Can peace lead to an increase in business profits? Steve Killelea, former technology mogul turned philanthropist, is sure of it. To prove it, he’s launched the Global Peace Index, which ranks the countries of the world by their level of peace and tries to show how fighting for peace might help companies fighting for their pocketbooks.
A personal journey
When Australian technology entrepreneur Steve Killelea’s company Integrated Research, Ltd, went public in 2000, he and his wife Debbie created The Charitable Foundation and set out to give away half of their wealth to help the poorest of the poor in the developing world, mainly East and Central Africa and parts of Asia. Since then, The Charitable Foundation has become one of Australia’s leading private foundations, and Killelea has become one of Australia’s largest overseas aid donors.
Like many philanthropists of his generation, Killelea takes an investment-minded approach to his giving, insisting on maximizing the impact of each dollar. “One of our main aims is to quantify the benefit by measuring the dollar cost per beneficiary,” he says. “We want to know, for example, that we can provide clean water for under $20 per head and drop the death rate for children under five by 25%. The foundation focuses in programs focused on clean water, tuberculosis eradication, housing, agricultural development and famine relief. At any one time it has between 20 and 30 active projects on its books with an expenditure of between $100,000 and $1,000,000 per year per project.
Global Peace Index indicators
Measures of ongoing domestic and international conflict
- Number of external and internal conflicts fought: 2001-06
- Estimated number of deaths from organized conflict (external)
- Number of deaths from organized conflict (internal)
- Level of organized conflict (internal)
- Relations with neighboring countries
Measures of societal safety and security
- Level of distrust in other citizens
- Number of displaced people as a percentage of the population
- Political instability
- Level of disrespect for human rights (Political Terror Scale)
- Potential for terrorist acts
- Number of homicides per 100,000 people
- Level of violent crime
- Likelihood of violent demonstrations
- Number of jailed population per 100,000 people
- Number of internal security officers and police per 100,000 people
Measures of militarization
- Military expenditure as a percentage of GDP
- Number of armed services personnel per 100,000 people
- Volume of transfers (imports) of major conventional weapons per 100,000 people
- Volume of transfers (exports) of major conventional weapons per 100,000 people
- UN Deployments 2007-08 (percentage of total armed forces)
- Non-UN Deployments 2007-08 (percentage of total armed forces)
- Aggregate number of heavy weapons per 100,000 people
- Ease of access to small arms and light weapons
- Military capability/sophistication
The “Peace Industry”
The Global Peace Index is developing metrics that show the correlation between peace and business development in the “Peace Industry.” Here’s how different sectors benefit economically from peace:
- Retail -- For every 10 place improvement in the GPI:
- Consumer spending on food and nonalcoholic beverages increases by US$166 per head of population
- Consumer spending on clothing and footwear increases by approximately US$79 per head of population
- Consumer spending on communications increases by approximately US$371 per head of population
- Consumer spending on household goods and services increases by approximately US$50 per head of population.
- Tourism -- for every 10 place improvement in the GPI:
- Tourism spending increases by approximately US$77 per head of population
- Consumer spending on hotel and catering increases by approximately US$214 per head of population
- Consumer spending on leisure and recreation increases by approximately US$16 per head of population.
- Commercial aviation
- Peace offers stability needed for airline security and stable flying routes
- Violence and instability decreases the number of customers flying to conflict zones
- Security expenses raise costs and reduce income.
As a part of his hands-on approach to philanthropy, Killelea travels regularly to visit the projects his foundation supports. Many are located in the world’s most dangerous regions, including northern Uganda, where the foundation has supported a rehabilitation program for child soldiers. Yet, throughout his travels, Killelea began to notice that there was an ebb and flow to the level of conflict in any given region.
Back in Australia, Killelea began to think more deeply about what conditions created conflict -- and, more importantly, what conditions led to peace. As a businessman, Killelea had a keen understanding of the power of numbers, and while he understood intuitively that peace contributed to a company’s bottom line -- by lowering risk, stabilizing markets, and facilitating commerce -- he realized that there was no set of metrics to measure the impact of peace on a company’s bottom line. Nor was there any global ranking of countries by their levels of peacefulness, a potentially powerful instrument to help governments, investors, and policymakers promote peace and prosperity. So like the intrepid entrepreneur he is, Killelea set out to fill the market gap by building a global index of peace.
The Global Peace Index
In 2007, Killelea launched the Global Peace Index (www.visionofhumanity.org/gpi/home.php), the first study to rank countries around the world, from Algeria to Zimbabwe, according to their peacefulness -- and, more importantly, to identify the key drivers of peace. The underlying research was conducted by the Economist Intelligence Unit, a research organization affiliated with the Economist Group, publisher of The Economist magazine. Drawing on a global network of 650 contributors, the research team found over 8,000 data points, which feed into 24 qualitative and quantitative indicators of external and internal measures of peace -- factors ranging from a nation’s level of military expenditures to its relations with neighboring countries to levels of crime, domestic homicide, and incarceration (see sidebar). Finally, the research was reviewed by an international panel of leading peace experts.
When it was first published, supporters -- including former U.S. President Jimmy Carter, the Dalai Lama, South African Archbishop Desmond Tutu, British business impresario Sir Richard Branson, and Harriet Fulbright of the Fulbright Center -- hailed the Index as a breakthrough piece of work. “This Index stands to broaden our very definition of what peace is, as well as how to achieve it,” Fulbright said. “Peace isn’t just the absence of war; it’s the absence of violence.” The popular response was equally significant: within a month of publication, the Index was featured in over 500,000 articles on the Internet, and the GPI website had over 250,000 visitors in the weeks following the Index’s launch.
The Index has drawn its share of critics, too. Conservatives in the United States critiqued the Index for weighting military expenditures, which, The Economist noted, “may seem to give heart to freeloaders: countries that enjoy peace precisely because others (often the USA) care for their defense.” Likewise, the author and cultural critic Raine Eisler excoriated the Index in the pages of the Christian Science Monitor, arguing that, by not including indicators specific to violence against women and children, the Index overstates the peacefulness of many societies, including Egypt (where she claimed 90% of women are subject to genital mutilation), China (where female infanticide is widespread) and Chile (where at over a quarter of women suffered at least one episode of domestic violence).
“Constructive criticism is always welcomed, but one of the challenges with doing these types of indexes is obtaining accurate statistics across all the countries measured,” Killelea says. Accurate gender-based statistics by country, he notes are not available. “Domestic violence, as best it can be, is covered by the indicators measuring levels of violence and trust amongst fellow citizens.” As for militarization, particularly of the United States, Killelea says: “It is important to understand that the GPI does not intend to make any moral comments about militarization. Countries militarize when they feel threatened or pose a threat. While countries do have a right to self protection, either way shows a lack peace in their environment -- that’s all.”
Now in its second year, the 2008 Index was expanded to cover 140 countries. Iceland topped the Peace Index, followed by Denmark, Norway, New Zealand, and Japan. The bottom five counties are Israel (136), followed by Afghanistan, Sudan, Somalia and Iraq. With two years of data, however, one of the striking features of this year’s index were the improvements some countries made. Angola, Indonesia, India, Bosnia-Herzegovina and Uzbekistan all moved up more than ten places.
Peace and policymaking
Straddling the worlds of business and policymaking, the GPI’s key innovation lies in the fact that it seeks to quantify the relationship between peace and economic well-being. One of the key findings of the 2008 research was that for every ten positions a country moves up in the Index, per capita GDP increases $US 3,145. “For a lot of countries, that’s a pretty significant economic imperative,” Killelea says.
In addition to highlighting this economic imperative, the Index outlines what steps countries can take to become more peaceful. For example, it helps to be a small, stable, democratic country. (Sixteen of the top 20 most peaceful nations are Western or Central European democracies.) But even investments in education, good governance and economic infrastructure can pay handsome dividends in both economic prosperity and peace.
“What’s striking is how sensitive the model is,” says Clyde McConaghy, founding member of the Institute for Economics and Peace (www.visionofhumanity.org), a think tank Killelea created to publish the Peace Index and support the cause of global peace. “It doesn’t require a country to have wholesale changes in its structures or policies in order for it to move up. It doesn’t have to completely rebuild itself.”
Profits and peace
While policymaking is undoubtedly a key piece of the puzzle, Killelea hopes that business will eventually become one of the main drivers of peace. “Businesses can play a decisive role in creating global peace,” he says. “But there’s no real understanding of the impacts of peace on their markets, their costs and their profits.”
Killelea hopes to remedy this. This past year, the Institute for Economics and Peace published a discussion paper that examined the “Peace Industry” -- industrial sectors that thrive on peace and whose markets and cost structures are adversely affected by violence or war (see sidebar). Over the coming year, the Institute will be developing a set of analytical tools that can model the impact of peacefulness on a company’s revenue.
“The gold ring is really to make the GPI a tool for business strategy and decision-making,” Killelea says. With the right data sets, a company could use the Global Peace Index and associated research to look at revenue by nation and correlate revenue to peacefulness. “Using the Global Peace Index, you could look at the revenue by nation, then you look at the size of the market, and then you look at the basket of costs” associated with those markets. “Then you can actually put a value on the size of the increase in markets and the reductions in costs,” he continues. “And once you have that, you’re able to work out which target markets are likely to be most profitable -- and then you have a numerical justification for your investment.”
If Killelea and his colleagues can develop the analytical tools, the potential market is huge. According to a recent survey conducted by the United Nations Global Compact, a partnership of 4,700 businesses in 120 countries around the world who share an interest in corporate citizenship and responsibility, 80% of businesses believed that peace improved profits -- yet 86% lacked the metrics to measure peacefulness and shape business decisions.
Showing the way to peace
Despite Killelea’s passion for numbers, data and economic analysis, he has never lost sight of the fact that peace ultimately depends on the actions of individuals -- whether they are corporate chieftains or Somali warlords. “One of the transforming aspects of my life was understanding how to find my own personal peace,” Killelea says. “I firmly believe that individuals can transform their societies. I have always been amazed by people who in the worst of conflicts put down their arms and at much personal risk, work for peace.”
In 2006, Killelea approached the Australian filmmaker Tim Wise to start a film company that would promote the cause of peace. Killelea and Wise had both worked with child soldiers in northern Uganda -- Wise produced Child Soldiers, a heartbreaking documentary on children who had become belligerents in numerous war zones around the world -- and they shared a belief in the transformative power of film. “I wanted to reach people with inspiring messages to empower them to act for peace,” Killelea says. “We picked film as the medium of communication because of its capacity to convey strong emotional themes.” Six months later, the duo established One Tree Films, whose mission is to produce world-class documentaries and other forms of media (including online videos) that have a strong focus on social issues.
In December, the company released Soldiers of Peace (www.soldiersofpeacemovie.com), a documentary that illustrates the connections between individual acts of heroism and the systematic changes required for peace. The film depicts the reconciliation between IRA bomber Patrick Magee and the daughter of one of his victims; religious fundamentalists in Nigeria who now preach peaceful co-existence; the Colombian musician Cesar Lopez, who makes guitars from AK-47 machine guns, and many others who are making a difference.
Narrated by Michael Douglas, the film incorporates stories from 19 countries. With interviews with Sir Bob Geldof, Hans Blix, Archbishop Desmond Tutu and Sir Richard Branson, Soldiers of Peace has generated significant buzz on the film festival circuit, garnering the Angel Film Award and Best Director (Feature Documentary) at the 2008 Monaco International Film Festival.
“In a world bombarded by negative imagery and messages, the film showcases the alternatives to conflict,” Killelea says. “There are countless inspiring examples that prove that peace can be achieved through greater equality, emancipation, tolerance and understanding,” Killelea says.
The future of peace
While the Global Peace Index and the work of the Institute for Economics and Peace have received a warm welcome, Killelea is quick to note that there is still much to learn about the economic and political underpinnings of peace. “We don’t actually understand much about peace. If you go to any university, you won’t find a course in the literature faculty on the literature of peace. You’ll find no chairs in the economics departments focusing on the economics of peace, nor will you find any history subjects which are on the history of peace. So the first thing that we need to do is have a much, much better framework to actually understand peace if you want to implement it.”
Promoting this understanding is a key role for philanthropists. “Philanthropists who are interested in peace and the study of peace, particularly from an economic perspective, are likely to be highly successful because the area is so new,” says Killelea, who is a member of the Global Philanthropists Circle. Funding basic research is a critical first step. “Research and innovation have a long history of support from philanthropists and foundations. The Institute for Economics and Peace aims to collaborate with entities worldwide; we believe that by pooling resources so much more can be achieved.”
By the same token, Killelea sees market opportunities for investors, including foundation endowment managers -- an area he has been exploring though his business networks. “We’ve been working with a couple of fund managers and some different people who have experience in conflict areas, to look at what a Peace Fund would look like. This would be a fund that invests in countries with the highest likely levels of improved peacefulness.” Countries with low per capita incomes but high rankings on the Peace Index are likely good targets, he notes. “There’s a peace dividend which happens when the level of economic development catches up with the peacefulness of a fast improving society....Peace creates opportunities for investment. I love the fact that by investing business people can help create peace and make money at the same time. That’s just excellent.”