INVESTING IN STABILITY

The document argues that financial institutions can either sustain or mitigate conflict through their investment decisions and resource flows. It identifies tangible risks for the financial sector, including litigation, regulatory costs, and asset defaults, while highlighting 'win-win' opportunities such as 'conflict-free' investment funds and first-mover advantages in post-conflict economies. The text outlines specific levers for peacebuilding—core business, policy dialogue, and social investment—and provides a framework for action across the conflict cycle (conflict-prone, during conflict, and post-conflict).

• Violent conflicts in underdeveloped regions are frequently linked to human insecurity and competition over the control of or access to scarce or valuable natural resources, often exacerbated by policies that undermine resource-based livelihoods.
• Financial institutions face several tangible risks from conflict, including the potential for legal challenges regarding complicity in human rights abuses, increased regulatory costs related to anti-terrorism and transparency, and the risk of financial defaults.
• The financial sector can influence social stability through three primary levers: core business (providing services, diversifying economies, and setting loan conditions), policy dialogue (multistakeholder processes for public goods), and social investment (funding community needs and microcredits).
• Financial firms can become entangled in conflict through investments in projects that undermine stability, the misuse of their services by criminal or insurgent groups, or by contributing to instability via large-scale financial flows that worsen macroeconomic downturns.
• There are potential competitive advantages and 'win-win' opportunities for the financial sector, such as the creation of 'conflict-free' investment funds, venture capital for post-conflict reconstruction, and early entry into post-conflict markets.
• Specific industry examples of conflict-sensitive approaches include Enbridge Inc.'s adoption of the US-UK Voluntary Principles on Security and Human Rights in 2002 and the FTSE4Good Index's 2003 introduction of human rights criteria for resource extraction companies.

APA

International Institute for Sustainable Development (2003). INVESTING IN STABILITY. https://www.iisd.org/system/files/publications/natres_investing_stability.pdf

Chicago

International Institute for Sustainable Development. INVESTING IN STABILITY. 2003. https://www.iisd.org/system/files/publications/natres_investing_stability.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=INVESTING IN STABILITY |date=2003 |url=https://www.iisd.org/system/files/publications/natres_investing_stability.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2003investing, author = {{International Institute for Sustainable Development}}, title = {{INVESTING IN STABILITY}}, institution = {International Institute for Sustainable Development}, year = {2003}, url = {https://www.iisd.org/system/files/publications/natres_investing_stability.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }