Companies’ Growing Role In Natural Disaster Relief

Multinationals are taking an increasingly prominent relief role in humanitarian disasters, including those in China. The Center for Strategic and International Studies, a Washington think tank, has put the subject under its microscope, finding that corporations have become a central component of the international response to natural disasters. The likes of Coca-Cola and Cisco were bigger contributors to Sichuan earthquake relief than the U.S. government (if not bigger donors than the general public). The Center sees the trend as part of an expanding notion of ‘corporate global citizenship’, though in the case of Chinese disasters, it notes, it may be as much smart local brand building.

The Center dates the trend to the 2004 Indian Ocean tsunami. It excites policymakers, for all the differences in values and organizational cultures that exist between the private and public sectors. Companies bring cash but also a new disaster assistance network through their globalized and local personnel, supply chains and customers–and a desire to protect all three. Policy makers should remain realistic in their expectations, however. Relief for both domestic and international disasters accounts for less than 3% of all corporate donations, the Center notes.

Each natural disaster is unique in its own way. Beijing had the resources to deal with the 2008 Sichuan earthquake, unlike, say the Haiti government in the wake of the 2010 earthquake there. Yet U.S. corporations still donated an estimated $110 million toward relief of the Sichuan disaster, even if they were seen as “driven by commercial calculation rather than by acute humanitarian concerns”, the Center says. Up to a further $30 million was given via the Red Cross. The U.S. government itself gave just $5 million. The Business Round Table and the U.S.-China Business Council were instrumental in corralling U.S. multinationals to give in Washington’s stead.

Here is a list of the four most generous U.S. corporate donors for the relief of the Sichuan earthquake, one of the five big disasters examined for the Center’s study. The numbers include cash, in-kind donations and employee contributions.

  • Cisco: >$45 million
  • Coca-Cola: $15.6 million
  • Procter & Gamble: $7.6 million
  • Johnson & Johnson: $5 million

Seriously generous numbers.

This is all evolving ad hoc. In the U.S., the Business Civic Leadership Center at the U.S. Chamber of Commerce is emerging as the coordination point between the corporate, governmental and non-governmental organization worlds. UN agencies and the Global Economic Forum (Davos) is tickling forward the global agenda. There is interesting cooperation going on between companies and disaster relief agencies to enable corporate management and organizational skills and technologies to be deployed in the field at the time of disaster and to raise the core capacities of relief agencies over the longer term. As was demonstrated in the U.S. after Hurricane Katrina, a retailer like Wal-Mart is much more practiced than government disaster management agencies in distributing large volumes of basic supplies to a lot of people quickly. This is all beyond our immediate remit but gone into in some detail in the Center’s report, though the examples are mostly U.S.-centric.

From the ash-gushing Icelandic volcano to the Fukushima nuclear disaster, natural disasters can readily disrupt global supply chains. Disaster risk reduction may not have the feel-good factor of disaster relief for corporate donors, but private-sector engagement in these areas, though still rudimentary, is just as vital. That is not just about social responsibility. It is also, as the report notes, “about economic risk management and the longer-term vitality of consumer societies”.

While business may not be in the business of disasters, it decreasingly stands by, if it ever did, when disaster strikes. For multinationals in China, preparation is understanding where a company can be helpful and at what points in the system it can make their offers of assistance. For Chinese companies abroad, it is something to understand that this is becoming yet another dimension of being a multinational.

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2 Comments

Filed under Environment, Politics & Society, Sichuan earthquake

2 responses to “Companies’ Growing Role In Natural Disaster Relief

  1. Pingback: Sharing is caring – Disaster Relief Logistics « pabeju

  2. Pingback: Disaster Relief Logistics « pabeju

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