Corporate disaster relief in Japan: going beyond charity?

With global attention focusing on the rapid escalation of conflict in Libya and desperate efforts to contain the nuclear threat in Japan, it is easy for the ongoing humanitarian crisis in the wake of the Japanese earthquake and tsunami to recede from view. But with reports of the death toll now edging past 18,000, and nearly 500,000 people still living in shelters, the country is still certainly in dire need of support and assistance - and will be for some time to come. A report from the World Bank has estimated that the damage inflicted by the disaster will cost somewhere between $123bn and $235bn, the equivalent of some 2.5% to 4% of the country's GDP. Recovery could take up to 5 years, the report suggests.

Business in Japan has been significantly damaged by the quake and its aftermath. The automotive and electronics supply chain, in particular, appear to have been severely disrupted, leading to delays and shutdowns in production. But as previous disasters have shown, business can also play a major role in rescue and relief operations, as well as in subsequent rebuilding efforts. Wal-Mart famously upstaged the US government in responding effectively to the floods in New Orleans after Hurricane Katrina in 2005. In contrast, after the devastating 2008 cyclone in Burma, international companies were slow to offer assistance. Last year's Haitian earthquake generated a lot of corporate donations, as well as a fair deal of controversy around the role of companies in economic redevelopment and rebuilding projects.

Corporate involvement in disaster relief in Japan has yet to hit the headlines in any major way, primarily, as far as we can tell, because companies have been rather conservative in their responses. That's not to say that companies haven't helped raise a lot of money for the cause, because they have. According to the US Chamber of Commerce's, Global Aid Tracker, which does a pretty impressive job of keeping tabs on such things, global corporate assistance for the Japan crisis has now exceeded $158 million.  This includes 100m Yen (about US $1.2m) each from companies such as Bayer, BP, Hyundai, LG, Nikon, and others. Even higher sums - up to 5 times as much in fact - have been committed by the likes of Canon, Citigroup, Dow, GE, Mitsubishi, Nintendo, Sony, and Wal-Mart. As you can see, it's not just Japanese companies either, but global companies, especially those operating in Japan doing the giving. The Japanese Red Cross, however, appears to be the most favoured recipient.

Some companies have linked up their corporate donations with employee giving, often by matching employee donations, as a way of engaging workers in CSR initiatives. An interesting development here has been the tie-up between the CSR services company AngelPoints and Network for Good to provide a free on-line giving platform to the firm's clients. As the firm's press release puts it:

From now until the end of April, two million employees from companies such as Newell-Rubbermaid and Sterling Savings Bank will have access to a centralized online donation platform that will facilitate the immediate transfer of funds to organizations in Japan that need it most.

In fact, the on-line world has probably seen some of the more innovative responses to the disaster from the corporate community. Whilst some, such as iTunes and LivingSocial have simply enabled users to readily make donations through their sites, various Japanese gaming companies have developed cause-related game tie-ins to engage their users in contributing to relief efforts. The gaming demographic is notoriously difficult to enlist in social programmes, so it is certainly a positive sign that gaming companies are using their core products to reach out in this way. Zinga, the US company behind the hugely popular Facebook games, Farmville and Mafia Wars has followed up its Haiti giving initiative with a Farmville in-app donation vehicle which enables users to donate by buying virtual goods within the game - in this case, a daikon crop. Launched within 24 hrs of the disaster, online gamers reportedly went on to help Zinga contribute more than US $1m in just a few days. For a company with a tagline of 'connecting the world through games' (and already drawing fire for its addictive effect on young players), Zinga's ability to use social media to connect gamers around the world with major social problems is a surefire winner.

Elsewhere, there has been a disappointing lack of innovation among the corporate community in the Japan disaster relief. Providing money and in-kind goods is one thing, but what really can make humanitarian aid efforts stand out are when they leverage core corporate capabilities. Japanese manufacturing companies, with their decades of experience in just-in-time management and lean manufacturing practices, could be deploying their logistics and supply chain prowess to relief efforts. Law firms and financial services companies could be putting their skills towards helping displaced families, many of which lack earthquake insurance, sort out the legal and financial mess they have found themselves in rather than simply donating cash.  The list goes on. Short-term charity is fine as far as it goes, but companies should know that a more strategic approach to corporate responsibility has the potential to add considerably more value both to the stricken Japanese people and to themselves.

Top 10 Corporate Responsibility Stories of 2010

Mermaids protesting the BP oil spill. Photo by Johnathaneric.

 It's been a big year for corporate responsiblity. A huge oil spill, continued ructions in the financial sector, landmark decisions in the courts, and a new dawn for online companies around human rights issues. It is never easy to pick the most important stories of the year. Some get huge coverage simply because they feature big brand companies. Some hardly even scratch the public consciousness despite having major implications. In other cases, it can be difficult to determine accurately what their long-run significance will be.

But here in the Crane and Matten control room, we've put our heads together to come up with what we regards as the top 10 corporate responsibility stories of the year. These are the events that we think will have the most lasting impact on the field. But it was a hard choice - narrowly missing the cut were the 10 year anniversary of the Global Compact, the FIFA World Cup corruption scandal, Unilever's "Sustainable Living" plan, Apple's labour violations, Wal-Mart's latest announcements on sustainable agriculture, Jerome Kerviel's massive fine, and American Apparel's rollercoaster ride through 2010, among others.

But, hey, not everyone can be a "winner". So if you think we're worng, or if we've missed off your biggest story of the year, do let us know. And while you're at it, take a moment to complete our poll on the right to help us find the top stories according to our readers.Here, though, is our top 10.

1. BP's oil spill in the Gulf of Mexico
Deepwater Horizon was one of the world's largest ever oil spills, and understandably this story absolutely dominated 2010. Not only did it put a final nail in the coffin for BP's once vaunted sustainability reputation, but it heralded a major rethink about the viability of deep sea drilling. BP didn't cover itself in glory by failing to come up with a realistic remedy until far too late - and ended up picking up most of the tab, thereby putting paid to the usual assumption that pollution is simply an 'externality' of business. Really, this was the mother of all corporate responsibility crises in 2010.  

2. Google's battle for free speech
Google's withdrawal from China at the beginning of the year was a landmark decision in the battle for free speech on the web. A real clash of titans, no other story this year illustrated better the clash between government and big business around human rights issues. But Google's subsequent legal problems in Italy, where senior executives were convicted of privacy violations, demonstrated just how complicated this battle is going to be. 

3. WikiLeaks publication of the embassy cables
Who knows where this one will end up, or just what its long term significance will be for corporate responsibility? But it's hard to deny its significance as a major turning point in the fight for greater government transparency, and the contested role of the media and NGOs in bringing confidential information into the public realm. Heralded by some as the first great cyber war, the WikiLeaks maelstrom inevitably catapaulted online companies into the fray with predictably unpredictable results.   

4. Citizens United decision
The only court case to make it into the Top 10,  but according to President Obama the 5-4 decision by the US Supreme Court in Citizen's United vs Federal Election Committee "reversed a century of law" and "opened the floodgates" for corporations to play an ever greater role in US politics. According to the ruling, companies and other special interests can now spend as much as they like on influencing the outcome of elections. And why? Because despite their vast resources, companies should have rights to free speech on political matters the same as any other citizen. An historic ruling.

5. Toyota’s product safety recall
This case grabbed a lot of headlines in 2010, mostly because of the very scale of the recall and Toyota's previously unblemished safety reputation. This was a huge embarrasment for the Japanese car maker and showed up serious problems in the firm's management culture.

6. Bank bonuses 
Bank bonuses stayed in the headlines during 2010. Despite continued economic problems, huge public bailouts in Greece and Ireland, persistent unemployment, and widespread austerity measures, some banks managed to award bigger bonuses in 2010 than ever before.  No surprise that the public stayed angry with a bonus culture apparently so far removed from their day-to-day problems. But European regulators finally seemed to get the message with new guidelines released at the end of the year that looked set to dramatically change the bonus landscape across the entire continent.

Butcher in Haiti with food vouchers used to stimulate trade. Photo by DFID

7. Corporate response to the Haiti earthquake 
Few stories better illustrated the precarious role of business in international development than the corporate response to the Haiti earthquake back in January. The arrival of cruise ships full of vacationers represented for many the unacceptable face of corporate insensitivity and amoral consumerism. Yet, few denied that business had to be an essential ingredient in getting the stricken country back on its feet again. 

8. Greenpeace campaign against Sinar Mas palm oil 
Greenpeace won Ethical Corporation's campaigner of the year in 2010 for its work in combating deforestation. This was exemplified in the NGO's campaign against Indonesian palm oil producer Sinar Mas which saw them force Unilever, Nestle and others to cease buying from the company during the year. Greenpeace's spoof ad on YouTube for the Nestle chocolate bar Kit Kat went viral demonstrating how campaigners were effectively harnessing social media for anti-corporate protest. 

9. HP's termination of CEO Mark Hurd
Hewlett Packard has had its ethical ups and downs over the years, but few expected the company to follow through quite so severely when CEO Mark Hurd was found to have made fraudulent expense claims to cover up a relationship with a female contractor. Rejecting Hurd's offer to pay back the $20,000 he'd received for the claims, the highly regarded leader was ousted by the board for failing to live up to the company's code of conduct. This was an impressive commitment to ethical rules by anyone's standards. However, it angered many who thought the company was shooting itself in the foot. A tumbling stock price and Hurd's instatement at competitior Oracle showed how much pain there could be in doing the right thing.

10. India's 2G licence scandal
OK, so actually this happened in 2008, but it was only in the closing months of 2010 that the full extent of the 2G telecom spectrum licences scandal began to be revealed. In what some have called India's biggest scandal since independence, Telecommunications Minister Andimuthu Raja was forced to resign over allegations that he lost the Indian Government some $38 billion in revenues using an opaque permit system that was riven with corruption. Leaked tapes of secret phone calls with corporate lobbyists have poured oil on the fire. This could yet become India's Enron moment.

So that's our Top 10 for 2010. Doesn't make for particularly edifying reading, but it hasn't been all bad. In amongst the scandals and corruption there have been some genuine cases of ethical leadership in 2010, where companies like Google and HP have had to make some hard ethical choices that have cost them dear. No ne said corporate responsibility was easy.

Cruising to the quake?

In the aftermath of the Haiti earthquake last week a very interesting discussion on CSR has arisen. While thousands of people are suffering, lacking medical care, let alone shelter or food, cruise ships from all over the (developed world) keep arriving in Haiti, albeit it not in the direct earthquake stricken zone around Port-Au-Prince.
Many newspapers reported about this and the debate whether it is good taste, let alone ethically sensitive, to have people dining and wining in the resort of Labadee while 160 kms to the South people have hardly anything to eat for their naked survival. The case raises a typical dilemma for business ethics which shows how important moral imagination and a sound command of ethical theories can become for a company.
Royal Caribbean International, one of the companies whose ships still dock in Haiti, takes a clear utilitarian stance on this. Their CEO was quoted saying:

"My view is this -- it isn't better to replace a visit to Labadee ... with a visit to another destination for a vacation. Being on the island and generating economic activity for the straw market vendors, the hair-braiders and our 230 employees helps with relief while being somewhere else does not help. People enjoying themselves is what we do. People enjoying themselves in Labadee helps with relief. We support our guests who choose to help in this way, which is consistent with our nearly 30-year history in Haiti."

Indeed, cruise liners bringing business to the island is resulting in the ‘greatest good for the greatest number’, compared to them stopping it or going elsewhere. But it seems to be more a question of fairness and equity, which raises the eyebrows of some commentators. In some ways, the strongest argument comes from what we refer in our book to as the ‘postmodern’ view on ethical questions, as one blogger put it:

"To me it's like going to a funeral and singing and dancing around the casket."

Yesterday in the Canadian News they showed thousands of people sitting in the port of the capital but unable to leave the country because of lack of fuel. Watching a white cruise ship with a nine hole golf course swiftly gliding by is not what these people need right now. Maybe the fact that people ‘enjoy’ themselves in poor countries is a problem in the first place. The earthquake just makes this unfair and unequal distribution of wealth on the globe just that little bit more visible. Even on a normal day in Haiti, there is still this grotesque gap between luxury on the ships versus abject poverty starting meters away from the fence of the resort in Labadee. Why else would one need to guard it by armed security even on a normal day?

For companies such as RCI these are no easy times. But they are in the moral maze of solving this dilemma, as it were by default. And one cannot say they are not trying, having also pledged $1m in food relief which they will deliver with the help of a local NGO. Engaging in blogs, working with local players and to find a pragmatic solution on the ground, reflects some lessons in discourse ethics. At the end of the day, RCI's behavior just reflects the demands of their stakeholders, most notably their customers: only very few of RCI’s customers are reported to have cancelled their cruises...
(We would like to thank our colleague Nancy Sutherland at Schulich for alerting us to this story.)