Ukraine one year on: can businesses operate responsibly in conflict zones?

International companies are already seeking to invest in Ukraine’s post-war economic recovery, but can business ever be a force for good in war-affected areas?
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Dozens of international companies, from Deloitte to McDonalds, declared they would suspend operations in Russia following its invasion of Ukraine a year ago. Motivations ranged from avoiding sanctions to protecting their staff, or simply showing solidarity with the people of Ukraine.

However, far fewer decided to support Ukraine by expanding their presence there. Kingspan Group was one exception. The Irish construction materials firm announced in June that it will construct a €200m (£176m) building technology campus in the Lviv region over the next half-decade.

In some ways, the move was a no-brainer. Kingspan has operated in Ukraine since 2005, “so we know our way around there,” says Mike Stenson, head of innovation at the group. The country’s location is perfect for exporting to the EU, while post-war reconstruction – the costs of which could soar to £622m – will likely fuel massive demand for Kingspan’s products.

Even so, many companies would be hesitant to invest before the outcome of the war is more certain. Apart from the continuing security risks, corporate activity in war zones can be controversial, perhaps bringing to mind blood-soaked mines or greased palms in corrupt regimes. 

However, a growing field of research (appropriately titled Business for Peace) suggests, if run responsibly, businesses can be a force for good amid conflict. 

What is Business for Peace? 

Business for Peace asks some big questions. Among them: how can local and international companies help to promote real peace? What are their responsibilities when trading in war-torn or fragile states? Wouldn’t it be easier to exit the country altogether?

Christopher Williams is professor in strategy and international business at the University of York. He says: “We hear about scandals involving certain companies around the world… but the average person in the street doesn’t think about what role businesses can play in helping to bring about and sustain peace in challenging environments.

“We’re not talking about encouraging combatants to lay down arms straight away, but helping to implement and sustain the conditions for peace.”

It can be a strategic minefield for companies because they can be accused of ‘peace-washing’

Williams points to Heineken’s investment in social projects amid intrastate conflict around the world as an example of getting it right. In Ethiopia, the brewer paid for clean water and sanitation and sourced barley from locals, while in Myanmar it made roads safer. Both of these helped to create a “zone of responsibility” around its breweries in each country, he says.

Other examples include the business-led #SoyCapaz peace campaign in Colombia, the Consultative Business Movement that aided democracy in South Africa, and Northern Irish businesses choosing to hire ex-combatants after the Troubles. 

Even normal business activities such as creating jobs and boosting the local economy can have powerful effects, says Williams. For instance, some companies have made efforts to hire demobilised rebels. “Many of these places can flip back into violence very easily. So, you don’t want these often young, uneducated male combatants to be left for too long without a job.”

Of course, multinational corporations are not social enterprises. For many, the equation is simple: a more peaceful society generates better profits. And promoting peace come with risks. 

“It’s a strategic minefield for companies… because if they get it wrong, they can be accused of all kinds of bad behaviour in terms of ‘peace-washing’ or public relations exercises,” says Williams. In the worst-case scenario, corporations and their workers could become targets for violence or inflame tensions between combatants.

Operating responsibly in Ukraine

Elon Musk’s satellite company, Starlink, illustrates how fine that line can be. At first, it received glowing headlines for providing communications services to Ukrainian forces. But the company faced a backlash this month after it stopped the military from using its technology to control drones.

Companies seeking to operate in Ukraine will face similar tough decisions for years to come – even after the war ends. For a start, random outbreaks of violence are likely to continue long after any peace deal.

Then there are ongoing tensions. Williams outlines the hypothetical situation of a multinational opening a factory in the occupied Donbas region of eastern Ukraine following the war. People who had fought for both Russia and Ukraine could end up working side-by-side.

“While they may have been neighbours before, they’re clearly going to have bad feelings towards each other [post-war],” says Williams. “So how do you recruit? How do you select? How do you onboard? How do you manage workers who have recently been firing guns at each other? It raises all kinds of implications for human resource management.”

‘Ukraine is open for business’

It might sound ghoulish to think about future economic opportunities while civilians are being shelled and buildings torn apart.  But Ukraine is actively courting foreign investment as it gears up to emerge from the war with a stronger, future-proofed economy, recently launching a £330bn drive.

Opportunities to do business throughout the world would be the strongest support possible for Ukraine

“Ukraine is ready and open for business,” says Sergiy Tsivkach, executive director at government agency UkraineInvest. “We do not ask for donations, we ask for opportunities to do business with our partners throughout the world… that would be probably the strongest support [possible] for our people.”

Tsivkach says UkraineInvest has already supported $1.5bn of investment, with $2.3bn more in the pipeline. Companies that invest now will be in pole position to take advantage of that hoped-for economic recovery, he argues. They include Bayer, which has announced an investment of €35m, alongside millions in aid, and Uber, which responded to a government call to expand its services in the country.

While Kingspan’s project is still in its early stages, Stenson says it will be full steam ahead barring a major development in the war.

“There were lots of discussions,” he says. “But once we made the decision there hasn’t been any hesitancy and there still isn’t any hesitancy. We see it as really being something fantastic both for Kingspan and the local economy.”