New Approaches to Assessing the Social Impact of Business in Fragile and Conflict-affected Settings

This discussion paper has been written by Mark van Dorp and Marcel Smits at the request of LSE IDEAS. It aims to review current knowledge and practices around ESG impact measurement in more Fragile and Conflict-affected Settings (FCS) including the barriers and opportunities for applying new social impact assessment guidance that would contribute to responsible and sustainable business conduct. The paper features a novel approach that clarifies the material issues relevant to the social impact by small and large companies operating in FCS using the concepts of Human Security and Positive Peace and how they help to identify and measure contributions to the Sustainable Development Goals (SDGs). The authors attempt to show the additional benefits of the use of the new measurement approach in terms of other and more valid results it will yield in comparison with existing approaches. The paper is providing an outline of this new approach that will form the basis of a guidance for businesses. 

The development of this paper has been informed by a series of interviews with representatives from businesses, including the financial sector, and a two-day roundtable discussion in The Hague in February 2020 with private sector and government representatives, academics and civil society actors. The guidance is intended to serve companies that wish to clearly define their social responsibility, in order to not only avoid doing harm but also ‘doing good’. It also offers a way to simplify reporting on social responsibility standards and guidelines and ultimately create more value for their business. Indirectly, it is meant to assist ESG rating agencies and financial institutions and investors when reviewing the risk management by the companies in settings where higher risks are involved. 

The production of this paper, the series of interviews and the roundtable discussion in The Hague were supported by the Knowledge Platform Security & Rule of Law through its Knowledge Management Fund, as well as through own contributions by LSE IDEAS and the Institute for Economics & Peace. The authors are very grateful for the support and inputs of Dr. Mary Martin, Dr. Vesna Bojicic-Dzelilovic and Alice Bryant of the London School of Economics, as well as to the participants to the Roundtable in The Hague. Any feedback, questions or suggestions can be sent to the authors: mark@bureauvandorp.eu or marcel@fcsimpact.com.