Designed smartly, private investment in fragile and conflict-affected settings (FCAS) has the power to do good – whether building social cohesion, providing inclusive livelihoods or improving safety. Yet, the amount of investment to fragile settings has declined since 2015, and remains concentrated in extractives sectors. The global financing gaps for the SDGs is approximately $USD 100 trillion, and COP29 agreed a goal of $USD 300 trillion in climate finance to developing countries.

What is peace-positive investment?

Peace-positive investment delivers prosperity and peace. It is emerging as a solution to the interlinked problems of conflict, SDG financing, climate change, economic growth, and prosperity. Initiatives include Peace Bonds, Peace Renewable Energy Credits (P-RECs), Investing4Peace and the Peace Finance Standard.

The opportunity

Investments could finance a wind farm in a fragile setting, or local entrepreneurs with new products like environmentally friendly gas stoves in conflict-affected areas. Evidence suggests that investment in sectors beyond extractives are promising – especially those which can add and retain significant value like agribusiness or renewable energy. Finance is leveraged from multilateral development banks (like the World Bank, African Development Bank or European Investment Bank), countries’ development finance institutions (like British International Investment, KFW or FMO), and private investors like pension funds, commercial banks, and insurance companies. This opens doors not just to the development finance system, but the global financial system. Through building peace, investments also make societies and economies more predictable, attracting further investment.

Yet, investment in FCAS is not automatically good. As with peacebuilding or development initiatives, local context is everything – including local power dynamics, relationships and perceptions. An investment could create jobs, but displace people or fuel corruption. Investments that make land or other resources accessible for investors may create new land or resource-based grievances – such as some agribusiness or renewable energy projects or free-trade zones. How the investment is designed and implemented really matters.

Let me share a positive example from International Alert’s engagement on conflict-sensitive business in Kenya. A renewable energy project took place amid clashes between nomadic/semi-nomadic pastoralists and sedentary farming communities. Through inclusive community engagement, the company negotiated a 5% share with the Indigenous land custodians. Revenues went to a community-led trust that financed the community’s future skills needs. The long-term revenue stream and local electricity supply has positively transformed the lives of communities and built long-term value for investors. Even if peace was not an explicit investor aim, the project contributed to it by involving and empowering the local community and strengthening their livelihoods, leadership and decision-making power.

The dilemma

There are relatively weak incentives within the global financial system for investing in peace. International standards by the International Finance Corporation and Environmental, Social and Governance indicators do not explicitly include peace. FCAS are risky places for private investors who may shy away turning instead to predictable places that promise more financial return. Or investors may target finance towards projects that offer returns which may not be the peace-positive choice. Investors are removed from communities that need investment dealing more with companies and governments – and communities may lack the agency to engage them.  

Setting the course for peace-positive investment

Success depends on partnerships and innovation between governments, investors, companies, development banks, civil society, and communities – bridging finance, development, and peace.

Governments can:

• Strengthen regulatory and policy frameworks to explicitly include peace as a goal – including for green energy and climate investments.
• Encourage development banks and private investors to learn from and with peacebuilding partners.
• Fund civil society organisations to empower communities in engaging productively with investors.

Civil society can:

• Bridge between investors, companies and communities, including helping investors undertake and act on conflict analysis with community agency and participation.
• Boost civil society capacities to know their rights and participate inclusively.
• Encourage peace-positive investment in a coordinated way, using clear language that resonates with investors and using positive case studies.

Investors can:

• Collaborate with local NGOs around potential investments to understand the local dynamics and how to engage communities.
• Develop peace-positive tools and capacities for investing in fragile settings.