectively worked for mechanisms of better service delivery, and ensuring workers rights to
assemble, free speech, and information laws.3
Small & Medium Enterprises and SMEDA

Like in other economies, Pakistan depends significantly on the growth generated by small and
medium enterprises (SMEs). The SME Development Authority (SMEDA) is a government
department established in 1998 to take on the challenge of promoting competitiveness and
profitability among SMEs, by providing resources and opportunities for capacity-building for
quality enhancement and market access. The organization came in response to a deteriorated
entrepreneurial culture which emerged from nationalization during the 1970s and that had
lagged behind in modern standards of product quality and compliance. SMEDA has tried, within
constraints, to provide an enabling environment and business development services to existing
and upcoming SMEs.
SMEDA notes that conflicts mostly arise due gaps in both employers business skills as well as
workers productivity. Small businessmen themselves feel handicapped by a lack of planning,
management and marketing skills, and try to recover from these by imposing stringent work
targets on workers, while trying to keep worker benefits minimal. Workers on the other hand
suffer from a lack of education, under-developed skills, poor work ethic, and low commitment to
quality, trying to push back at the employer for what they perceive are exploitative tendencies
without appreciating that responsibilities have to be mutual. This attritional relationship appears
quite typical of SMEs, and imposes a cost that emerges from to low production, resource
overruns, price fluctuations of raw material, occasional market shutdown, energy shortages and
political, ethnic and religious agitation. Like any business, SMEs too are subject to the overall
challenges to doing business, including crime, random violence and instability as a result of
terrorism, and the largely inadequate government competence for responding to it.
Another factor behind the increasing sense of insecurity among SMEs is the pervasive lack
of education, which by default contributes to an ignorance of basic rights and responsibilities
associated with businesses as well as workers and other stakeholders, particularly the
requirements of the law. SMEs generally are fail to comply with social, environmental and
financial formalities mandated by law, which leads them towards insecurity due to a fear of
regulatory agencies or illegal threats. As such, even a minor conflict or legal issue becomes
aggravated and severely affects business.
SMEDA indicates it contributes to conflict mitigation by raising legal awareness and provides a
one-stop service for legal advice and negotiations, as well as facilitating registration, certification,
licensing, taxation, dealing with local authorities and handling labour and environmental

3 An important way to enable venting frustration and possibly reduce the desire to turn to violence as an outlet.

24

regulations for local SMEs. SMEDAs Third Party Facilitation Centre (TPFC), implemented in
collaboration with a number of Chambers of Commerce, trade associations and regulatory bodies
is presented as a possible model that can be strengthened for peace-building.
In building up the general technical capacity and knowledge of SMEs, there are a number of
programs, including partnerships with the private sector, educational institutions and non-
governmental groups targeting marginalized communities that aim to help SME owners generate
employment and thereby provide income security to workers. There is a particular focus on
women entrepreneurs, particularly in the Aik Hunar Aik Nagar (AHAN) initiative that seeks to
develop localized product clusters linked to business development services, technologies and
financial services, matched with access to markets.
Media
Like in other societies, Pakistans increasingly independent electronic media has the capacity
either to incite conflict or to promote attitudes that endorse peace-building. There are examples
of both tendencies in recent months. However, Pakistans media has often demonstrated a
propensity for sensationalizing information which may have directly contributing to conflict. Not
only has this tendency contributed to local distress, it has been a factor contributing to the
negative perception of Pakistan, often exaggerating the sense of physical and financial insecurity
in the country.
Businesses express their concern over what they perceive as a lack of understanding of economic
issues by media anchors, as well the way such issues are reflected and discussed in mainstream
programs. This adds to the already difficult economic situation in the country and pushes away
the promise of reconciliation, tolerance, communal harmony, which would inform a fair
proportion of conflict mitigation and peace-building actions this report has indicted. Although it
possesses the capacity to generate educated and informative discussions on such issues, provide
a fertile forum for innovative business ideas, and offer a space for mediation between business
stakeholders to resolve common conflicts, the opinion is that the media by and large has failed to
live up to its positive potential.
Under present levels of regulation setting up a TV channel, in relative terms, is not a costly
endeavour. Providing quality original programming, however, often requires far greater
investment. Most channels see political talk shows as the low cost solution for increasing
viewership. The trend has resulted in an unhealthy ratio of news to entertainment channels,
which only serves to magnify negative events in society.
There is near unanimity that Pakistans media continues to promote negative attitudes through
its cynical approach that encourages a culture of intolerance, and is very likely linked to an
increased acceptance of conflict in society as a whole.
The medias behaviour is often seen to be directly at odds with established responsible business
values or ethical codes of conduct creating an overall disruptive force that weakens business
efforts to promote peace, and contributes to destabilize society by perpetuating intolerance. As a
result, by diminishing the international image of Pakistan, it contributes to slowing down the
inflow of foreign investment and tourists.
Businesses clearly need to take a more proactive role in reaching out to the media, which is itself
a business, in ensuring that positive social attitudes are reinforced, and the consequences of an

unfortunate phase in the political and social life of the country. Considering that the media is
itself dependent to a large extent on advertising from the corporate sector, there is a significant
opportunity for companies who understand their social responsibility, to find the means to work
with media companies in steering programs that promote positive values, tolerance and
inclusiveness among audiences. In practical terms, this means moving away from merely paying
for advertising slots, to having a greater say in choice of content that is directed to audiences.
The message can be reinforced by businesses working with citizen-sector organizations,
particularly consumer groups, to provide feedback to media that low quality talk-shows must be
replaced by constructive programming.
Investors
There is a significant trust deficit amongst investors, for reasons that not only have to do with the
security environment, but also with the lack of investor-friendly policies that considerably lower
investment inflow. Efforts to promote the so-called positive image of Pakistan through messages
from the government without clearly demonstrating that the claims being made are reality have
the opposite effect by actually increasing the level of distrust and cynicism. There have been a
number of cases where leaders and trade delegations have convinced foreign investors to
establish businesses in Pakistan, or where coordination of specific marketing or cultural event
with foreign embassies or trade organizations have helped in promoting a positive image of
Pakistan. However, with the business climate remaining uncertain due to the policy gaps and the
security environment, this has not proved lasting.
The first principle of reputational management is establishing systems that demonstrate a match
between what is claimed and what is delivered by a business. Customer trust and loyalty follow,
if reputations are serviced consistently and credibly. Hence, it is essential that business, as well
as other key stakeholders invest first in establishing credibility, and regain the trust of a number
of well-regarded international investors. The vehicle for propagating this would be trade and
cultural shows within and outside Pakistan, manned by well-briefed representatives representing
not only government of business, but also by well-made products and well-documented stories
of success.
More importantly, greater exposure to different products and markets, and through them to
other cultures and value systems for the technical and supervisory staff of Pakistani businesses,
and where possible even workers, would definitely increase understanding and tolerance. Focus
on younger members of staff and where possible, creative entrepreneurs wanting to set up new
businesses of their own, especially in so far neglected, environmentally friendly technologies and
socially responsible products, would help idea generation, create new avenues for raising capital,
and strategically build confidence in Pakistans business environment.
Labour Unions
The unequal distribution of opportunities across social groups helps promote resentment and
disharmony within society. Pakistan is no exception. With the added pressures of ethnic, regional
and religious biases and prejudices in the workplace, economic activity can be hampered through
lower worker productivity and loss of revenue owing to labour strikes.
Merit based hiring, professional or technical skill development, career tracks, promotions and fair
administration of equal opportunity regardless of social, religious and ethnic group still remains a
26

solid strategy for mitigating workplace conflict. Not having well-managed human resource
management systems increases the likelihood of disruptive employee behaviour, which can on
occasion draw external parties into conflict. Direct linkages and trust building measures with
worker representatives, even where labour unions are not established, helps management in
addressing legitimate concerns regarding labour, health and safety and other worker rights
necessary to avoid consistent internal conflicts.4
Incidents like the tragic fire in a textile factory in Karachi continue to underscore the poor
compliance of health and safety regulations in the country. The problem does not lie in
regulations, of which Pakistan has many, but in enforcing them. Companies, particularly small
enterprises in a highly stressed market, often have to find ways of cutting costs to maintain
profitability. Because costs of raw materials, utilities and overheads are often beyond their
control, such businesses often end up choosing to cut costs by ignoring labour practice standards.
The brunt of this behaviour is borne by workers, who may suffer from a curtailment of salaries or
benefits, or face increased hazards in the workplace because safety protocols are ignored.
An important role, therefore, for workers representatives, particularly labour unions, is to
ensure that labour standards are upheld, and causes for conflict minimized as a result. This is
a role that workers organizations, particularly labour unions can assume in a constructive
manner. There persists a feeling of distrust between company managements and worker
representatives, propagated by a history of conflict between what are considered opposing
positions, namely company profits versus workers rights. From the perspective responsible
business values, both are essential, but must be tempered with strict consideration for legal
requirements, as well as human values. There are examples where companies with robust labour
organizations have mitigated conflict by allowing worker representatives to play a positive
mediating role between management and workers.
Host Communities
Of course, the community as a stakeholder comprises an all enveloping category, with members
of all other stakeholder groups being members of the community at large. For this discussion,
therefore, communities immediately around business units will be analysed.
There is no doubt that business activity generates benefit for the economy and its community,
but it does so by drawing its resources from the larger ecosystem. Exploitative behaviour by
companies leaves a long-term footprint on the social, environmental and economic future of
communities. In many cases business often attempt to even the score by giving some portion of
their accumulated revenue to the community through charity and philanthropic projects.
However, the community deserves to be a constant participant in the process rather than simply
a recipient of retroactive compensation.
These host communities face risks of exploitation of resources and degradation of environment
due to the impact of business processes and operations. These risks multiply the chances of
conflict and thus fuel economic losses to businesses and the government, and heavy welfare loss
to society at large.

4 Workers Employers Bilateral Council (WEBCOP) indicates that, forward looking employers and progressive workers continue to
engage in dialogue to increase mutual understanding and encourage cooperation for the prosperity of all working class.

Businesses draw enormous strength from their host communities, in the form of raw materials or
workers, but also in the form of the social license to operate. This is a strong rationale for both
businesses and members of the host community to create mechanisms for ongoing dialogue on
issues of common concern. Such mechanisms most likely have to be created and supported by
businesses, not only because it has the skills, but also because it has the primary interest in
maintain rapport. They must be conducive to dialogue that is constructive and transparent, and
take place around issues such as environmental impact by companies, or work-related
negotiations, with a view to generating mutually beneficial outcomes.
Law and Justice

In the last decade Pakistan has seen a constantly deteriorating law and order situation, with
increased levels of domestic terrorism, public strikes and protests, and ethnic and sectarian riots.
Transporters, traders, labourers and manufacturers have all been involved in strikes in the recent
past in the face of a crippling energy shortage and surging utility prices. The resultant
atmosphere of lawlessness has severely compromised the ability of local businesses to remain
competitive and profitable.
A lot of the conflicts referred to above can be mitigated by improving the efficacy of the justice
system. Criminals, including those involved in terrorist or militant activity, are often released due
to an inability to gather sufficient or appropriate incriminating evidence, inefficiency of the
security agencies, political pressure and a lack of protection for the witnesses from intimidation.
Businesses convey their concern on security issues and apply pressure on the government and
judiciary through chambers and other sector associations. Stronger channels of communication
and linkages with the judiciary and legal authorities would serve to benefit businesses by letting
them contribute their concerns in the shaping of relevant laws and procedures.
Chambers, Business & Trades Associations

Businesses can handle internal conflicts within their organizations, but external factors of conflict
are usually out of their scope and reach to deal with. Constructive collaboration among
businesses can play a vital role in mitigating many conflicts. The significance and magnitude of
security and conflict issues varies with sectors and geographical locations, hence different
chambers and associations are struggling to deal with these issues according to their own
members situation and priorities.
In Punjab the industry is mostly affected by electricity and gas shortage, labour rights violations
and health and safety oversights while businesses in Karachi and Sindh have to deal with
extortion rackets, kidnappings for ransom and other criminal activities as well as businesses
deciding to shift overseas. Khyber-Pakhtunkhwa (KPK) businesses and traders are directly hit by
terrorism and Baluchistan is suffering from ethnic tensions and resource exploitation issues.
Interviews with key respondents indicate that the countrys various chambers of commerce, and
researchers working with them have identified potential for conflict, and factors that instigate
them in ways that hamper the growth of businesses. Chamber representatives have discussed
possible solutions to mitigate the impact of these conflicts and help develop a peaceful
environment. These, however, mostly focused on government policies that would provide relief
and exemptions to businesses so as to counteract the effect of market instability caused by
conflict, poor law and order, as well as the high cost of doing business. A handful of efforts are
28

focused on cooperating with government in tracking crime or providing information to law
enforcement agencies that can help decrease the incidence of crime against business interests.
The most quoted example sis that of the Citizen-Police Liaison Committee in Karachi that has as
its primary sponsor the business community.
There is however, still significant gap between the need for Chambers and Trades Associations to
act as enablers of conflict mitigation or interlocutors in peace-building processes, and their own
capacity to perform this role. To their credit, the business community is very keen to actively
participate in any thoughtful effort towards peace building in the country. They recognize that
the prevailing instability continues to affect business adversely, and it is in their collective interest
to work towards promoting peace, but often, it is from inadequate understanding of the precept
of conflict resolution and a lack of familiarity with tools and processes that they feel inhibited.
This attitude is characteristic of business leaders in Pakistans business representative
organizations, who have a record of initiatives that have helped increased business stability, and
hence wider socio-economic well-being by being proactive and motivated. A number of
examples, ranging from visualizing innovative service-delivery programs and educational or
healthcare institutions, to supporting job creation and technical training in high-growth sectors,
are well-known contribution of Pakistans business associations. Such enthusiasm and clear-
headed leadership as has been evident in such endeavours remains an asset for future business-
led peace-building initiatives in Pakistan.
Federation of Pakistan Chamber of Commerce and Industry (FPCCI)

FPCCI has advocated and voiced the collective opinion, concerns and aspiration of the private
sector and offered helpful advice and solid assistance to the government in its efforts to promote
exports, encourage foreign investment and stimulate economic activity in the country.
Representatives interviewed for this study confirm poor law and order conditions as a critical
issue faced by the business community. FPCCI indicates it has collaborated with institutions such
as the Justice & Development Forum to counter such trends and help identify ways to resolve
conflict. In collaboration with the business community the FPCCI supports the idea of regional or
sectoral businesses developing need-specific strategies for conflict mitigation and peace-building,
which may be implemented independently, but within the larger umbrella of FPCCI and
government supervision in a nationally coherent peace-building strategy.
FPCCI also recognizes that meaningful peace building processes depend on external factors
contributing to the insecurity and conflict in the country, and the impact of Pakistans geopolitical
situation. In the meantime, FPCCIs senior management continues to seek active engagement
with the media to share views on issues faced by the commercial sector and regularly represent
the perspective of their members that demands an improvement in the law and order situation
from the government, and avenues to help address their genuine business concerns.
Overseas Investors Chamber of Commerce & Industry (OICCI)

The OICCIs primary role, that of promoting foreign investments in Pakistan continues to be
under strain. While OICCI expects to expand the role of its present member businesses by 16
percent, building strategies for increased sales, profits and return on investment, representatives
interviewed observed that capital investment plans for the next six months have registered a
further decrease of 15 percent, down from 69 percent last year to 55 now. The causes referred

to, as for other stakeholders remain poor governance, erratic policies, the weak law and order
situation, and political instability. In addition to the overall impact on business of these
challenges affecting the demand side, security procedures that sometimes lead to suspension of
mobile phone networks or constraints on free movement in certain areas add another
unforeseen cost, as does the frequency of public strikes or hartaals, which reduce labour
productivity and deflate employee morale.
OICCI recommends that a focus on building values of tolerance is essential. A peace curriculum
and conflict mitigation tools would be a welcome
inclusion into peace-building strategies under Business Confidence Index (BCI) fell to
consideration. In OICCIs view such curricula would minus-34% from the previous low of
be relevant in primary schools, business schools and minus-25% because of energy shortage,
trainings for Human Resource Development worsening security, and inflation. Capital
programs. investment plans for the next 6 months
fell from 69% to 55%, with no planned
For OICCI members, security remains the most increase in employment levels.
serious issue. Misconceptions surrounding the
extent to which the security situation has Overseas Investors Chamber of Commerce
deteriorated in Pakistan have resulted in foreign and Industry - September 27, 2012
investors, officials and buyers choosing not to travel
to the country. This lack of direct communication has affected the confidence that the OICCI can
generate for investing in Pakistan, while also adding substantially to the travel costs for OICCI
members who have to, almost exclusively, meet with their investors and clients overseas. There
is a need to find ways to attract more foreign businessmen to Pakistan who can then share
positive experience so that international confidence can be reclaimed.
OICCI indicates that it continues to work with foreign embassies to communicate a more holistic
picture of Pakistan and promote its business environment and the available opportunities for
investment, often utilizing internationally recognized financial tools, such as Bloomberg, to
showcase Pakistans promise. They also generate research and position papers that aim to
promote positive elements of Pakistan. Despite these efforts, OICCI choose to avoid publicity
considering it having the potential to be counter-productive choosing instead to strategically
address them with the government at higher levels. OICCI also takes a relatively proactive stance
on the security situation by regularly engaging with a number of private security providers, law
enforcement agencies, as well as with the Citizen-Police Liaison Committee (CPLC).
OICCI indicates that it encourages members to share strategies and guidelines amongst
themselves to prepare for, or even pre-empt security threats. By current on the types and
frequency of incidents in the different areas, the chamber aims to be able to assist with specific
risk prevention and mitigation. CPLC shares with OICCI, data on abductions, car snatching and
other crimes relevant to business. These figures, well-respected for their reliability, also
emphasize the slow government response in tackling such threats. OICCI seeks to lobby where it
can to persuade the government to improve in these areas.
OICCI understands that it must continue to leverage its substantive and unique knowledge on the
risks and opportunities for business engagement in Pakistan and work in collaborative programs
that build capacity for peace-building and conflict mitigation.

30

Karachi Chamber of Commerce and Industry (KCCI)
As the countrys largest, the Karachi Chamber of Commerce & Industry (KCCI) continues to play
its part in developing the economy of Pakistan while Karachi remains the countrys most
important business hub. KCCI indicates it has always been committed to supporting the citys
private companies and addressing their problems in tough times.
KCCI is concerned, like other chambers, about Pakistans deteriorating
The Government will international image and the subsequent reduction in foreign investment.
bear 50% cost of But it has also had to face conflicts unique to Karachi, such as the
CCTV cameras and
security equipment powerful, politically affiliated extortion racket referred to as bhatta mafia,
procured by the which is often responsible for intimidating and extorting local businesses.
traders for
surveillance.
A number of criminal gangs in different communities across the city often
attract uneducated or unemployed youth to their ranks, and then use
Dr Ishrat-ul Ebad them to commit crimes. Being split along ethnic lines, Karachi faces
Governor Sindh tensions especially in the present context. Often sectarian militias are
seen to be involved in vicious cycles of retaliatory attacks.
KCCI indicates it has a progressive approach towards such problems. Its policy is to fully support
and actively collaborate with the media in its efforts to promote a positive international image of
Pakistan. It also believes that Karachis law and order problems can be addressed by
depoliticizing the police, and building processes that work to develop inter-communal respect,
particularly focusing on youth education, conflict awareness, counselling and employment.
There is a consistent desire among KCCIs respondents to make strong media statements in
opposition to violence and militancy. One of the suggestions aims to showcase the plight of
families affected by violence, particularly those who fall victims to criminal activities and terrorist
attacks. KCCI expressed readiness among its members to collaborate on advertisement and
sponsorship decisions to encourage responsible programming that rejects violence.
Apart from working with the media, KCCI also indicates an interest in supporting live workshops
on positivity and tolerance, hand in hand with SME development initiatives. KCCI feels that
empowering people in the lower socio-economic strata allows them to take responsibility for
their own livelihoods, and thus overcome the cycle of poverty and frustration they are caught up
in. Technologies are becoming cheaper, making more and more opportunities in reach of small
enterprises. Chambers like KCCI can be strong allies in promoting initiatives that incubate such
entrepreneurship. Examples from other countries, such as the system of malaria diagnosis5 in
remote areas by transmitting pictures of blood slides to labs in far off labs, are just some of the
ways that such initiatives targeting micro-enterprises can have positive economic and social
effects.
Sarhad Chamber of Commerce and Industry (SCCI)

KPK chamber members find themselves in perhaps the most difficult situation, having to
generate economic activity in a high-risk environment that borders a number of war zones.
Markets and factories have regularly been the target of terrorist attacks. A climate of extreme
uncertainty saps creativity or expansion, as businesses struggle to even meet their day-to-day

5 Yunus Center Asian Institute of Technology, Thailand working with MobileDiagnosis ONLUS Italy has developed a social business
model that reaches out to remote communities.

operating requirements. Many businesses are now shifting to other provinces, which further
exacerbates unemployment, and thus the risk of youth being involved in violence. In some
instances even officials decline to visit the chamber citing security threats. Despite these
enormous setbacks, the chamber conveys a commitment to its members and continues to run
collaborative workshops and seminars, with organizations such as ILO, NPO, BSF, and the Skill
Development Council, on labour rights, productivity, skill development, cottage industries,
taxation, market access and women entrepreneurship.
SCCI has also been active in negotiating with the
government to gain exemptions and waives for its Gas supply to 750 industries in Faisalabad was
members so they can conduct business in more suspended for four days due to the load
management by Sui Northern Gas Pipelines
favourable terms. A recent success has been a Limited (SNGPL).
decrease in income tax and a 50% cut in sales tax for Faisalabad Chamber of Commerce
businesses working in insecure areas.
Lahore Chamber of Commerce and Industry (LCCI)

LCCI is the second largest representative body for businesses in Pakistan. It shares many of the
difficulties and concerns that KCCI and the other regional chambers of commerce in Pakistan
face, particularly with respect to the policy environment for business and the relative insecurity.
LCCI indicates that it has a primary role in efforts to promote peace across the border with India
through trade. As a major city on the border with many cultural and historical ties with India,
Lahore lends itself naturally for this push towards normalizing ties in the sub-continent. External
agencies, such as USAID, recognize LCCIs importance in generating meaningful and sustainable
economic initiatives, and consult its members on a number of policies and assessment studies6.
LCCI collaborates with the Punjab Government in the
Citizens-Police Liaison Committees, even though the Violence and instability has made it
necessary for extractive companies to
feeling is that these committees could be more
take measures to protect their
effective. LCCI also carries out situational analysis on personnel and assets by using their own
emergency response awareness and regularly advises armed guards or by entering into
factory owners on incorporating security measure. arrangements with private security firms
LCCIs Dispute Resolution Centre helps mediate and or with state security forces.
resolve disputes across the commercial hierarchy, from multinational to local businesses.
Challenges to Stakeholders
From the interviews and feedback received, it is clear that all stakeholders are unanimous in their
concern for the safety and security of their business assets. Having to constantly worry about
how to secure staff, plant sites, equipment, warehouses, supply chains and distribution networks
as well as reputation against random acts of lawlessness has a debilitating effect on business
prospects.
This type of situation may not be unusual for businesses operating in countries with conditions of
extreme poverty, inequality or poor rule of law, or where high value commodities such as
minerals exacerbate local conflicts and compound problems for vulnerable communities7.

6 Some examples include the USAID Wage Border Assessment study and the track two diplomacy initiative
7 Acworth, L. (2001), Human Security and Global Governance, Global Governance, 7 (1), 19-23, quoted in Doing Business While
Advancing Peace and Development, 2010, UN Global Compact New York
32

However, for Pakistan this remains a steep price to pay, considering the countrys businesses do
not calibrate their operational costs to adjust for security costs, as perhaps a mining or oil
company might.
In the present circumstances, where the national business landscape is characterised by uneven
policy incentives, poor regulation, insufficient security, shortages of energy and water, and
fraught inter-communal relations, companies cannot operate without finding ways to mitigate
the cost of instability and conflict.
Some companies find ways to lobby government, effectively seeking waivers that further skew
the market and make other companies or regions uncompetitive. This may momentarily relieve
pressure on a small group of businesses, but exacerbate conditions for many more that do not
stand to derive benefit from such policy. Quite apart from being anti-competitive, such
preferential measures fail to go beyond mere re-distribution of resources to privilege-seeking
businesses without really creating wealth.
A key challenge therefore, is for businesses to find ways of resisting the impact of short-term
measures that ultimately inhibit economic growth by actively participating in developing and
implementing long-term measures that achieve two strategic aims. First, companies making such
investments are able to establish a relationship of trust at the grassroots level, being seen as
indispensable partners in community development, not exploiters of resources. Second, by
helping to empower and equip local entrepreneurs to create local businesses, companies allow
for a whole community of SMEs to establish create a stake in social stability and peace. Together,
these two investments, despite their cost and the patience required to see them mature, can
ensure stability and sustainable economic growth.
The Responsible Business Framework

The Responsible Business Framework (RBF) was developed to help companies demonstrate their
social performance. The RBF draws upon, and is compatible with a number of recognized
business mapping and disclosure frameworks, including the UN Global Compact.
It comprises six pillars on which the viability of a company stands, and the removal of even one
affects its claims to social responsibility. Each of these pillars comprises elements that can be
adopted by companies incrementally, in any sequence, and not necessarily at the same time.
This progression towards a mature state of responsibility can be seen to proceed through four
levels, referred to as the Ps above.

When a company adopts the RBF it agrees to include the pillars in its vision, aligning operational
goals with them, and establishing their use as variables for decision-making. This requires the
company to invest resources and maintain sustained commitment over time. The six pillars of the
RBF are used as measures of a companys business viability and as such, a predictor of its
sustainability. The corollary being that a company that is able to demonstrate socially responsible
behaviour at any of the four levels of performance can do so because it is able to manage its
internal and external environments effectively towards its business goals. And as such, such a
company, by being socially responsible has a reputational stake in its host community as well
among its key stakeholders and has much to lose in case its trust is lost. Such a company would
then do all it can to maintain its position of trust in the community by taking decisions that
perpetuate this relationship of trust and mutuality among its stakeholders. It would have the
willingness and the capacity to manage internal conflict, as well as safeguard itself from external
threat of conflict.
This study relies on the RBF pillars in the design of its interview protocol, and also to inform the
analysis emerging from this mapping across regions, sectors and stakeholder groups.


34

Business Feedback
Applying the six pillars of the RBF, this section ascertains organizational mechanisms that respond
to threats and conflict. Companies chosen were taken as the four principal cases for this mapping
study, based on their regional and sectoral relevance, and the national impact of this sector.
Fauji Fertilizer Company Limited

RBF Pillars Internal External
Governance & Proper Governance hierarchy Board can be held accountable for
Management Comply to code of Corporate negative social & environmental impacts
Governance of their decisions
Principles & Businesses have a vested interest in Believes in giving back to the community
Policies peaceful surrounding
Equal opportunity and non-
discrimination
Compliance & UNGC labour rights Sustainability Report;
Disclosure Adherence to tax regulation H & S and Environmental newsletter;
Sexual harassment Committee Initiatives to improve/impact energy
Collective Bargaining Association efficiency
Environmental & CSR Committee Wind mill project
Stakeholder Active engagement with Farmers and Fertilizer Industry Meetings/
Engagement surrounding community Publications/ Training/ Focus Group/
annual general meeting and monthly Seminars/ Demo Plots/ Farmer
quarterly meeting with employees and Meetings;
managers Meaningful help to the underprivileged
Product & Integrated Management System (IMS) interventions in health, education, relief
Customer Focus for energy & water conservation and and rehab through poverty alleviation
waste management; for the community and buyers;
Cost efficiency through research &
development
Financial Awareness of SRI index & criteria and Formally communicate social and
Viability benchmarking mechanisms; environmental responsibilities to
Cost-effective SRI systems financial institutes
The chemical industry, like several other industries in the manufacturing sector is affected by the
absence of peace. FFC believes that the conflicts that effect business in Pakistan include
misperception, vested interests, lack of education and exploitation. Business generally faces
conflicts emerging from unfavourable policies, unfair exploitation of resources, lack of
governance, security lapse and poor law and order situation. Dominance of feudalism in various
regions has exacerbated to illiteracy, unemployment and lack of infrastructure. FFC defines CSR
as assistance to underprivileged communities with meaningful interventions and remunerate
what has been acquired from the surroundings, and hopes this will bring about a closing of
resource gaps that cause conflict.


Concerns
There are several external conflicts that directly affect FFC business operations. This survey
identifies national security, terrorism, sectarian conflicts, weak governance and poor policy
development as the major external conflicts that hamper business growth. Weak governance and
poor policy development has created issues related to energy shortages. Natural gas plays a
critical role in the production of fertilizers, hence, these shortages hampers production. This not
only causes loss to FFC because of idle time and process re-start costs, it deprives farmers of a
critical farm input, and when the government imports fertilizer, it drains precious foreign
exchange.
FFC also recognizes that the absence of peace, incidence of natural disasters and financial
impediments significantly contribute to impede business growth. On the other hand conflicts that
affect business operation internally includes health and safety of the workers and downsizing of
labourers. In the current socio-economic outlook of Pakistan, poverty and unemployment are the
two core components promoting intolerance and conflict. Hence, as a responsible business, FFC
gives significant attention to counter unemployment and alleviate poverty.
Lack of ownership, sustainability of the intervention and lack of awareness within the community
may also create issues for business operations. The most effective way of countering such
hindrances is to engage the community and all
business stakeholders. The sustainability report is Pakistan has ample resources and
available for all stakeholders of FFC including the capacity but mismanagement, short-
farmers, suppliers, regulators and academia; this sighted goals and lack of governance has
insures involvement of various stakeholders in contributed to the issues businesses face.
business operations. FFC has also aided in Still, in this era of globalization, businesses
can pull in resources in all fields. This gives
development of several social ventures in order to
them the edge to play a vital role in peace
gain trust of local communities that might react to
building
environmental hazards involved with chemical
industry. Fauji Fertilizer statement
Response
FFC encourages business participation through effective CSR in building a better image of the
country. By empowering community, their paradigm greatly shifts from conflict to opportunities,
hence FFC believes in promotion of social and cultural activities. Businesses have a vested
interest in peaceful surrounding and for that they have no reluctance toward active engagement
if only provided with the right platform is provided to them for active participation.
As a response to the identified conflicts the company has been unable to improve external issues
because of the peripheral role of the business; however, it attempts to mitigate these conflicts by
providing feedback to relevant ministries in order to improve policies that may have an impact on
business operations.
FFC has confronted an overall increase of 30-35% in their allocated budget for security to counter
any threat to their workers and working sites. Moreover, FFC has efficiently managed to handle
any internal conflict the business is likely to confront. FFC follows the policy of equal opportunity
and non-discrimination in their recruitment procedures to avoid any conflicts pertaining to
employee/ labour rights. HR department also ensures that it provides opportunities for team and

36

rapport building amongst employees from different backgrounds. UNGC principles of freedom of
speech and association, equal opportunity and non-discrimination in recruitment procedure are
also adopted by the company. The company complies with regional and international standards
of business operations through which it promotes peace.
Fertilizer production and use both may induce environmental hazards. Protecting air and water
quality and water quantity during the production of fertilizers is important, as is the prevention
of hazards from gas leaks or fire that can affect surrounding communities.
A major risk emerges from environmental impact to the communities. FFC Management indicates
its commitment to protect the environment from possible impact of its industrial processes, and
take all necessary measures to reduce damage or injury in and around the plant sites. Plant sites
are ISO 14000 certified, which is compatible with International Environmental Standards.
The company invests in safety measures to alleviate the risk perception among its surrounding
community with respect to plant safety. This, in its views mitigates the potential of conflict
arising out of mistrust. A total of almost Rs. 1,130 million is spent on environment, health and
safety measures.
Another of FFCs initiatives that mitigates environmental impact, and has quality of life potential
for local communities is the establishment of its first wind energy farm, and investments in
energy conservation, water resource management, waste disposal at plant sites, and tree
plantation including the orchard-planting support to an educational NGO. The business also
ensures sustainable and fair management of natural resources through its Integrated
Management System (IMS) for energy conservation, water conservation, and waste disposal
management. The environmental impact and performance is disclosed semi-annually and is
available for all stakeholders.
Many conflicts induced by poverty can be mitigated through poverty alleviation initiatives. FFC
has created technical training and vocational centres and an Agri-Advisory Service to build
marketable skills among its host communities, as well as influencing efforts to mitigate any
conflicts that may arise due to regional economic conditions. Both men and women are
beneficiaries of this program, which helps them find work or make a living independently.
Farmers are given special assistance in order to become agriculturally more productive and
efficient.
FFCs healthcare interventions provide advances services to the underprivileged and deprived
communities especially around FFC plant sites. FFC has encouraged healthy activities and
continues to support sports events in areas of Rahim Yar Khan and Ghotki as well as on the
national level. This strategy not only provides services in a far-flung location, it helps builds
bridges with host communities, builds tolerance in the community and eases frustration amongst
the society. FFC feels such close engagement can indirectly lower criminal activities.
Way forward
FFC indicates that designated CSR staff continuously engages with employees, providing
assistance through non-interest loans, medical and education facilities, scholarship for their
children, pension funds, marriage assistance, grievance policy, sexual harassment policy, and
quota for disable personnel. Management feels such initiatives have a role in significantly

reducing the negative economic impact of external conflict, which employees face in their home
loves. This improves attitudes and contributes in ways that the business is insulated from risk.

Serena Hotels
RBF Pillars Internal Conflict External Conflict
Quarterly board meetings have conflict Low profile, and association with a
Governance &
resolution on agenda personality known for philanthropy and
Management
development vision
Strong HR division catering to a high- Protecting and sustaining the lifestyle of
Principles &
stress service-oriented environment local groups and promoting cultural
Policies
through incentives and training heritage.
Compliance to Labour Rights and Induces green thinking and sustainability
Compliance &
Environment Standards. initiatives through media to its
Disclosure
customers.
Engages employees with meetings and Entrepreneurship projects for locals
Stakeholder
newsletters Creating optimum economic
Engagement
opportunities for communities
Local hiring encouraged Local Supply chain for supplies
Product &
Customer Focus
Local supply low cost Recycling of waste foodstuffs into

Financial
Cost saving on transportation animal fodder.
Viability

According to the World Economic Forum, Pakistan ranked 113 out of 130 countries in 2009 as a
tourist destination8. Tourism is often referred to as an industry that holds great promise for
foreign investment, but in exploring the true potential of a land as rich and diverse in its history,
culture and landscape as Pakistan, prospective investors face a daunting challenge in terms of
security of investment and business flows. The tourism industry is exposed to the obvious threat
of terrorism, which is magnified in the absence of a tourism regulatory framework.
Concerns
Serena Hotels identifies natural disasters and political instability as factors that most affect the
hotel industry in general. The 2010 floods washed away over a hundred tourist hotels built on
the bank of the Swat River. It is true that many of these were built against the law of nature and
law of land, but the cost of recovery is steep, and much depends upon the state of security in
the region. According to Ecotourism Society Pakistan, the private sector alone has suffered
losses of approximately 550 million US dollars so far9.
From its heyday as a mountaineers paradise with 200 of the worlds loftiest peaks straddling its
north and the ancient cultures of Moenjodaro, Harappa and Mehrgarh scattered along its axis,
Pakistans tourism fortunes have ebbed in the face of militancy in all these areas, particularly by
high-profile bombings such as those targeting the Islamabad Marriott hotel in 2008.

8 Tan veer Ahmed, Travel and Tourism Competitiveness Report 2009 in Daily Times
9 Special Report about Pakistan Floods 2010 , Ecotourism Society Pakistan
38

But even without natural disasters and terrorism, Pakistan suffers because of the absence of a
sound tourism regulatory framework. As a result, apart from perhaps the few premium
properties, hotel operators shy away from offering benefits to staff who feel the burden and
express it in high turnover, low motivation, and poor attention to service. On top of that,
because it is poorly regulated, there is no significant representative voice to speak for the
industry. As a result, despite the huge losses, there is no means of launching a joint effort from
the industry to seek support or policy benefits from the government.
Among the countrys premium hospitality groups, Serena Hotels sees itself as a steadfast
contributor Pakistans tourism industry, even as it continues to bear the cost of conflicts in a
number of previously prime locations. Flagship properties in Quetta, Islamabad and over the
border in Kabul, Afghanistan have become virtual fortresses where visitors, often from abroad
seek security, rather than the joy of experiencing a vibrant culture. Properties in Swat and Gilgit
are in localities where access is still limited.
In each of these regions, with the exception of Islamabad and Faisalabad, Serenas properties are
located in places with high levels of poverty mean the hotels can help positively address
unemployment. But this has not been possible, host communities sometimes showing hostility
for the high-class lifestyle displayed by the hotel in sharp contrast to its surroundings. This is by
no means unique to Serena, but it does add to the risk. Serena indicates that even in these
difficult times, it is committed to continue operating as a responsible business. This mapping
study reveals political, religious, and ethnic divisions that are rising to the surface in the backdrop
of the war on terrorism which remains the main external conflict to affect the hotel business.
Response
Serena Hotels expresses commitment to creating
optimum economic opportunities for the local Taliban will never listen. How do
communities in which it operates. These takes many make them listen to you? It is a
valid question, but in the words of
forms, such as employment, supply of handicrafts, supply
Nelson Mandela If you talk to a
of local dance troupes or supply of raw materials. This man in a language he understands,
may take the form of fruit and vegetables, meat, dairy that goes to his head. If you talk to
him in his language, that goes to his
products and a wide range of other food stuffs. heart. We need to find the language
that can touch their hearts.
The Group also works with local suppliers and out-
Rizwan Yahya
growing schemes so as to enable local growers to meet
Blog 09/10/2012
the exacting quality standards required by the group, as

well as to practice economies of scale in supply.

In some areas, recycling projects have been founded, which allows recycling of waste foodstuffs
into animal fodder. The company supports local youth through providing careers, leisure,
educational and training opportunities. Serena properties are located in some of the most
beautiful areas of Pakistan, with their extraordinarily diverse range of cultures and ethnic groups,
all of which cherish their own particular cultural traditions and heritage. Serena conveys that it is
dedicated to both protecting and sustaining the lifestyle of such groups and showcasing and
promoting their individual cultural heritage. Old citadels such as Shigar Fort and Khaplu Palace
have been restored as residential areas within heritage museums.
Since the company believes that environmental protection must extend into all levels of the
community, it offers community training on environmental responsibility. Serena continues to

plant trees in public locations, carry out indigenous plant re-stocking projects as well s contribute
to butterfly-breeding and turtle-protection programs. It collaborates with IUCN, the conservation
NGO, to develop better understanding on environmental and conservation issues amongst the
general public. Serena has participated actively in the industrys green initiatives, making green
thinking an essential part of corporate policy and practice so as to promote ecologically sensitive
behaviour amongst its target audience10.
Conflict reduction is resonates strongly with Serena staff, a number of whom come from
presently fraught regions. For example, even though it remained shut for 3 years as a result of
security threats, Serenas Swat hotel management decided not to fire any of its staff, placing
them at other locations or engaging them in further training. This helped mitigate internal
conflicts that other prestigious hotels may have faces due to downsizing. Also, during recent
public demonstrations close to Serena Islamabad, staff offered protestors water and even though
they did not get involved in any way, this gesture generated empathy for the Hotel and helped its
friendly and socially responsible business image.
Packages Limited
Governance & Board interacts with stakeholders other Board accountable for negative social &
Management shareholders for transparent decisions environmental impact of their decisions
Principles & Process-led, merit-based recruitment Track record of community investment

Values Functioning policy against gender, race, Incentives for ethical behaviour
colour or creed discrimination
Compliance & Annual reports, Fortnightly Review COP for UNGC HR Principles on
Disclosure Record of compliance with laws, NEQs, Compliance with ILO frame work
Social and HR standards Press releases
IMS, 9001; EMS 14001 Waste minimization & energy efficiency
Green Office Initiative
Sustainability report
Stakeholder Toolbox talks, focus groups, and Training for suppliers and vendors;
Engagement trainings for employees Competitor engagement through CSR
Mechanism for process improvement Mechanisms for product innovation
based on social & environment concerns based on environmental concerns
Product & Annual team building trainings Direct purchase of 3 million litres milk
Customer Focus Encourage local hiring
Financial Use of wasted paper as recycled paper Use of wasted paper as recycled paper
Viability
Packages Limited is among the first modern business in Pakistan, and a role model for several
other organizations. It is known as a value-led company that promotes ethical business and a
tradition of community investment. Packages competes regionally in packaging, paper,
paperboard and consumer products.
Concerns
In response to business identification and resolution of conflicts related to local situations and
problems Packages Limited believes that unemployment, poor working conditions and improper

10 Mr. Mahmud Jan Mohamed, MD Serena Group, interviewed for UNWTO e-magazine Tourism and MDGs, 2010
40

infrastructure trigger restlessness and a sense of negativity amongst the communities. Illiteracy,
poor health facilities and other social impediments also add to internal and external conflicts
faced by business fraternity. Directing public resources for the benefit of community will
ultimately have a positive influence on the businesses as well.
External conflicts continue to arise due to judicial and government instability, national insecurity
and fluctuating trade policies that are identified as significant impediments to efficient
operations. Internal conflicts emerging from labour negotiations or health & safety concerns are
rare, but occasionally test management. There are instances where lack of transparency or
corruption emerge as causes of internal conflicts. Being a paper products manufacturer,
Packages is conscious of the possible hazards to its surrounding community from end-of-pipe
waste in case disposal procedures are not followed, causing the host the community to react.
Response
Packages deals with these internal and external conflicts through a series of actions in line with
its responsible business values, and actively promotes ethical business dealings. Risks from
conflict or threat assessments are reviewed in the fortnightly business review meetings attended
by all senior management and business units heads. Any risk to the work environment, whether
through activities, production processes or personnel, is treated as a risk management measure.
For Packages fresh milk packaging business the estimated daily intake exceeds 3 million litres.
This milk is collected from a network of farmers, for whom it is a constant source of substantial
income. By buying directly at the farm, Packages creates economic opportunity for a large
population, and is a factor in the uplift of rural communities out of poverty.
The company produces recycled paper products made from various grades of paper and board,
including shipping cartons, newsprint, magazines, and other waste paper often mixed with a
controlled percentage of virgin pulp. Packages collects this material through an outreach system.
As a measure of the importance Packages places on waste minimization, 20 million US dollars are
spent on environmental safety actions alone, for specialized cleaning equipment to remove
residual sludge and suspended particles while the process is designed to reduce water usage.
The company is certified with ISO 14001. A major plant located close to a residential area was
shut down after environment analysis indicated possible hazard risk to the local community.
Packages was one the first to encourage organized sport, and has hosted the annual Jaffar
Memorial Hockey Tournament for the last thirty-six years, bringing together school teams from
all over the country. Over the years, thirty members of Pakistans national hockey team have
come up through this event.
Apart from delivering quality, Packages indicates that taking care of its staff, their health and
safety is a key priority. The integrated management system in place at Packages is designed to
flag and manage rising internal conflicts. An important conflict mitigation policy is to hire locals,
who then tend to be more cohesive and less conflict-prone within the work environment.
Stringent policies are in place to discourage employees from conflict-of-interest situations. At the
same time the company recognizes ethical behaviour through incentives. An MBWA (managing
by walking around) policy allows close and constant interaction between various levels of
management as workers.

Also strictly supervised are the various checks for compliance with various codes of conduct or
best practice guidelines. Appropriate information, prevention and control tools, demonstrated
transparency in transactions and behaviours inform corrective measures as required.
Way Forward
Packages has indicated it takes obeying the law as a basic, un-compromising principle. As such,
every director and employee of the Company is expected to abide by all legal requirements set
down for business. Any one seen to be in wilful violation must face disciplinary consequences.
By creating equity through accountability, Packages has installed a strong mechanism for
minimising internal conflicts even in day to day decision-making. The onus to perform within the
law lies directly with managers, who must answer for any violation of laws within their area of
responsibility, which proper supervision could have prevented.
Pakistan International Airlines

Governance & Board members interact with Prefers minimum intervention from
Management stakeholders other than company external stakeholders
shareholders
Principles & Policy against firing once recruited no Any conflict caused by PIA is going to
Policies downsizing be resolved by PIA too
11
Compliance & Stringent internal documentation codes OSA Certification & IATA Registration
Disclosure ISO certifications 18001 & 14001
Stakeholder Al-Shifa Trust relief services Prominent PIA board for image-building
Involvement PIA model secondary School Relief goods transport for earthquake
35 medical stations for public First Aid stations in a number of cities
Product and Health, Safety & Environment initiative Emergency Response (ERP) Manual
Customer Focus Emergency Response Teams
Industrial training institute
Financial Inefficiencies and over employment Research on policy issues
Viability increase costs (-tive) Political involvement
International security regulations add
cost (-tive)

Pakistan has seen a relative reduction in airline traffic over recent years. A number of airlines
have gone stopped flights into the country citing security concerns. This has meant increased
passenger volumes for a smaller number of airlines, including Pakistan International Airlines
(PIA), with passengers travelling to nearby hubs for long-distance connections. Even so, PIA is
facing tougher competition in this short-haul segment from new, ambitious airlines.
Keeping up with changing demands of passengers has been a major challenge. This particularly
so because PIAs culture of political interference, over-staffing and disruptive worker
representatives. With the rising cost of security services and the dwindling tourism sector, the
national flag carrier has begun to face internal pressures from staff, and external pressure from
the competition.

11 The IATA Operational Safety Audit Program is an internationally recognized and accepted system for assessing the operational
management and control systems of an airline
42

Concerns
PIA indicates that a major concern is ongoing tension between the state-controlled management
and a bloated employee population that has within its ranks a large number of political
appointees who are demanding in terms of benefits and relatively low in terms of efficiency. As a
result, there are recurring incidences of labour-management discord leading to high costs and
declining quality in a very quality-conscious business. From its heyday up to the 1970s when PIA
was counted among the top airlines globally, its many management- and security-related
problems have seen it slip into a category where it competes only for short-haul passengers, who
are typically Pakistani guest-workers serving in the Middle East or Southeast Asia, travelling
between home and work a few times a year, or for seasonal pilgrims travelling to Saudi Arabia.
With the introduction of the open skies policy over a decade ago, a number of aggressive
national airlines have competed with PIA even in the short-haul sector, offering better value for
money, and therefore making it even more difficult for PIA to compete with its present staffing
structure, which is rife with internal discontent and rent-seeking tendencies. Frequent changes in
top management have also weakened management structures. The resulting vicious cycle of
labour-management conflict and deteriorating standards continues to cost the company in
revenues, service quality and reputation.
Security remains a cost multiplier for PIA and also a reason why it cannot compete effectively in a
cut-throat market. New security protocols for airlines operating in, from or through Pakistan
means additional costs for deploying security precautions, which often means more staff as well
as longer airport turnaround times. Both are expensive for airlines operating in the country. For
PIA, further costs are added on flights to North America, which require a mandatory stop enroute
that adds on 100 US dollars per passenger seat. With long-haul flights operating at low capacity,
this is a significant add-on in an environment of high fuel prices and terminal costs. As a result,
PIA has progressively cut back on its many international routes, and given up lucrative landing
slots at some of the worlds busiest airports.
Corruption too is alleged to have added further to PIAs concerns. Management is sometimes
accused of bartering away highly sought after routes and landing slots to competing airlines in
non-transparent deals. Recently, one such deal for European routes between PIA and Turkish
Airlines was blocked by the courts.
PIAs biggest challenge remains its style of management. PIA indicates that it prefers minimum
intervention from external stakeholders and wants to tackle issues on its own. However, with
the enormous influence exerted by its labour organizations, which are typically backed by
political parties and also by ethnic groups, such attempts become contentious and often
intractable.
Response
Despite its overall gloomy business outlook, PIA demonstrates attempts to pay its role as the
national flag-carrier airline and reach out to the community through promoting culture and sport.
In the current security environment, PIA has made efforts to share its technical capacities with
the general public. For example, Emergency Response Centres have been established in Karachi,
Lahore & Islamabad and PIAs flights ferried over three hundred tonnes of relief supplies during
recent natural disasters.

PIA also continues to maintain its image as a safe airline by making efforts to comply with
international standards. It indicates that a number of its passengers travel on PIA even when its
prices are higher simply because of its better safety record compared to some new, untried
airlines. The airline also maintains a high-quality medical services division, which now offers
limited outreach services to vulnerable communities through 35 medical stations spread over a
number of locations. First response fire stations in a number of cities are an extension of PIAs
fire-fighting capabilities and help support a sector that is often stretched.
Way Forward
Conflict management in PIA is a priority, and because of its status as national flag-carrier, PIA
needs to be proactive in its risk management, whether it is with respect to internal conflict
resolution, or relating to international security issues. PIA management understand that its
efficiency and reputation are key to traveller confidence, and therefore to increased
sustainability.
Kohat Cement
Governance & Management re-vamp in progress to Involvement of local interests to reduce

Management make it more accountable to security threats
stakeholders
Principles & Crisis is taken as an Opportunity, we Create more stakeholders for more
Policies are positive about them and tackle our peace.
problems accordingly
Compliance & Plant shut down to meet environmental Weekly physical verification of plant
Disclosure standards conditions in remote areas
Stakeholder Royalty for families in quarry sites Local vendors preferred

Engagement Skill development & local hiring Transporter given additional incentives
Kohat Cement Scholarship Program
Product and Use of Information Technology and Company truck stops furbished as
Customer Focus management systems to improve community hubs and opened to public
customer responsiveness Local supply chains upgraded
Internships for skill development
Financial Viability Quota for profit sharing system to keep
up involvement

Kohat Cement Company indicates that a general of education and poverty create a vicious cycle
and as such, are the two most important socio-economic issues that contribute to conflicts
related to businesses. In the cement industry, whose quarries and plants are often located in
remote communities, conflict of interest is generally considered the root cause of several socio-
economic challenges, where in a number of situations important local personalities, who claim to
have a duty towards their community advance personal interest in ways that can have
environmentally or socially adverse consequences.
In addition because they operate in the remote areas, an important concern for Kohat Cement is
the security of their business operations. There are a number of impediments to operating
peacefully in certain locations where the plan site is located close to a conflict zone, or where
traditional culture allows for a few people to bargain away important natural resources.
44

Having to function in a conservative traditional environment, Kohat Cement indicates it
recognizes the importance of understanding and protecting regional interests to prevent
external conflicts. The main plant is located 60 km from Peshawar in Khyber Pakhtunkhwa
province, which is a very conservative area and where tribal customs hold sway. It is close to the
zone where the military is engaged against militant groups. The induction of staff from outside
this cultural context carries implications for both the cooperative attitudes of the local
population, as well s the safety of staff from outside.
Cement is a sought after product, particularly in neighbouring Afghanistan where huge
infrastructure projects have been underway over the past few years. Hence, Kohat Cement has
enormous interest in ensuring that business processes are not interrupted, and that local
harmony is maintained by managing internal conflicts. This is done through a mechanism of
constant monitoring and reporting of business operations, particularly tracking sentiments of the
local community with respect to outsiders. Kohat Cement communicates clearly its belief that as
a company it must prioritize the protection of local interest to prevent any external conflicts.
To underscore this belief, the company has invested in local infra-structure development and
instituted a quota-based for profit sharing system. These measures communicate Kohat
Cements seriousness in improving the local economy. The company also prioritizes local vendors
and hires locally o the extent possible, with the purpose of enhancing local livelihood
opportunities.
Due to its location near a conflict zone, the plant faces staff turnover of eight to ten employees
per week, which that takes its toll on efficiency. The conflict tracking and monitoring mechanism
employed by the company involves on-site verification and real-time reporting of potential
tensions or emerging conflict threats. Kohat Cement indicates that their Management take the
recommendations from the monitoring system positively and continue to consider technology
upgrades that will allow for greater productivity and lesser threat of attrition.
Concerns
Initially there was feeling of lesser work opportunities for local people and a sense that local
mineral wealth was being sent out to outsiders without creating specific benefit to the local
communities. This led to demands for subsidized cement for local people. Kohat Cements initial
lack of KCCL involvement in improvement of basic facilities also caused problems.
Around the quarries and plant site, air quality remains an issue, also because Kohat Cement uses
coal as fuel. Air pollution is linked to respiratory illnesses such as asthma. Plant operations can
cause polluted drinking water, and construction activities can lead to deforestation. As such
environmental degradation is an issue Kohat Cement , especially so because locals often react to
such environmental hazards by claiming ownership of factory land.
Employees insecurity affects their freedom of movement and in turn personal and productive
efficiency. Incidents such as kidnapping of their general manager for ransom have occurred in the
past that were resolved with the involvement and protection of the military.
Response
Kohat Cement has established a priority that seeks to enhance the companys involvement in
local affairs. Referred to as an effort to create more stakeholders for peace, the companys
agenda is to encourage more and more local people to engage with it constructively, as

employees, vendors, beneficiaries of social and infrastructure development projects, and
contributors to its socio-economic efforts.
An example of this the way Kohat Cement provides jobs and small contracts using a mechanism
that ensures that people from each village surrounding the plant are chosen in turn. This is done
so as to prevent any conflict amongst those villages.
The old plant, which was deemed an air quality hazard has been shut down and replaced by a
new environmentally friendly one. This also means more opportunities for cost reduction
through reduction in wastage during the production process.
Kohat Cement has transferred ownership of the 200 trucks that carry up to seven tonnes of
product every day to locals. Sixteen truck stops have been built with maintenance workshops,
tea stalls, food hubs and small shops. These have been opened to the public as recreation areas
and have led to more economic activity that is controlled by the local population.
The company provides local skill development internships that have proved successful as
expressions of Kohat Cements policy of creating more stakeholders. Locally managed supply
chains for the raw materials, specifically gypsum and laterite achieve the same purpose.
Distribution of royalty to families who own land where quarries are located, has been a reason
for conflict. The amount of about 6 million rupees has to be divided every year to about ten
families. Kohat Cement has helped convene a common-interest committee that allocates the
payment in a fair and consultative manner. The same committee decides on distribution of
profit-sharing quotas. This mechanism has traditional roots in the consultative jirga system
typical of the region, and involves local communities to in way that they take ownership of for
the success of the business.
Using current Information Technology, Kohat Cement has established a video link between the
plant site in Kohat and the at company head office in Lahore by which the management can
view the production lines and intervene for quality and efficiency. The high cost of this
technology is taken as a necessary operating cost.
Way Forward
The Kohat Cement Scholarship Program pays for one place every year in medical college, and
four seat s in engineering universities in KPK. There is still room to expand initiatives such
entrepreneurship training programs for skill development among employees, and a steady pace
of infrastructure investments that seek local participation need to be maintained to create
harmony in Kohat Cements business environment.

46

Indus Motors
Governance & Directors/ Board members interact with Board can be held accountable for
Management stakeholders other than company negative social & environmental impacts
shareholders of their decisions
Principles & Review policies and procedures to Concern beyond Cars
Policies ensure values are consistent with
business core values of hiring,
procurement and training.
Compliance & Annual reports Separate policy for environment
Disclosure ISO14000 & OSHA certifications Compliance
Stakeholder Stakeholder feedback is shared formally Formal/informal processes for external

Engagement and is publically available stakeholder involvement such as
stakeholder maps and focus groups.
health clinics, educational scholarship
Product & CAC 0800 Number for stakeholder and Vocational training, s procurement and
Customer Service customer feedback buying decisions based on energy
Training efficiency and environmental
Product innovation such as CNG exotic friendliness
based on environmental concerns
Financial Viability Innovative Environment Investments community provide security of

infrastructure during riots and strikes

Indus Motors is the manufacturer of Toyota and Daihatsu vehicles in Pakistan. It is a joint
venture between Pakistans House of Habib and Japans Toyota Motor Corporation and Toyota
Tsusho Corporation of Japan. The company manufactures and markets Toyota and Daihatsu
brand vehicles in Pakistan. The manufacturing facilities at Port Qasim, Karachi are connected to a
network of 34 independent Sales-Service-Spares (3S) dealerships across the country.
Concerns
The prevailing law and order situation has had a major financial and social impact on Indus
Motors. Employees coming to work must suffer traffic jams and pass through the Malir-
Qadirabad corridor that is known for its high crime rate, including mobile and car snatching even
during daytime rush hour. Road blocks due to strikes and protests are frequent, pushing up
employee absentee rates and delays in supplies from local suppliers. All this affects the
production line, the production schedule and planning. This sense of insecurity lowers employee
morale and efficiency, and leads to a high staff turn-over because people with to work in safer
areas.
The automobile sector is also a victim of low investment. In addition, to mitigate the impact of
this loss of investment business meetings are arranged outside the country, raising further the
cost for businesses.


Response
Indus Motors directors can be personally liable for any negative social and environmental
impacts resulting from their decisions, taken as they are in a transparent and open manner. The
companys procurement decisions are based on energy efficiency and environmental friendliness.
With the collaboration of the law enforcement agencies, Indus Motors has worked out enhanced
force deployment at points where there is greater risk of crime, particularly during rush hours
when slowed down traffic becomes a victim of crimes such as mobile-phone and car snatching.
Indus Motors indicates that these can only temporary solutions with no sustainable and
continuous security relief outcome.
Employee absenteeism is managed partially by providing an expensive pick and drop service.
This and additional security and insurance to senior staff and expats has also increased business
operational costs. Indus Motors indicates that the deterioration in public safety creates
enormous risk, not only for the companys business itself, but for the entire countrys image as a
place to do business. The state of affairs requires effective remedies at the policy level as well as
the implementation level. Otherwise, doing business in Pakistan will continue to get more
difficult. The country needs a secure business environment and clear, consistent policy
incentives that offset the automobile sectors increased costs.
Way forward
Indus Motors recognizes the significance of engaging youth in healthy activities and preparing
them for good employment opportunities. The company engages young apprentices for 2- 3 year
training in automotive technology, and hires successful graduates at the plant and dealerships.
Training for unskilled employees enhances their skills and closes the so-called skill gap.
Trainings are employed as team-building activity that helps minimize conflict.
Apart from its regular contributions to vocational training, health clinics, educational scholarships
and child labour prevention initiatives, Indus Motors funds research on cost of congestion and
traffic jams. In view of the rising impact of the media, the company is working with journalist to
cover issues faced by business community and supporting efforts to reach out to the people as a
responsible business.

Sectoral Review
The above details refer to how different businesses tackle elements within the Responsible
Business Framework, ranging from Governance and Management to Financial Viability, and how
they respond to internal and external issues related to each principle.
However, in Pakistan, businesses are often faced with more explicit conflicts, particularly cases of
violent confrontation which may or may not be linked to terrorism. It is crucial to note the
drivers, the causes and the subsequent impact of these conflicts on various sectors, as well as the
specific businesses response varies across different locations.
It is important to note how responsible business practices help mitigate internal and external
conflicts within companies. The following table summarizes findings from direct inquiries from

48

companies representing the listed sectors. These findings lay out conflicts as well as the various
company responses developed to handle and manage conflicts faced at the sectoral level.
Sectors Conflict Impact Affected Response

Oil &Gas Exploitation & Investment hurdles Labour Government
unequal resource Higher business Industry owner initiatives to counter
distribution costs regional disparity
Unrest, strikes and Community
protests development
Textile Labour conditions Loss of revenue Local communities Lobbying for

Energy crisis Unemployment Suppliers uninterrupted fuel
supply
Weak export policy Social unrest
Revise exporting
Strikes & protests
policy
Automobile Unrest & protests Security cost Labour Community-based

Crime High turn-over Local businesses security options
Workforce diversity Local skill
development
Telecom Sabotage linked to Decline in retail Consumers Alternative

& IT militancy trade Brands technology
Tough Reputational risk investment
employee
environmental Environmental
regulatory regime compliance
Hospitality Militancy Local businesses Infrastructure loss Security perception

Staff attrition Labour Unemployment Local business
Travel restrictions Low client turnout Loss of revenue support
Culture promotion
Banking High security risk Lower inflow of Employees Follow strict security
Uncertain investment higher Customer policy by enforcing
investment outflow of savings controls

Political influence for -Special training and
Loans contracts for locals
Textile Industry
Pakistan Textile Industry contributes 8.5% to GDP12, employs 30-40% of the work force and
accounts for 46% to the total output produced in the country. The Textile industry is subject to
various conflicts every single day. These conflicts involve strikes by the labourers and
businessmen leading to intermittent closure of industrial units. The factors responsible for these
conflicts are lack of governments will, energy crisis and the governments export policy of
excessive unchecked export of cotton yarn. At present, Pakistani knitwear industry alone
contributes up to 17% of the total textile exports of the country whose products are the most
value added13.
However, there is a challenge to the growth of this export industry. As exports grow, there
occurs a shortage of raw material in the local market, which in turn threaten manufacturers to
reduce operations, and in some cases, face shut-down. Because of poor liquidity in a shrinking

12 Chairman's Review by Mr. Gohar Ejaz (Chairman APTMA 2010-11)
13 Yasin Ahmed (2012), Report-Textile industry in Pakistan, Horizon Securities, Lahore

economy, heightened risk calculations that limit lending by financial institutions, limited mobility
of Pakistani businessmen as well as their clients to travel for business negotiations, and most of
all rising cost of doing business due to higher costs, exacerbates a competitiveness in a very
price-sensitive global trade environment. As a result, both labour who face unemployment, and
factory owners who face loss of business and often unpaid bank loans, suffer from a continuous
state of insecurity. However, workers bear the brunt of this insecurity, primarily because they
have fewer resources to fall back upon and limited skills to find alternative livelihoods. In the
absence of state-supported income support or social insurance, as well as poor support from
workers organizations most employees in this sector remain un-organized and because of this
often unable to negotiate favourable terms with their employers. As such, this complex of
causes, compounded by a lack of effective communication channels often lead to a increased
propensity for labour-management conflict, to breakdown in discipline, and even law and order.
The cost of these events is unofficially estimated at about 1 billion US dollars a year. The textile
industry has a vocal representative body, which is lobbying with government to ensure supply of
energy, and also revise international trade policy so that exports become competitive, and crucial
imports become cost effective and easily accessible. It does recognize, however, that the energy
crisis that has had perhaps the biggest impact on the textile industry, creating vulnerabilities that
have led to factory closures and businesses sifting entire plants to foreign countries. From a pre-
eminent position until recently, Pakistans textile industry now lags behind other regional
powerhouses in India, Bangladesh and China.
Concerns
The energy crisis is invariably brought up as the core issue faced by the textile industry. It has
causes an almost irrecoverable rise in overheads making the price of Pakistani product
uncompetitive in an extremely competitive global market. As expected, companies that wish to
remain competitive in the face of such odds, tend to slash costs in an area where there is least
likelihood of active resistance, namely labour. As such, wages tend to remain stagnant around
the minimum even for skilled workers, benefits are reduced, and health and safety procedures
are compromised. All this has a lasting and deep negative impact on labour-management
relations. As an example of the stress faced by this key industry, it has been mentioned how
before the energy crisis the ratio was three workers to one machine. Now it stands at one
worker to two machines. This has clearly had serious consequences not only with respect with
reduced employment opportunities, but also in terms of poor labour practices, such as
exploitative work conditions and a consequent deterioration in product quality.
As a result, the number of knitwear units exporting their product showed a 29% decline over the
past 5 years. In 2005 there were 1,183 export units, while in 2009 only 840 remained active.
Textile industry representatives accuse the government of showing a lack of long-term vision and
poor resource-planning, which they say will make a come-back for industry more and more
difficult. An example of this short-sighted planning is said to be the shift to private power
generation, which has not worked because fuel prices make this option unaffordable and thus
unworkable as remedy to the core issue of competitiveness.
Sometimes businesses that may have been created to mitigate conflicts have led to even more
fraught consequences. In the late 1980s, in order to curb illegal poppy cultivation, the
government launched a crop substitution program in the Bannu area of Khyber Pakhtunkhwa.

50

The poppy fields were cleared and subsidized loans were provided for developing textile units in
the region who would employ unemployed residents. However, because skilled workers were
not locally available, companies brought in migrant workers. The situation worsened from one
being simply a lack of gainful livelihoods for locals to becoming an inter-ethnic conflict. This
region has continued to suffer since because of unrest emanating from worsening
unemployment and poverty.
Way forward
Since energy is seen to be at the heart of to the textile industrys present crisis, industry
representatives have begun evaluating self-generation based on alternative energy options,
particularly low-cost solar. However, with the cost of installation is still very high and technology
back-ups not available locally, the investment cannot proceed without strategic policy incentives
from the government and preferred financing options from lenders. Being close to an active war-
zone, these basic pre-requisites are unlikely to be fulfilled over the short term. The government
recognizes that the textile sector urgently needs attention, particularly in policy support that can
help in diverting raw cotton exports from export to local processing for greater value addition,
developing strategic financing and technology solutions to meet power shortages, particularly
through promoting locally supported technology14, and by creating capitalization incentives and
flexible financial products that encourage investment in the sector.
Minerals & Mining Industry

Pakistan is proven deposits of high quality mineral, both metallic and non-metallic, across
600,000 square kilometres15 extending from Balochistan along the Afghan border, all the way to
the Himalayas crossing Khyber Pakhtunkhwa. Because this entire region is politically unstable,
and has seen active armed conflict over decades, these minerals have not been exploited
effectively. In cases where efforts to establish modern mineral extraction and processing
facilities have been undertaken, the cost of protecting guest workers, plants and assets has been
a disincentive for investment. Small-scale operations that have gone on for many years, often as
family enterprises of government-run units, often do not match the scale at which such projects
can substantially impact the national economy. Pakistans mineral deposits are in geographically
isolated regions with a sparse population governed by conservative traditions that resist
modernization, which further leads to poor civic infrastructure, loose writ of the state,
inadequate skills, unemployment and mounting poverty. Added to this is a general resentment
against a distant government that is seen to have ignored this part of the country since
independence, a violence-prone neighbourhood, and therefore a higher risk of lawlessness.

Concerns
The primary issue in this industry surrounds the right of host communities to control what they
see as local resources. There is a history of local communities reacting aggressively to mining
projects in their homeland especially if excluded from discussions about the control of the
regions natural resources. Industry representatives say that they are literally on the fault-lines
of political and environmental conflict, and that the presence of potentially high value

14 Knitwear Industry of Pakistan by Qasim Shamim, Usman Ahmed & Muhammad Abdullah
15 Review on Pakistan from Economic Watch by the Board of Investment Prime Minister Secretariat Government of Pakistan

commodities such as minerals tends to exacerbate local conflicts and compound problems for
these already vulnerable communities. The extraction industry, by its nature draws its
profitability from resources in the larger ecosystem. This often involves processes that are highly
detrimental to the environment, unless designed to minimize such impact, and have business
model that is inherently transient in its purpose and thus not designed to invest in the local
community or its socio-economic r ecological future.
As such a majority of the traditional businesses in the sector, which are not mandated to comply
with international standards, demonstrate a tendency towards simply extracting the mineral and
shipping it on its way to the market. In some instance, after the accumulation of what is
considered sufficient revenue, these local businesses try to give back to the community in
philanthropic ways. Labour standards continue to be poor and value-addition not sufficiently
mature, causing high wastage and quality variance amid low incentives for improvement and re-
investment.
Operating in the mining industry, companies often face various external pressures from the tribal
communities that occupy this mostly remote mountainous terrain. The colonial tradition of
paying chieftains a retainer to win acquiescence from their respective tribes still survives, but is
becoming less effective as traditional values confront current trends. As a result, tribal leaders
often cannot control local groups when they block roads, steal machinery or capture company
vehicles in attempts to force businesses to pay them. Often, this behaviour indicates local
communities resentment about their loss of control over local mineral wealth, and its transfer to
other places.
Tribal demands are often expressed as claim for royalties from mining companies, even though in
many places concessions negotiated in tribal areas traditionally include payments to tribal
leaders who accept them on behalf of their tribe. In any case, this propensity for tribal disruption
of operations creates security issues for foreign investors and staff, as well as buyers.
Way forward
Building trust in their host communities is vital for mining companies. However, given the lack of
law and order, and the historic expectation of royalties rather than a working share in economic
opportunities, there may continue to be obstructions for mining companies to engage in more
innovative responses. However, companies it may make sense to invest in creating local skilling
programs that prepare individuals for the mining industrys labour requirements and then
actively induct locals into jobs. This effort can be useful in helping build trust in the community
and benefit locals to be able to continue business operations.
The government is clearly interested in revenues from increased exports of value-added products
from the mining industry. It has, therefore, a stake in cementing law enforcement and security
services in the area, if necessary, augmented through privatized arrangements for plant security
as in the case of locally recruited tribal levies overseen by professionals. Alternate dispute
resolution and negotiation mechanisms, bridging national legislation and tribal tradition must be
developed and mainstreamed in local administrative procedures.
The net impact of well-structured skilling and employment opportunities for locals, as mining
technicians or as security service-providers, and building business opportunities around mining
sites that cater to local needs just as they would to the mining company, would create a stake for
the local community to maintain stability as well as reduce economic vulnerability. Over time, in
52

concert with effective administration of justice, such measures would promise conflict mitigation
and poverty reduction, reducing the levels of present vulnerability.
Chemical Industry
The chemical industry too confronts an absence of peace, primarily due to unstable or
unfavourable policies, unfair exploitation of resources, lack of governance, security lapses and a
poor law and order situation. The major concentration of chemical industries in Pakistan,
particularly fertilizer, refineries and chemical plants is in peri-urban regions. However, in some
cases, these plants are located in areas dominated by traditional power structures, referred to as
feudal in Pakistan. These areas also suffer from higher rates of illiteracy, unemployment
compounded by poor civic of infrastructure and inadequate land-use planning. All this leads to
pressures related to unplanned growth and waste mismanagement that end up in environmental
degradation, in addition to creating conflicts typical of areas where the gap in quality of life is
wide.
Concerns
There are several types of external conflicts that directly affect business in the chemical industry,
and research links all of these to unequal distribution of resources, weak trade policies and poor
security and justice administration. In addition internal conflicts that affect business operations
emerge from issues workplace conditions, including health, safety and environment (HSE) and
labour rights.
From the environmental perspective, end-of-pipe effluents or air contaminants released from the
processes, as well as the products emerging from chemical plants themselves, often have the
potential of causing environmental hazards unless carefully managed. This means that
protecting air- and water quality and water resource reuse during production of chemical
industry products, particularly fertilizers, is seen as being of the utmost concern. Pakistan has
well-defined environmental quality standards and despite operational gaps, chemical companies
generally comply with them. Environmental impact assessments are essential for all new plant
permissions, and the industrys own interest lies in minimizing risk of injury or environmental
impact on their host communities, as well as its staff. In short, conflicts challenging most
chemical plants relate primarily to the environment, whether it is through compliance with
national standards, or it has to do with safeguarding staff, neighbouring communities or
customers from the impact of environmental management or labour practice failures.
Way forward
Advocacy and tighter oversight of legislation and regulatory provisions will help avoid
environmental or labour conflicts. Active support for fair practices and observance of
environmental safeguards, matched sufficiently by incentives for responsible behaviour, matched
by high level advocacy, issue-led business forums, and public opinion mobilization has been
proven as a useful strategy by businesses. This can be expanded to engage local stakeholders
more, and working to stake mutually agreed positions that help mitigate conflict. Regulatory
practices, such as business policies, codes of conduct and compliance to social and legislative
directives/rules etc. are subjects where business and its stakeholders can engage with each
other, with local communities or in some cases, affected individuals encouraged to become part
of the advocacy-led dialogue. Companies can open up their supply chains to a wider network of

stakeholders, who by building a business interest in the success of the company, would wish to
ensure high standards of business behaviour and ultimate shared success.
Support for recognized certifications through independent audits is a tested strategy as well.
Annual reports and sustainability reports might also be encouraged, if not mandated, to include
social and environmental performance against recognized international standards.
An example of local stakeholder investment in a companys success comes from chemical
business located in an area rife with dacoits. The company developed a program through which
former dacoits or their close relations were recruited in the workforce or as contractors. This not
only created inclusion for local communities who could share in the benefits of the business, but
also helped countering petty crime as well as imparting a sense of pride among the local
community and a sense of harmony with company employees coming from other areas.
Other companies located in similarly feudal areas have successfully experimented with more
need-responsive community investments in social services and local infrastructure that are
developed through local participation, involving opinion leaders as well as political
representatives. This helps in reducing the potential of conflict arising from perceptions of
uneven resource distribution, as well as builds social capital that the company can bank on in
times of need.
Oil & Gas, Hydrocarbons Industry

Pakistan has proven oil reserves of 300 million barrels16 from oilfields primarily along the Indus
basin, from Potohar to Badin. Present oil production stands at 55-65,000 barrels a day whereas
demand is estimated at 363,300 barrels per day. This means that Pakistan is able to attract
investment in exploration and upgrade of production facilities. Currently a number of foreign oil
companies are partnering with the state-owned companies with the aim of doubling production.
Proven natural gas reserves are calculated at 850 billion cubic metres, with major sites in the
Balochistan basin. Present output is about 19 million cubic metres per day with increase it by
another 23 million cubic metres per day due to successful drilling ventures emerging from
increased investment. Gas is presently the mainstay for energy needs in Pakistan. However,
rising demand for gas has already caused shortages and the government plans to import 14
million cubic metres per day of gas in response.
Of the 185 billion tonnes in proven coal reserves, 184 billion tonnes are concentrated in the Thar
Desert, with the remaining spread across the Salt Range and the Balochistan plateau. The
reserves consist of lignite, which because of its high water content is not usable as industrial fuel
without processing. Present utilization stands at 4.8 million tonnes per year, over half of which is
used as fuel for brick kilns.
All this shows the high potential for returns on investment in this industry, which is being
encouraged by the grant of more and more licences by the government. In this climate of
increased investor interest, the potential for conflict has already become evident.

16 Oil and Gas Journal, Pakistan, January 2006
54

Concerns
The oil and gas industry faces a wide range of conflicts ranging from low wages and
environmental insecurity to destruction of gas pipelines. These could be attributed to a lack of
corporate investment in underdeveloped regions, lack of hiring of the locals, non-compliance
with environmental standards, terrorist attacks on pipelines and exploitation and unequal
distribution of resources.
The most affected are local communities, suppliers and environment, National and International
companies. Oil and gas exploration and production companies working, Khyber Pakhtunkhwa
(KPK), and Baluchistan have suffered from terrorists rocket launchers attack on pipelines
resulting in increasing insecurity and business costs and hence investors hesitation to invest
under such circumstances.
The deterioration of investors trust has also delayed the re-construction and repair of the
pipelines. The delay has caused the gas prices to increase as demand is not being catered to. The
sector representatives are meeting with government agencies but no significant initiative
towards the local community has been adopted by government. The sector representatives,
however, eventually aim to counter regional disparity and inequality. Circular debt in the
petroleum industry, rupee to dollar exchange rate, increased cost of doing business, increased
utilities costs, and fuel costs creates financial impediments. Such constraints effect business
operation in oil & gas sector adversely.
Handling hydrocarbons is a hazardous task for oil & gas businesses. These hazardous situations
have the potential to cause harm to the health and safety of its employees, contractors, the
public and the environment. Proactively identifying, minimizing and mitigating the effect is
needed.
Way forward
Oil and gas industry has mainly focused on transparent hiring processes that are believed to
deter any emanating conflict within companies. External pressures by government and
community are tackled through implementation of international codes and national policies.17
The petroleum and gas industry aligns their principles with international standards and follows
their examples to resolve internal conflicts. As for external issues, the industry incorporates
economic, social, ethical and environmental impact to address the concerns of all relevant
stakeholders. OGDC damaged roads with heavy vehicles and destroyed infrastructure. They have
not given any contracts to locals. Moreover, some private companies helped communities at the
time of national crisis.
The industry feels that as maximum people are included in the employment net, conflicts
automatically reach a minimum. Various measures for internal and external compliance and
disclosure are taken. The industry is subject to lab accreditation to ensure quality control and
keeps the shareholders involved through annual meetings to maintain internal stability. The

17 Therefore, petroleum companies took lead in getting international certifications: ISO 9001:2008 (Quality Management System),
ISO 14001:2004 (Environmental Management System) and OHSAS 18001:2007 (Occupational Health and Safety Management
System). All effluents are checked and verified regularly before discharging by third party EPA (Environment Protection Agency)
approved Labs to comply with NEQS.


industry also follows effective health and safety policies and ensures transparency in all business
transactions.
On most occasions the industry demonstrates strong values of integrity and ethics however,
there has been an instance of non-compliance with constitutionally allocated seats to employees
and top management. To keep the stakeholders engaged, holds meetings, policy discourses and
focus groups discussion. There is an open door culture for all in-house stakeholders. Press
conferences, news release, surveys and hot lines are means of engaging external stakeholders
including customers. Respect for local culture has help resolve conflicts with local communities.
e.g. one instance an extractive company had guards posted on higher posts in the valley. The
local community reacted to this by protesting how their women felt their privacy was intruded;
the company negotiated and relocated the guard posts and put screens to block view.
The oil and gas sector adopts a wide range of measures that seek to improve the product and
customer service experience such as training courses and developmental activities and assisting
community schools, masjids and churches. Free gas facilities and family health benefits are given
to the employees to further increase incentive and subsequently improve service. The Customer
Service Department also provides a complain resolution mechanism to resolve complaints at the
earliest.
There is also a separate media office department (Corporate and Media Affairs). The oil and gas
sector has recently been hit by high monitoring costs to counter gas theft issues. Supply chain
department addresses the oil demand issues in the upcountry region through timely
transportation and refining of petroleum products in a cost effective manner. The LPG supply
chain has increased after acquiring SHV Energy of Holland which was the largest LPG distribution
company in Pakistan. This will increase the ability of businesses to reach more people in the
upcountry region affected by gas shortage.
Violence and instability has made it necessary for extractive companies to take measures to
protect their personnel and assets by using their own armed guards, or by entering into
arrangements with private security firms or with state security forces. These arrangements can
be dangerous in terms of contributing to human rights violations and deteriorating company
image.
Since most of the oil and gas mining industries are set up in conflict areas companies try so
meeting tribal leaders to build trust relationships. Baloch tribal community is reasonable people
business need to understand and handle their egos.
Businesses often make an attempt to respect the local culture by getting involved at personal
level. Companies should also respect and support some of their religious/political stands.
Food & Beverages Industry

The Food & Beverages Industry is also not safe from the widespread violence and instability
prevailing in the country.. Many local businesses in the industry have hence been negatively
affected. Strikes and protests are the obvious results. One example of a response by a company
in this industry was to monitor the movement of delivery trucks with electronic trackers and
insure the inventory against looting and theft. Family businesses and badly governed business are
more exposed to risk of criminal act and black mailing. Public limited with better governance
sectors companies can manage exploitation and threats.
56

Concerns
The disposal of by-products of sugarcane industry is a major environmental concern. These may
result in aggression by the community. Sugarcane molasses based distillery waste water (spent
wash) is considered as one of the most obnoxious industrial wastes which tend to pose serious
environmental pollution, if not treated effectively. Disposal of these pollutants in rivers and on
land results into pollution of natural water bodies and agricultural lands which consequently lose
their fertility. Spent wash is hazardous to aquatic ecosystem because its coloured components
reduce photosynthetic activity and depletes dissolved oxygen in water bodies.
Forward
Through social action programs and strategic planning, companies aim to improve the lives of the
rural population by connecting and empowering resources. The sugarcane products conform to
the ISO 9001:2000 standards and the product quality is tested at the Research Institute's ISO/IEC
17025 certified laboratory. Efforts have been made at various levels of business management to
treat their hazardous waste before discharging it to the atmosphere. Some of their by-products
that can be harmful to the surroundings are neutralized by hydrogen sulphide (H2S). Different
effluent treatment plants based on anaerobic digestion procedure have been installed by
businesses.
One of the prominent food businesses, is focused on developing five key areas: educated youth,
empowered women, a healthy population, a culturally rich environment and a better community.
An example of environmental friendly solution is the Green Energy Initiative by Shakarganj;
considering the present energy crises in the country Shakarganj is developing its first Bio gas
power plant. This plant is Pakistan`s first renewable energy using sugar cane waste biomass
material from production of Ethanol. This would help the business and the site surrounding mills
to benefit from it and bridge the gap of supply and demand of energy at national grid. The
surplus electricity produced by this plant was planned to be distributed the community also sold
to the government.
Most of the Milk producing companies are providing livelihood to poor farmer communities by
Involving communities and facilitating women in milk collection and production.
Telecom Industry
The telecommunications infrastructure is improving dramatically with foreign and domestic
investments in fixed-line and mobile-cellular networks; system consists of microwave radio relay,
coaxial cable, fibre-optic cable, cellular, and satellite networks. Approximately 90 percent of
Pakistanis live within areas that have cell phone coverage and more than half of all Pakistanis
have access to a cell phone18. With 118 million mobile subscribers in March 2012, Pakistan has
the highest mobile penetration rate in the South Asian region19. About Rs. 300,000 million is
generated as revenues from the telecom industry alone5. Therefore, the telecom industry is
currently one of the most thriving industries in Pakistan. However, it is amidst those suffering
from several external conflicts that can have a possible impact on its growth

18 "Pakistan Country Report", The World Factbook, Central Intelligence Agency, United States, 14 June 2011
19 "Telecom Indicators", Pakistan Telecommunication Authority, (Wednesday, 9 May 2012)

Concerns
For the telecom industry, terrorism and protests have resulted in new regulations imposed by
PTA in accordance with the orders from the Ministry of Interior. Not only the telecom companies
bear the burden of such rigid policies but the consumers and small local business are equally
affected. Retail trade is drastically affected and unemployment could reach a number of 1
million, according to an estimate given by Chairman PTA the government has adopted a
regressive approach. Loss due to mobile service blockage due to law and order situation in last 2
months about 6 times in different cities about 1 billion rupee losses; even telecom security
hotlines are blocked. Mobile blockage has also affected revenue forecasts. Cell sites/towers have
a large carbon footprint; the Huge generators are significant contributors to noise and other
pollution because of diesel and petrol use. There are several concerns of the community
regarding such environmental degradation.
Way forward
Some telecoms are now installing land lines for security hotline where employees and customers
are informed of fire or any other emergencies due to terrorism or calamities. The telecom
industry feels that a forum should be established that provides equal opportunity to all
stakeholders so a middle ground is reached. PTA on the other hand feels that there is a need for a
technological solution that creates a central registry to curb crimes associated with cellular
phones.
Now some telecom companies are moving to solar generators, micro-hydro generators, and
hybrid systems to counter concerns of community regarding environmental pollution. Companies
have to bear extra security costs these includes ID card and address checking of each customers.
Legal & HR departments are involved in providing support in coordination with other
departments. Periodic meetings are also held with regulators and relevant government
offices/bodies. The telecom industry believes that the degeneration of social, political,
environmental, legal and technological factors is the main cause of business insecurity. However,
it also considers engaging a diverse group of employees & vendors on a consistent basis to
ensure equality.
Telecom industry, for internal compliance and disclosure, effectively employs different
procurement policies to ensure transparency in business transactions. Internal and external
audits are also conducted regularly.
The industry focuses on customer service and community work to acquire a larger market share.
Media acts as an important stakeholder for many businesses as it is engaged through the
marketing departments of businesses. The telecom industry had implemented human resource
recruitment, training and compensation policies to improve service internally.
Most of the telecom sector provides support to public and private colleges/universities for
various student body initiatives. It also facilitates the customers through sponsoring various
recreational activities and through socially driven ventures by their consistent support to Shaukat
Khanum Memorial Trust for cancer patients. Telecom industry has made also made long-term
investments in infra-structure development, for future benefits.
Information Technology Industry

58

The IT industry is regarded as a successful sector of Pakistan economically, even during a financial
crisis. The government of Pakistan offers numerous incentives to IT investors in the country,
which has since last decade that resulted in the development of the IT sector. In the years 2003-
2005 the country's IT exports saw a rise of about fifty percent and amounted a total of about 48.5
million USD20. Exports account for 11% of total revenues of IT sector in Pakistan. However,
threats to national security often lead to disruption of services, which carry significant
opportunity and transaction costs, and push back efforts made by government.
Concerns
In a generally busy environment, IT sector faces major constraints due to network service
blockages. Information technology companies are the backbone for telecomm sector, when
networks are blocked its a business loss for very single entity involved. With no networks full
time support cannot be delivered to local clients.
On the other hand customers also feel handicapped as they cant access the mobile technical
teams for any urgency via Mobiles. Apart from network disruptions, IT company staff also face
risks to personal safety in an unsafe environment. In general, the countrys overall reputation as
an unsafe place to live and work in makes client decisions to place IT business in Pakistan or
invest in expansion difficult.
Way forward
IT businesses in Pakistan are registering themselves as international companies or are physically
moving operations abroad. The growing political uncertainty and security crisis in Karachi and
other parts of Pakistan has resulted in a large reduction of investment in the IT industry.
Essentially, the highest number of IT companies fall in the SME category. Existing government
policy does not provide enabling incentives for these small companies even though they have
high export potential. Likewise, the IT sector does not have access or influence within chambers
of commerce and other professional institutions through which they can mitigate this financial
strain. As such all efforts to counter constraints and build business effectiveness in a generally
fraught IT environment is left to small scale by private businesses.
Banking & Finance Industry

The banking industry is amidst other financial institutions facing impediments due to insecure
environment. National Savings are 10.7 percent of GDP in 2011-12 as compared to 13.2 percent
in 2010-1121; this decrease in national savings can be attributed to the numerous external and
internal conflicts that Pakistan is currently suffering from. The decrease in savings and
investments has affected various operations of financial institutions.
Concerns
The banking sector has also been affected by the increase in terrorist-related violence and the
high level of security risk. Defaults and other non-fulfilment issues have increased because
businesses are not growing at normal rates.

20 Encyclopaedia of India, Pakistan & Bangladesh by Om Gupta
21 Pakistan Economic Survey 2011-12 by Finance Ministry of Pakistan

Personal security also causes employee absenteeism. As a result customers suffer poor service.
Although banks remain profitable due to tighter risk management systems and low lending
outlays, they cannot effectively participate in economic growth opportunities. The net result is
that businesses bear high costs due to lower inflow of investment & higher outflow of savings.
Way forward
In their consumer function, banks are highly visible to the public. A number of banks participate
vigorously in supporting cultural and sports activities, and also engage in high profile multimedia
advertising campaigns. However, due to the nature of their work, banks exposed to violent crime
and security risks, in the shape of hold-ups, or in the form of fraud and extortion.
Internally, however, banks offer a stable environment to staff and work within stringent
operating guidelines and codes of conduct within regulatory controls established by the State
Bank. Employees are generally well remunerated and enjoy good status in the community. As
such, the risk of internal conflict is quite low.
The banking industry complies with human rights, environmental rights, labour rights (with
special emphasis on employee rights and delegation) and community rights.
Banks also comply with business law and state bank regulations. Most are trying to use
environmentally friendly equipment and contribute towards positive environmental initiatives to
comply with environmental regulations.
The banking industry is also subject to both internal and external audits for compliance with
transparency laws and public disclosure respectively. Banks focus on customer service and
community work to acquire a larger market share.
Private Security Service Providers

Businesses require being aware at all times of the security situation in the area they work. In
Pakistan, security is a significant and growing business because of the present environment.
Over 300 private security companies are members of the All-Pakistan Security Agencies
Association, while an almost equal number are thought to be operating independently. The
sector employs an estimated 300,000 individuals, which is a number equal to the nations
paramilitary forces22. Associated businesses include scanners, surveillance technology, closed
circuit TV systems and protective equipment.
Traditionally, security companies in Pakistan have been manned by retired armed forces
personnel. However, with increase in demand for such services and a limited regulatory
framework, the proliferation of security companies is causing concern. The governments
position on foreign-owned security companies led to the departure from Pakistan of the
international security services provider G4S in 2012.
Considering that the single most mentioned variable mentioned by businesses as detrimental to
their operations is security, it is clear that security services companies will continue to remain in
high demand. This makes it necessary for laws and regulations to be drafted and promulgated to
govern this sector.

22 The Financial Times, October 11, 2012, Pakistans Security Business Booms, by Farhan Bokhari in Karachi
60

This study finds that most companies maintain security departments, often headed by a retired
military officer. However, the role of such departments is primarily that of watchmen who focus
on gatepost protocols. Apart from a few large companies, there is little evidence of modern,
innovative techniques that fit the need for the kind of intelligent, pre-emptive security systems
required in todays business environment.
Companies in the sector, with the exception of large security firms such as Wackenhut or
Phoenix, which have history of collaboration with overseas security companies, often offer only
security personnel. Important elements such as security analysis, recommendations for security
systems and equipment, personnel training to recognized standards, and response services are
often not available. This is a gap in the ability of the security sector to perform a comprehensive
role in managing security-based risk for companies.
Multinational companies engaged in Pakistan, particularly in remote regions routinely
commission security assessments. For example, one of the companies interviewed for this study
indicated that they waited to commence work in Balochistan for 6 years because of unfavourable
security assessments. Work began after the analysis showed that in the companys area of
operation, most security issues were related to politics, culture and resource ownership. 23
There is a need within the private security sector to make more in-depth analysis of security
incidence24 and model security scenarios, matched by security awareness training.25
Concerns
The growing demand for security services means that quality personnel are in short supply. This
means that the standard of service among security companies is highly variable. Smaller
companies who simply offer uniformed guards appear to be unaware of the importance of having
and following compliance standards for security providers.26 Only a handful of compliant security
companies provide quality services, but they are expensive. Others operate without license, or
with expired licences or incomplete documentation27.
Guards are typically deployed, are underpaid and undertrained28 so they are often incapable of
being able to provide security. Businesses who hire security services wish to cut costs, and often
compromise on quality and background checks of security staff. A number of cases have been
reported where such guards were themselves involved in crimes against their own clients.
Response
Business insure Security companies are beginning to understand that the situation today requires
specialized security services, and companies must assess the cost-benefit of deploying effective
security systems. Clients are not aware that an international code of conduct for private security
providers (Icon) exists for reference and that they can demand proof of training for the security

23 Tribes appear to target only the government-owned Oil and Gas Development Corporation (OGDC) for not guaranteeing land
rights and denying expected royalties
24 Security is a mathematical science based on statistical principles
25 sends visa email to employees training material to read and after a month, For staff weekly session on solutions--- security tip of
the month.
26 International Code of Conduct for Private Security Service Providers (ICoC) is a Swiss government convened, multi-stakeholder
initiative to clarify standards for the private security industry operating in complex environments, (http://www.icoc-psp.org)
27 In Karachi alone 138 private security service providers were found to be running without license, or expired licences
28 Incidents of ineffectiveness in conflict situation, handling guns improperly and harming themselves.


staff they hire. The situation now demands that businesses explore out of the box, technology-
centred solutions to augment their human-dependent security services.
Security companies also indicate that while the need is growing, there are not enough specialized
security managers who understand business-related security. As such, there is a need to develop
a cadre of corporate security experts who can not only understand the particular security needs
of a business client, but can conduct tactical and strategic security risk analyses around which
companies can design their security systems.
Way forward
Chambers and business association can play an effective role in expanding their members
knowledge about security codes of conduct and minimum standards of training. Institutes can
develop and offer specialized security course to train professional managers, and a focus on
technology solutions for security can augment the stretched human resource deployment.


62

Recommendations
This mapping study confirms the overwhelming concern that businesses share for deteriorating
law and order, and even though local threats vary by context, there unanimity on the importance
of security for business to continue. There is also a clear recognition that businesses have a
strategic role to play in conflict mitigation and peace-building, simply because they need secure
and stable environments to flourish and contribute to economic growth.
This study also confirms that businesses are ready and willing to join hands to create a
mechanism that helps them learn and respond to security threats in a more scientific manner,
but that this is not easy in the absence of government policy, institutional support and technical
expertise that is essential to create such a mechanism. Businesses are clear that they cannot do it
on their own, and need a national umbrella to function under.
The complexity and multidimensional
nature if conflict and its related issues The struggle between the haves and the have-nots,
particularly when the have-nots are numerous, is a
gets even more complex within potent cause for conflict, perhaps not so much the
specific local business environments. ethnic, sectarian or religious divide which becomes the
There is an important multi- icing on the cake or, in simple terms, the struggle
between the favoured and the disfavoured provides the
stakeholder role for business
necessary unhappy conditions for ethnic and sectarian
associations, media, government, strife to take root and prevail.
regulatory bodies, private security
providers, and academia, in Khalid Mirza
Former Chair, Securities & Exchange Commission
formulating and implanting a strategy
Former Chair, Competition Commission
for conflict mitigation and peace-
building.
Feedback from respondents identifies key stakeholders for such an effort and identifies specific
expectations associated with each stakeholder. The need to create a common mechanism that
can help convert thinking into action has been expressed clearly. This mechanism aims to address
issues of policy and socio-economic impact, as well as respond to the technical elements of
enhanced security preparation. The recommendations collated from the mapping study:
Securities & Exchange Commission:

Promote responsible business practices through awareness on its CSR guidelines, the
future version of which must include conflict mitigation and security planning.
Form Standing Committee on Peace within the already established CSR Forum29 to
coordinate with Chambers and Business Associations.
Engage all key stakeholder representatives through the CSR Forum to propagate
importance of responsible business for peace and security.

29 SECP is in a process of finalizing CSR guidelines

FPCCI and Chambers of Commerce:
Form a permanent committee on Responsible Business for Peace working on policy
advice and usable mechanisms for peace building.
Assess the feasibility and move towards a permanent resource unit on Partnership for
Peace with chapters at regional level for continuous coordination with all related
standing committees, research and other initiatives30 and stakeholders.
Explore partnerships for business opportunities and employment in conflict zones.
Sponsor or co-sponsor media programs focused on positive attitudes and tolerance.
Form permanent cell for sharing of information and resources on peace and business
within and outside of the membership.
Send clear messages against in-efficient processes and sector-biased policies, and suggest
ways to mitigate conflict.
SME Development Authority:

Improve collaboration with Chambers in linking SMEs, particularly those in conflict zones
to markets, and invest in programs aimed at efficiency and competitiveness.
Deliver security and community investment workshops designed for post-conflict

situations in collaboration with experts
Academia:
Revamp curriculum to include new practical courses that address conflict and business,
such as Peace-Building and Responsible Business.
Design and deliver seminars and conference events on building capacity among business
for peace and conflict mitigation.
Generate substantive and unique knowledge on the risks and opportunities for business
engagement in peace building.
Encourage and incentivise students of technology and business research to focus on
developing enterprise models that respond to community issues emerging from conflict
Link research with practice to inform investors through Business associations.
Business:
Include conflict and security issues as elements of business risk assessments, and make
decisions based on them, as bottom line issue.
Manage risk to go beyond social, environment compliances, to address long term impact
on society and security.
Consider all internal and external security and conflicts relevant to their sector and
geographical location at planning stage and allocate appropriate budget for security and
conflict mitigation

30 Dispute resolution Centre, Police liaison committees, law & order committees cross border trade committee, and research
department , Environment H&S committees, Labour and human right committees ,
64

Update company strategy and policies to consider conflicts and associated security risk.
Lobby business association and related ministries to license only internationally
compliant security service providers.
Media:
Articulate views that help business engage with government on improving governance,
security, anti-corruption measures.
Help and raise awareness on impact of irresponsible policies and practices on business.
Demand compliance on security, ethical codes and socio-environmental safeguards.
Government:
Provide incentives such as tax rebates, trade/tariff incentives that enable and incentivise
responsible business practices, conflict mitigation and community investment.
Encourage government procurement from business in conflict zones.
Incentivise training, implementation and adoption of ICoC31 for private companies.
Create reporting mechanism for security updates that can be shared in media briefings,
carried on cable and social media.
Encourage and facilitate creation of peace cells in companies and representative
bodies, linked to government policy forums and relevant line departments, to inform
government policy, incentives and sanctions.
Towards an Integrated Response

Specific Action Agenda
The mapping narrative works through many perspectives and contexts, but succeeds in
identifying relatively similar issues that concern business in an unstable and insecure business
environment.
Businesses, as well as government and the citizen sector are often clear about the problems, but
not so clear about what to do. While many continue to try and address challenges on their own,
particularly if the size of the business allows for generating the resources required, but for the
average business, the resources in terms of time, personnel, expertise and social capital are
simply not there. Since this is a collective issue, there is support for a collective response.
The two-part question that is asked by perhaps all respondents participating in the mapping
study is: What exactly has to be done, and how will we do it?

31 International Code of Conduct for Private Security Service Providers

The answer to the first part of this question is summarized in twelve specific action points as
follows:
I Enforcement of legislation and regulatory standards
II Enabling and Empowerment of local communities
III Encouraging Learning and sharing among business and stakeholders
IV Equity and fairness in dealing with host communities
V Employment creation through structured opportunities locally
VI Enhancement of skills relevant to jobs requirements and standards
VII Entrepreneurship skills and support to innovative developments
VIII Environment Stewardship through awareness and local organization-building
IX Economic uplift in measureable terms through addressing development indicators
X Equal opportunity, without discrimination to all capable individuals
XI Early-warning systems for effective enforcement of legal requirements
XII Established process for risk assessment and mitigation

Business & Peace Resource-Group

The mapping narrative clearly sees a natural space for a Business & Peace Cell which can act as
a knowledge management / resource centre as well as coordinating nucleus for processing,
producing and disseminating learning products for building awareness and capacity of the
business sector and its stakeholders to respond to conflict situations.
At the practical level, however, there are gaps in consultation, peer learning, communication,
coordinated responses, and an appreciation of the fact that even in disparate contexts, the issues
are very similar. Businesses complain of patchy support from their chambers or associations, but
also realize that other than the Federation of Pakistan Chambers of Commerce and Industry, or
government agencies like the SME Development Authority, there are no bodies that work across
the country. And that neither has resident expertise in conflict mitigation and peace-building.
66

This further strengthens the case for a multi-stakeholder initiative to visualize and roll out a
coherent national business and peace strategy, duly supported by all parties in their own
specific way.
There are numerous successful examples of similar multi-stakeholder and trans-sectoral
initiatives that create value for their membership without drawing away a lot of resources. Most
such initiatives are government supported and business funded, with active involvement of
academia and the media.
It is a practical proposal that has chances of success, given the importance of the topic, the
enthusiasm exhibited by respondents, and the availability of international and local expertise.
This study confirms that a number of regional chambers are trying to address issues brought to
the fore in this mapping, but severely lack effective coordination and expertise. A Business &
Peace Resource-Group has the potential to provide these two crucial resources.

"While there are a few businesses that, because of their special
nature, prosper and do well in conflict conditions, most
businesses thrive best in peaceful conditions.
Khalid Mirza
Former Chair, Securities & Exchange Commission
Former Chair, Competition Commission


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Annex
Interviews
Name Designation Company
1. Muhammad
Haroon Agar President Karachi Chamber of Commerce & Industry
2. Husnain
Ahmed CEO Allied marketing
3. Jameel
Akhtar Chief Executive Jameel International
4. Dr.
Shela Akram CEO Don Valley Pharmaceutical
5. Mohammad
Abdul Aleem Secretary General Overseas Chamber of `commerce & Industry
6. Mohammad
Ali Chairman Securities & Exchange Commission of Pakistan
7. Syed
Babar Ali Advisor Packages Limited
8. Dr.
Imran Ali Professor Karachi School of Business Leadership
9. Kramat
Ali Director Pakistan Inst. of Labor Education & Research
10. Dr
Sujat Ali Secretary Industry C & I Punjab small Industries Corporation
11. Dr.
Ayub Alvi Dean NU-FAST
12. Samir
Amir Director Research Pakistan Business Council
13. Rashid
Amjad Vice Chancellor Pakistan Inst. of Development Economics
14. Sohaib
Arshad CSR specialist Mobilink
15. Mohammad
Umer Arfi Corporate Relation Manager Pakistan Poverty Alleviation
16. Zaffar
Bakhtawari President Islamabad Chamber of Commerce
17. Tariq
Banuri Director UN Division for Sustainable Development
18. Dr.
Basharat Hassan Bashir Director General H&W Alternate Energy Development Board
19. Yassar
Shaki Butt Executive Director S.A.S. Group
20. Farrokh
K. Captain Board Member American Business Council.
21. Mohammad
Arif Chaudhry Manager Lagal Services Cell Small & Medium Enterprise Devp. Authority
22. Ingrid
Christensen Senior Specialist on OH S International Labor Organization
23. Moin
Ud Din Director Corporate operations Serena Hotels
24. Asad
Farid Executive Director Pak Iron & Steel Casting
25. Shamim
Ahmad Firpo Senior Vice President Karachi Chamber of Commerce & Industry
26. Ayub
ghuari M Senior Advisory Council Punjab board of Invest ment and Trade
27. Salim
Gauri CEO Netsol
28. Pervaiz
Ghias CEO Indus Motors
29. Jamil
Goheer CEO Kaulitatern Inc
30. Anam
ul Haq Manager Public affairs Engro Corp
31. Masood
Hashmi President Marketing Association of Pakistan
32. Salima
Hashmi Dean (SVAD) Beacon House University
33. Amin
Hashwani President Pakistan-India CEOs Business Forum (PICBF
34. Aezaz
Hussain CEO Kohat Cement
35. Mohammad
irfan Director Sales Witribe
36. Haji
Javaid President Employers Foundation
37. Asma
Javaid Human Resource Manage Packages Limited
38. Shafqat
Kakakhel BOD COD, Ex- Ambassador
39. Humaira
karim Reporter Dunia News
40. Ahsaan
Ullah Khan President UNGC Pakistan Local Network
41. Major
Gen Ali Baz Khan Director General Institute of Peace and Conflict

70

Name Designation Company
42. Anees
Khan Vice President KPK chamber
43. Dr.
Ashfaque. H. Khan Dean NUST Business School
44. Ayesha
Wafa Khan Deputy Director Tourism Protocol Services Serena
45. Sheryar
Khan Security Manager Lafarge Cement
46. Yahya
Khan Market Security Manager Nestle
47. Adl
Khattak MD Attock Refinery Limited
48. Shahab
Khawaja CEO Competitive Support Fund
49. Yousaf
Naseem khokar CEO Small & Medium Enterprise Devp. Authority
50. Iftikhar
Ali Malik Vice president SAARC Chamber
51. Iftekhar
Malik Vice President Khyber Pakhtun Khawa Chamber
52. Maliha
Malik CSR Manager Fauji Fertilizer Corporation
53. Mian
Abdul Mannan Vice Chairman Faisalabad Development Authority
54. Jawed
Mansha Manager Corporate affairs Pakistan International Airlines
55. Hammad
Mansoor Alumni Schulich School of Business
56. Sohail
Manzoor Manager Social Protection National Rural Support Program
57. Kamaran
Mirza CEO Pakistan Business Council
58. Saqib
Mohaudin CEO Business Support Fund
59. Justice
Saqib Nisar Judge Supreme Court
60. Tariq
Puri Chairman Trade Development Authority of Pakistan
61. Imtiaz
Rastgar Chairman Rastgar Engineering
62. Abdur
Rauf Group Director Geo TV
63. Ateeq
ur Rehman CEO COASTALS
64. Ms
Margaret Reade Rounds Program analyst International Labor Organization
65. Dr.
Sohail Safdar Director General, trade Policy Ministry of Commerce
66. Altaf
Saleem Former Chair ERRA Shakarganj Mills Limited
67. Babar
Salim Corporate Comm. Manager Indus Motors
68. Masqood
Siddiqui MD OGDCL
69. Captain
Haleem Sidiqui CEO Marine Group
70. Azmi
Thassim Past President Hambantota Chamber of Commerce
71. Sultan
Tiwana General Manager Small and Medium Enterprise
72. Asad
Umar Senior Vice President Pakistan Tahrek e Insaf
73. Imtiaz
Hussain Warraich GM & Legal Advisor Masood Textile Mills Limited
74. Nauman
Wazir CEO Frontiers Foundry and marble
75. Aamir
Zia Editor The News

Annex
Serena RBF Checklist
Checklist1: Does the companys Governance & M anagement have the tools to ensure responsible behavior? Checklist 2: Do Values and Principles Drive Business Performance??
Specific policies available
Embedded in day to day
Embedded in day to
available to all staff
Specific procedures
PERFORMANCE
Specific procedures
Specific policies
PREPARATION
PERCEPTION
day decisions
Importance is
PERFORMANCE
PREPARATION
understood
GOVERNANCE & M ANAGEMENT PRINCIPLES & VALUES
operational
PRACTICE
Importance is
PERCEPTION
understood
operational
PRACTICE
to all staff
decisions
Directors/ Board m embers interact w ith A Your vision /mission Code of conduct/core values
Y Y Y Y
stakeholders other than company /strategy m entions
A shareholders Y Y Y Y or has separate Business principles standards
Y Y Y Y
(e.g. bribery policy)
B Familiar w ith UN GC 10 principle Y Y Y Y
Board conducts regular m anagement
reviews Principles for Countering
B Y Y Y Y Y Y Y Y
Bribery and Corruption
C Well defined process

Board decisions are transparent and open to communicate P & Y Y Y Y
V to internal
C Y Y Y Y
D Review policies and Procurement Y Y Y Y
procedures to ensure Hiring/firing Y Y Y Y
values are consistent Training Y Y Y Y
Board can be held accountable for negative
with Appraisal/reward Y Y Y Y
social & environmental impacts of their
decisions E Incentives for Y Y Y Y
Y N Y Y
F Process to
disapprove unethical
Y Y Y Y
Checklist 3: Does the company guarantee consistent Compliance w ith proper Disclosure Checklist 4: Do company decisions factor in Stakeholder Involvement?
to day
dures
stood
in day
Embe
proce
PERC
PERF
dded
polici
ANCE
to all
tional
ATIO
staff
dures
Impor
ble to
Speci
Speci
Impo
rtanc
rstoo
ARAT
all
under
Specif
Specif
decis
tance
EPTI
ORM
ation
availa
unde
PRAC
CTIC
opera
decisi
PREP
Embe
proce
PERC
PERF
avail
able
ions
dded
TICE
polici
day
oper
staff
PAR
PRA
ANC
STAKEHOLDER INVOLVEMENT & SOCIAL INVESTMENT
PRE
EPTI
ORM
day
COMPLIANCE & DISCLOSURE
e is
ON
ION
ons
es
fic
fic
ON
to
in
es
al
N
E
ic
ic
is
A Strategy m entions or Social equity A Policy document Community initiatives Y Y Y Y

has separate policy for Y Y Y Y mentions importance
CSR strategy Y Y Y Y
of SH involvement in...
Environment Y Y Y Y Business decisions Y Y Y Y
B Familiar w ith UNGC COP N N N N
disclosure B Have formal/informal Stakeholder m ap
GRI Y Y Y Y
frameworks/guidelines Y Y Y Y processes for external
UNCTAD /ISAR stakeholder Review /feedback
Y Y Y Y Y Y Y Y
involvement
C Have certification on SA8000 Y Y Y Y
Interactive w ebsite
ISO14000 Y Y Y Y Y Y Y Y
OSHA Y Y Y Y Focus group
Y N N N
WRAP N N N N
E Initiatives to Health & Safety Y Y Y Y C SH feedback is shared Formally Y Y Y Y
improve/impact Recycling/reuse Y Y Y Y with employees
Informally Y Y Y Y
Waste Y Y Y Y
D SH feedback is Directly
Energy efficiency Y Y Y Y Y Y Y Y
reflected in business
F Initiatives to Worker benefits Y Y Y Y plan Indirectly
improve/impact Y Y Y Y
Employee benefits Y Y Y Y
Working E Have communication Awareness sessions
Y Y Y Y Y Y Y Y
environment mechanisms for in policies/procedures
G Procurement and Energy efficiency satisfying internal Grievance/feedback
Y Y Y Y Y Y Y Y
buying decisions based stakeholders system
Recyclability Y Y Y Y
on F Grievance /complaint

Environment Y Y Y Y
Y Y Y Y system
friendliness

Checklist 5: Do Customers and Integrity Determine Product Quality? Checklist 6: Does the companys projection of social responsibility stem from financial viability?
Embedded in day to
Specific procedures
Specific procedures
PERFORMANCE
Specific policies
PREPARATION
PERFORMANCE
PERCEPTION
day decisions
Importance is
PREPARATION
CONSUMER & PRODUCT FOCUS

Importance is
FINANCIAL VIABILITY & CAPTILIZATION

understood
PERCEPTION
operational
PRACTICE
understood
operational
PRACTICE
to all staff
decisions
A Have policy on or Consumer/SH Y Y Y Y A Aware of SRI index & FT4Good Y/N Y/N Y/N Y/N
strategy document rights criteria and have
mentions Env. safe product Y Y Y Y mechanisms to reach RC Index Y/N Y/N Y/N Y/N
Process Y Y Y Y any benchmarks
responsibility CCI Y/N Y/N Y/N Y/N
Ethical m arketing Y Y Y Y B Formally Sustainability Y Y Y Y
/advertising communicate social reporting
B Customer Y Y Y Y and environmental UNCTAD/ISAR1 Y Y Y Y
hotline/person responsibilities to UNGC COP N N N N
responsible for financial institutes Env. Reporting Y Y Y Y
consumer/SH C Systems for cost Social Y Y Y Y
feedback effective m echanisms compliances
C Dept/mech for Y Y Y Y for Env. compliance Y Y Y Y
product innovation Ethical m arketing Y Y Y Y
based on Env, Supply chain Y Y Y Y
concerns verifications
D Dept/mech for Y Y Y Y D Have m echanism for Social Y Y Y Y
process improvement evaluating investments
based on S & E performance Environmental Y Y Y Y
concerns /financial benefits of investments
E Systems exists for Avoiding potential Y Y Y Y
E Mechanism to demand Y Y Y Y "damaging
social compliance events"
from supply chain Mitigating the Y Y Y Y
effects of a crisis
after occurrence

72

Annex
Packages RBF Checklist
Checklist1: Does the companys Governance & M anagement have the tools to ensure responsible behavior? Checklist 2: Do Values and Principles Drive Business Performance??
Specific policies
Specific procedures
Embedded in day to
PERFORMANCE
PREPARATION
available to all
Importance is
Embedded in
Specific policies
PERCEPTION
understood
operational
PERFORMANCE
procedures
Importance is
PREPARATION
day to day
PRACTICE
day decisions
decisions
PERCEPTION
understood
operational
Specific
PRACTICE
staff
Directors/ Board m embers interact w ith stakeholders A Your vision /mission Code of conduct/core
Y Y Y Y
other than company shareholders /strategy m entions or values
A Y Y Y Y has separate Business principles
standards (e.g. bribery Y Y Y Y
pol)
Board conducts regular m anagement reviews B Familiar w ith UN GC 10 principle Y Y Y Y

Principles for
Countering Bribery and Y Y Y Y
B Y Y Y Y Corruption
to communicate P & V
N N N N
to internal
Board decisions are transparent and open
stakeholders
C Y Y Y Y
with Appraisal/reward Y Y Y Y
Board can be held accountable for negative social &
environmental impacts of their decisions E Incentives for ethical
Y Y Y Y
behavior
D Y Y Y Y
F Process to
disapprove unethical Y Y Y Y

Checklist 3: Does the company guarantee consistent Compliance w ith proper Disclosure?
behavior
Checklist 4: Do company decisions factor in Stakeholder Involvement?
PREPARATION
Specific policies
procedures
to all staff
PRACTICE
Embedded
operationa
PERCEPTI
PERFORM
E Embedded in
Importanc
PREPARA
PERFORMANC
understoo
available to all
decisions
PERCEPTION
available
Importance is
in day to
policies
Specific
Specific
understood
operational
COMPLIANCE & DISCLOSURE
procedures
PRACTICE
day to day
ANCE
TION
decisions
day

e is
ON
Specific
d
staff
A Strategy m entions or has Social equity Y Y Y Y
separate policy for Environment Y Y Y Y A Policy document Community initiatives Y Y Y Y
B Familiar w ith disclosure UNGC COP y y y Y mentions importance of
frameworks/guidelines CSR strategy Y Y Y Y
GRI SH involvement in...
N N N N
Business decisions Y Y Y Y
UNCTAD /ISAR N N N N
B Have formal/informal Stakeholder m ap N N N N
C Have certification on SA8000 N N N N
processes for external Review /feedback Y Y Y Y
ISO14000 Y Y Y Y stakeholder involvement
Interactive w ebsite N N N N
OSHA Y Y Y Y
WRAP N N N N Focus group N N N N
E Initiatives to Health & Safety Y Y Y Y Survey Y Y Y Y

improve/impact Recycling/reuse Y Y Y Y C SH feedback is shared w ith Formally N N N N
Waste m inimization Y Y Y Y employees
Informally Y Y Y Y
Energy efficiency Y Y Y Y
D SH feedback is reflected in Directly Y Y Y Y
F Initiatives to Worker benefits Y Y Y Y
improve/impact business plan Indirectly Y Y Y Y
Working environment Y Y Y Y E Have communication Awareness sessions on
Y Y Y Y
mechanisms for satisfying policies/procedures
G Procurement and buying Energy efficiency Y Y Y Y
internal stakeholders Grievance/feedback sys Y Y Y Y
decisions based on
Recyclability Y Y Y Y

Environment friendliness Y Y Y Y F Grievance /complaint sys Y Y Y Y
Specific policies
PREPARATION
E Embedded in
PERFORMANC
available to all
PERCEPTION
Importance is
Specific procedures
understood
operational
procedures
PRACTICE
day to day
PERFORMANCE
decisions
PREPARATION
Specific
Importance is

PERCEPTION
staff
understood
operational
PRACTICE
to all staff
decisions
A Aware of SRI index & FT4Good

A Have policy on or strategy Consumer/SH rights Y Y Y Y criteria and have
document m entions mechanisms to reach any RC Index
Env. safe product Y Y Y Y benchmarks
CCI
Process responsibility Y Y Y Y B Formally communicate Sustainability reporting Y Y Y Y
Ethical m arketing Y Y Y Y social and environmental UNCTAD/ISAR Y Y Y Y
/advertising responsibilities to UNGC COP
financial institutes Env. Reporting
B Customer hotline/ person responsible for Y Y Y Y
consumer/SH feedback C Systems for cost effective Social compliances Y Y Y Y
C Department/mechanisms Y Y Y Y mechanisms for Env. compliance Y Y Y Y
for product innovation Ethical m arketing Y Y Y Y
based on env concerns Supply chain verifications Y Y Y Y
D Department/mechanism Y Y Y Y D Have m echanism for Social investments Y Y Y Y
for process improvement evaluating performance Environmental Y Y Y Y
based on S & E concerns /financial benefits of investments
E Systems exists for Avoiding potential Y Y Y Y
E Mech to demand S Y Y Y Y "damaging events"
compliance by supply
Mitigating the effects of a Y Y Y Y
chain
crisis after occurrence


Annex
Indus Motors RBF Checklist
Checklist1: Does the companys Governance & M anagement have the tools to ensure responsible behavior? Checklist 2: Do Values and Principles Drive Business Performance?
Specific procedures
Embedded in day
to day decisions
Specific policies
PERFORMANCE
Specific procedures
PREPARATION
Importance is
PERCEPTION
understood
operational
PERFORMANCE
PRINCIPLES & VALUES
Importance is
PRACTICE
PREPARATION
PERCEPTION
GOVERNANCE & M ANAGEMENT

understood
operational
to all staff
PRACTICE
decisions
A Your vision /mission Code of conduct/core
/strategy mentions or values Y Y Y Y
Directors/ Board m embers interact w ith
Not Sure has separate
A stakeholders other than company shareholders Y Y Y Business principles
what it m eans
standards (e.g. bribery Y Y Y Y
policy)
1
B Familiar with UN GC 10 principle Y Y Y Y
Board conducts regular m anagement reviews
Principles for Countering
Y Y 1 Y Y
B Y Y Y Y Bribery and Corruption
C rocess to communicate
Y/N Y/N Y/N Y/N
P & V to internal SH
C Y Y Y Y values are consistent Training Y Y Y Y
with
Appraisal/reward Y Y Y Y
1
E Incentives for ethical
Y Y Y
Board can be held accountable for negative social behavior
D & environmental impacts of their decisions Y Y Y Y F Process to disapprove
unethical behavior Y Y Y Y
Checklist 3: Does the company guarantee consistent Compliance w ith proper Disclosure? Checklist 4: Do company decisions factor in Stakeholder Involvement?
PREPARATION
E Embedded in
E Embedded in
PREPARATION
available to all
available to all
PERFORMANC
PERFORMANC
Importance is
Importance is
PERCEPTION
PERCEPTION
understood
understood
operational
operational
procedures
procedures
day to day
day to day
PRACTICE
PRACTICE
decisions
decisions
COMPLIANCE & DISCLOSURE STAKEHOLDER INVOLVEMENT & SOCIAL INVESTMENT
policies
policies
Specific
Specific
Specific
Specific
staff
staff
A Strategy m entions or Social equity A Policy document Community initiatives Y/N Y/N Y/N Y/N
Y/N Y/N Y/N Y/N
has separate policy for mentions importance of
CSR strategy Y/N Y/N Y/N Y/N
Environment Y Y Y Y SH involvement in...
B Familiar with UNGC COP Y Y Y Y Business decisions Y Y Y Y
disclosure 1
Y Y Y Y B Have formal/informal Stakeholder m ap
frameworks/guidelines Y Y Y Y
processes for external
UNCTAD /ISAR Y/N Y/N Y/N Y/N
stakeholder involvement Review /feedback
Y Y Y Y
C Have certification on SA8000 Y/N Y/N Y/N Y/N
ISO14000 Y Y Y Y Interactive website Y Y Y Y
OSHA Y Y Y Y Focus group
Y Y Y Y
WRAP
E Initiatives to Health & Safety Y Y Y Y Survey
Y Y Y Y
improve/impact Recycling/reuse Y Y Y Y
C SH feedback is shared Formally Y Y Y Y
Waste m inimization Y Y Y Y
with employees
Energy efficiency Y Y Y Y Informally Y/N Y/N Y/N Y/N
F Initiatives to Worker benefits Y Y Y Y D SH feedback is reflected in Directly Y Y Y Y
improve/impact business plan Indirectly Y/N Y/N Y/N Y/N
Working environment Y Y Y Y E Have communication Awareness sessions
Y Y Y Y
G Procurement and Energy efficiency mechanisms for satisfying opolicies/procedures
Y Y Y Y
buying decisions based internal stakeholders Grievance/feedback
Recyclability Y Y Y Y Y Y Y Y
on system

Environment friendliness F Grievance /complaint sys
Y Y Y Y Y Y Y Y

PREPARATION
PERFORMANC
Specific policies
Specific procedures
PERCEPTION
E Embedded in
available to all
Importance is
PRACTICE
PERFORMANCE
understood
procedures
operational
day to day
Importance is
PREPARATION
CONSUMER & PRODUCT FOCUS FINANCIAL VIABILITY & CAPTILIZATION

PERCEPTION
decisions
understood
Specific
operational
to all staff
PRACTICE
decisions
staff
A Have policy on or Consumer/SH Y Y (PBO & W arranty Y Y A Aware of SRI index & FT4Good Y/N Y/N Y/N Y/N
strategy document rights booklet) criteria and have
RC Index Y/N Y/N Y/N Y/N
mentions Env. safe product Y Y Y Y mechanisms to reach
1
any benchmarks CCI Y/N Y/N Y/N Y/N
Process Y Y Y Y
B Formally communicate Sustainability Y/N Y/N Y/N Y/N
responsibility
social and reporting
Ethical m arketing Y Y Y Y
environmental UNCTAD/ISAR Y/N Y/N Y/N Y/N
/advertising 1
1
responsibilities to
B Customer hotline/person y y y y UNGC COP Y/N Y/N Y/N Y/N
financial institutes
responsible for
Env. Reporting Y/N Y/N Y/N Y/N
consumer/SH feedback
C Systems for cost Social compliances Y/N Y/N Y/N Y/N
1
C Department/mechanisms Y Y Y Y effective m echanisms Env. compliance Y/N Y/N Y/N Y/N
for product innovation for Ethical m arketing Y/N Y/N Y/N Y/N
based on environmental Supply ch verif Y/N Y/N Y/N Y/N
concerns D mechanism for Social investments y y y Y
D Department/mechanism Y Y Y Y evaluating perf Environmental y y y y
for process improvement /financial benefits investments
based on social &
E Systems exists for Avoiding potential Y/N Y/N Y/N Y/N
environment concerns
1
"damaging events
E Mechanism to demand Y Y Y Y
Mitigating the Y/N Y/N Y/N Y/N
social compliance from
effects of a crisis
supply chain

after occurrence

74

Annex
FFC RBF Checklist
Checklist1: Does the companys Governance & M anagement have the tools to ensure responsible behavior? Checklist 2: Do Values and Principles Drive Business Performance??=Checklist 2: Do Values and Principles Drive Biness Performance?
CE Embedded
Importance is
in day to day
PERCEPTION
PERFORMAN
Specific procedures
PREPARATIO
understood
operational
available to
procedures
PRACTICE
N Specific
Specific policies
decisions
PERFORMANCE
PRINCIPLES & VALUES
policies
all staff
Specific
Importance is
PREPARATION
GOVERNANCE & M ANAGEMENT
PERCEPTION
understood
operational
PRACTICE
decisions
A Your vision /mission Code of conduct/core
Y Y Y Y
Directors/ Board m embers interact w ith stakeholders /strategy mentions or values
has separate Business principles
A other than company shareholders Y Y Y Y standards (e.g. Y Y Y Y
bribery policy)
Board conducts regular m anagement reviews B Familiar with UN GC 10 principle Y Y Y Y
Principles for
B Y Y Y Y N N N N
Countering B & C
to communicate P & V Y Y Y Y
to internal stakeholders
C Y Y Y Y
Board can be held accountable for negative social & Appraisal/reward Y Y Y Y
Y Y Y Y
D Y Y Y Y behavior
F Process to disapprove
unethical behavior
Y Y Y Y
Checklist 3: Does the company guarantee consistent Compliance w ith proper Disclosure? Checklist 4: Do company decisions factor in Stakeholder Involvement?
procedures
Embedded
to all staff
Embedded
operationa
PRACTICE
PERCEPTIO
PREPARAT
operationa
to all staff
PREPARAT
Importanc
procedure
understoo
l PERFORM
PRACTICE
Importanc
understoo
PERFORM
decisions
PERCEPTI
decisions
available
in day to
available
in day to
policies
policies
Specific
Specific
Specific
Specific
COMPLIANCE & DISCLOSURE STAKEHOLDER INVOLVEMENT & SOCIAL INVESTMENT
ANCE
ANCE
ION
day
ION
day
e is
ON
e is
d
d
N
s
l
A Strategy m entions or has Social equity Y Y Y Y A Policy document m entions Community initiatives Y Y Y Y
separate policy for Environment Y Y Y Y importance of SH
CSR strategy Y Y Y Y
B Familiar with disclosure UNGC COP involvement in...
Y Y Y Y
frameworks/guidelines Business decisions Y Y Y Y
GRI Y Y Y Y
B Have formal/informal Stakeholder m ap Y Y Y Y
UNCTAD /ISAR Y Y Y Y
processes for external Review /feedback Y Y Y Y
C Have certification on SA8000 Y Y Y Y
stakeholder involvement Interactive website Y Y Y Y
ISO14000 Y Y Y Y
OSHA Y Y Y Y Focus group Y Y Y Y
E Initiatives to Health & Safety Y Y Y Y Survey Y Y Y Y
improve/impact Recycling/reuse Y Y Y Y C SH feedback is shared with Formally Y Y Y Y
Waste m inimization Y Y Y Y employees
Informally Y Y Y Y
Energy efficiency Y Y Y Y D SH feedback is reflected in Directly Y Y Y Y
F Initiatives to Worker benefits Y Y Y Y business plan Indirectly Y Y Y Y
improve/impact Employee benefits Y Y Y Y E Have communication Awareness sessions on
Y Y Y Y
Working environment Y Y Y Y mechanisms for satisfying policies/procedures
G Procurement and buying Energy efficiency Y Y Y Y internal stakeholders Grievance/feedback system Y Y Y Y
decisions based on Recyclability Y Y Y Y F Grievance /complaint sys

Environment friendliness Y Y Y Y Y Y Y Y
Specific procedures
Embedded in day to
understood
Importance
available to
procedures
PERCEPT
operational
Specific policies
Embedded
PRACTIC
PERFORMANCE
PREPAR
PERFOR
MANCE
Importance is
PREPARATION
in day to
decisions
policies
day decisions
ATION
Specific
Specific
all staff
PERCEPTION

understood

operational
PRACTICE
ION
day
E
is
A Aware of SRI index & FT4Good Y Y Y Y

A Have policy on or strategy Consumer/SH rights N N N N
criteria and have RC Index Y Y Y Y
document m entions mechanisms to reach any
Env. safe product Y Y Y Y CCI Y Y Y Y
benchmarks
Process responsibility Y/N Y/N Y/N Y/N
B Formally communicate Sustainability reporting Y Y Y Y
Ethical m arketing /advertising N N N N social and environmental UNCTAD/ISAR Y Y Y Y
B Customer hotline/person Y YY Y Y responsibilities to financial UNGC COP Y Y Y Y
responsible for institutes Env. Reporting Y Y Y Y
consumer/SH feedback C Systems for cost effective Social compliances Y Y Y Y
C Department/mechanisms Y YY Y Y mechanisms for Env. compliance Y Y Y Y
for product innovation Ethical m arketing Y Y Y Y
based env concerns Supply chain verifications Y Y Y Y
D Depart/mechm for process Y YY Y Y D Mecc for evaluating perf Social investments Y Y Y Y
improvement based on S & /financial benefits Environmental investments Y Y Y Y
E concerns
E Systems exists for Potential damages Y Y Y Y
E Mech. to demand social Y YY Y Y
compliance by supply chain

avoiding and m itigating effects of a crisis Y Y Y Y


Annex
Kohat Cement RBF Checklist

Checklist1: Does the companys Governance & M anagement have the tools to ensure responsible behavior? Checklist 2: Do Values and Principles Drive Business Performance??=Checklist 2: Do Values and Principles Drive Biness Performance?
Embedded in day
Specific procedures
Embedded in day to
PERFORMANCE
to day decisions
Specific policies
PREPARATION
available to all
PERCEPTION
Importance is
Specific policies
PERFORMANCE
PREPARATION
understood
Importance is
operational
procedures
PRACTICE
PERCEPTION
day decisions
understood
operational
PRACTICE
Specific
staff
Directors/ Board m embers interact w ith stakeholders A Your vision /mission Code of conduct/core values Y
other than company shareholders /strategy m entions or Business principles standards (e.g.
A Y has separate Y
bribery policy)
B Familiar w ith UN GC 10 principle N
Board conducts regular m anagement reviews Principles for Countering
Y
Corruption
B Y C Well defined process
to communicate P & V
?
to internal
Board decisions are transparent and open stakeholders
D Review policies and Procurement Y
C Y
procedures to ensure Hiring/firing Y
values are consistent Training Y
Board can be held accountable for negative social & w Appraisal/reward Y
D Y Y
behavior

F Process to disapprove
Checklist 3: Does the company guarantee consistent Compliance w ith proper Disclosure?
unethical behavior
Checklist 4: Do company decisions factor in Stakeholder Involvement?
Y
A
policies
available
Specific
Specific
PREPAR
availabl
underst
PERFOR
policies
PTION
operatio
PERCEP
MANCE
ance is
PRACT
decision
Embedd
PREPA
procedu
operati
PERFO
Specific
Specific
PRACTI
Importa
COMPLIANCE &
e to all
ATION
PERCE
Import
decisio
Embed
RATIO
proced
underst
ded in
day to
RMAN
day to

staff
nce is
TION
ures
onal
ood
day
to all
ed in
CE
DISCLOSURE
ICE
staff
ood
day
CE
ns
res
nal
N
s
B Familiar w ith UNGC COP
A Policy document Community initiatives
disclosure GRI mentions importance of
frameworks/guidelines CSR strategy Y
UNCTAD /ISAR N SH involvement in...
Business decisions
C Have certification on SA8000
ISO14000 B Have formal/informal Stakeholder m ap
OSHA N processes for external Review /feedback
stakeholder involvement
E Initiatives to Health & Safety Y Interactive w ebsite Y
improve/impact Recycling/reuse Y Focus group Y
Waste m inimization Y C SH feedback is shared w ith Formally Y
Energy efficiency Y employees Informally
F Initiatives to Worker benefits D SH feedback is reflected in Directly Y
improve/impact Employee benefits Y business plan Indirectly
Working environment Y E Have communication Awareness sessions on
Y
G Procurement and Energy efficiency Y mechanisms for satisfying policies/procedures
buying decisions based Recyclability Y internal stakeholders Grievance/feedback system Y

on Environment friendliness F Grievance /complaint syst
Y Y

Specific procedures
Embedded in day to
available to all
PERCEPTION
CE Embedded
Importance is
PREPARATIO
PERFORMAN
in day to day
understood
operational
Specific policies
procedures
PERFORMANCE
PRACTICE
PREPARATION
N Specific
Importance is
decisions
PERCEPTION

day decisions
policies
Specific
understood
operational
PRACTICE
staff
Y/N Y/N Y/N Y/N

A Have policy on or strategy Consumer/SH rights
document m entions A Aware of SRI index & FT4Good Y/N Y/N Y/N Y/N
Env. safe product criteria and have
Process responsibility mechanisms to reach any RC Index Y/N Y/N Y/N Y/N
benchmarks CCI Y/N Y/N Y/N Y/N
Ethical m arketing /advertising Y
B Formally communicate Sustainability reporting Y/N Y/N Y/N Y/N
B Customer hotline/person Y social and environmental UNCTAD/ISAR Y/N Y/N Y/N Y/N
responsible for responsibilities to UNGC COP Y/N Y/N Y/N Y/N
consumer/SH feedback financial institutes
Env. Reporting Y/N Y/N Y/N Y/N
C Dept/mech for product Y
innovation based on C Systems for cost effective Social compliances Y/N Y/N Y/N Y/N
environmental concerns mechanisms for Env. compliance Y/N Y/N Y/N Y/N
Ethical m arketing Y/N Y/N Y/N Y/N
D Dept/mech for process Y
Supply chain verifications Y/N Y/N Y/N Y/N
improvement based on S
D Have m echanism for Social investments Y/N Y/N Y/N Y/N
& E concerns
evaluating performance Environmental investments Y/N Y/N Y/N Y/N
/financial benefits of
E Mech to demand S N E Systems exists for Avoiding potential "damaging Y/N Y/N Y/N Y/N
compliance from Supply events"
Chain Mitigating the effects of a crisis Y/N Y/N Y/N Y/N

after occurrence

76

Annex
Key Questions

32
KQ! Key socioeconomic issues contributing to
conflict that effect Business
. Importance Solutions
33
(1-5)
Understanding of types of conflicts
34
Lack of understanding of the regions
35
Conflicting Interests
Capacity for resource utilization
36
Rent- Seeking mindset
Isolated islands of development
general lack of education
poverty & ignorance

KQ2 Briefly explain kind of Conflicts experienced
by business in general how can business
identify & resolve conflicts related to local
situations
Importance Examples
37
(1-5)
Reasons of conflict in local communities Health
Lack of Education
Scarcity of Water
Local resource and infrastructure

How to mitigate Empowerment and participation
Equity and fair process
Local priority in decision-making
38

Role of business Fill Gaps in capacity and knowledge
skills development soft and technical
Youth career guidance
Youth cultural revival in conflict zones
Entrepreneurship training-
Dialogue and investigation
Support local think tanks to research

32
briefly share your views in the space., select from the options and add any other not mentioned here .
33
choose importance 1-5 , I for the factor extremely important to you and 5 for least important
34
conflict ridden region
35
of different companies, Donors, Government
36
privileges offered or rent paid to buy peace
37
choose importance 1-5 , I for the factor extremely important to you and 5 for least important.
38
any other

KQ3 What strengths/opportunities /influence
business sector can leverage to engage in
peace building activities
Importance Examples
(1-5)

Strengths/Capacity Entrepreneurship capacity
Finances to invest
Business Acumen
Linkages

Opportunities Promote social and cultural activities
Jirgas- use for traditional conflict
resolution mechanism
Traditional structure and systems

Influence Peace curriculum for Pakistan
Government and academia Promotion of sports
Policies/regulations

KQ4 Challenges/ constraints faced by
business to engage in peace-building
activities?
How can business overcome this
Challenges and constraints Importance Effects
(1-5)
Security of Investment
Absence of Leadership
Missing dispute resolution experience
Feudal mindset


78

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