Tsunami & CSR
Turning Tsunami into an Opportunity

Dr Madhav Mehra

Providing relief and rebuilding the affected communities is the best CSR response the corporates can give and a befitting tribute to the dead

Tsunami catastrophe makes a ghastly end to a grim year writ large with grisly stories from Iraq interspersed with a booming stock market. It has been the worst ever disaster of our times. It needs now an equally powerful response. Let us treat it as an opportunity of a life-time to lift the communities involved from their perennial poverty and transform them into modernity. The tragedy is so awesome that there is going to be no dearth of financial aid. What is needed is the ability and innovation in administering it. If spent judiciously on products and services that create employment opportunities, the billions of dollars of financial aid can create a new market. Let us build the best housing, best fishing nets and best catamarans for the affected communities. Clean drinking water is of prime importance. Here is the opportunity for Cola companies. They need to make their bottling plants in all the neighbouring areas work full steam and also consider investing in desalination of sea water. One beer company in Sri Lanka has already switched to supplying fresh water instead. Steel companies have an opportunity to provide steel for housing and aluminium companies to provide utensils for cooking food. Bamboos and plastic sheets are the need of the hour to provide immediate shelters followed by houses that can withstand future tsunami’s. We need pharma companies to provide medicines and para-medicals. There is also an opportunity for mobile communication providers to provide mobile connectivity to affected communities. Thus providing relief and rebuilding the affected communities is the best CSR response the corporates can give and a befitting tribute to the dead.

It is clear that the earthquake could not have been prevented. Despite stupendous advances in science and technology we have to recognise that humans cannot fathom the awesome power and vagaries of nature. Just as tsunami struck the Asian coast, Dubai witnessed snowfall. Human excesses have breached the fragility of ecological balance. Its spasms and contractions can be expressed in myriads of ways. The first lesson is that we must hold our planet earth (our only home) in awe and be worshipful to it and do what our scriptures enjoined:- “Vishnupatni namastubhyam padsparsham kshamasvame. Oh Lord Vishnu’s consort, I salute thee: forgive me because my feet have touched you”. It has now become clear how mangroves and wetlands have saved coastal communities from the havoc of tsunami. No damage or loss of life has been reported from the habitats around these wetlands. We must, therefore, take environment protection seriously.

The second lesson of tsunami is greater education and awareness about the environment and its nature. One ten-year-old. British school student, who remembered her geography lecture, saved hundreds of lives. Her intuition raised the alarm and timely evacuation of Phuket’s Makhaido beach and a neighbouring hotel before the water came crashing in. Why all schools can’t make their geography classes more meaningful and explain such natural phenomena? Had more students been taught such phenomena, the loss of lives certainly would have been far less.

Similarly while we should welcome the decision of the government of India to join the global warning system for tsunamis, we should question why it was not done earlier. What is more important is an institutionalised central mechanism for Disaster Management comprising major actors that should come into play as soon as such disasters occur. So the third lesson is constitution of a standing Crisis / Disaster Management Body to organise relief and coordinate collection, distribution and administration of all relief work.

Fourth lesson is that it is the poorest who are the worst sufferers of such calamities. The middle classes have savings, insurance policies and relatives to turn to in an emergency. The poor have no safety net. The coastline of the Indian Ocean is home to millions who eke out a meagre living from fishing. They have not only lost relatives, homes but also the only means of sustaining life by the giant tsunami waves.

The fifth lesson is that largesse does not equal relief. Efficient administration of aid is far more important than receiving aid. While a legion of ships and planes have been waiting at the ports and air fields aid is not reaching where it is needed most. The dead bodies are still littering the streets of Banda Aceh and beaches in Thailand & SriLanka. There is plenty of coarse food but no means to cook them. What is urgently needed is clean water, cranes, cookers and cooking utensils, solar stoves, solar lanterns, medical equipment, bamboos, plastic sheets, fishing nets and fishing boats.

Many stories of public generosity are being hyped by the media. The biggest danger in such disasters is that everybody who has some agenda chips in. Lots of pledges are made in the heat only to be forgotten when the time comes to implement them. The devastating earthquake in Iran a year ago saw commitments worth $1.1b, but just $17 million or less than a quarter of 1 per cent of the pledged amount has materialised so far. Hurricane Mitch swept across Honduras and Nicaragua in 1998, killing thousands and leaving millions homeless, and was followed by pledges of over $8b. Less than a third of that was ever given. Floods ravaged Mozambique in 2000 and more than $400m was promised to help in rebuilding affected areas, not even half of which has seen the light of day. An important task, therefore, is to see these commitments of donations go beyond PR exercises.

There are huge problems of delivery. The spread of the Andaman and Nicobar Islands is vast. Only a few places like Car Nicobar and Campbell Bay have airfields. Ships cannot dock because all the jetties have been destroyed. Most parts around Banda Aceh in Indonesia are mountainous and can be accessed only by motorbikes or on foot. UNICEF’s medical equipment, supplies, soaps and plastic sheets are lying at the airport awaiting customs clearance. There are also restrictions against foreigners visiting most parts of the affected areas.

Governments are notoriously inefficient in delivering relief in time of such emergencies. Even NGOs are uncoordinated. It is here that tsunami offers a huge opportunity to corporates to touch the hearts and minds of locals by organising delivery systems on scientific basis. Here is an opportunity to build their future markets by innovating products/ services to suit the rehabilitation and reconstruction needs of tsunami hit communities.

The coastline of the countries, which have suffered the most, is rich in natural resources. So one question should be why do they continue to be the world’s poorest people? Why they have had to suffer the indignity of thousands of dead bodies lying on the streets even a week after the tragedy. The fault lies with opaque, corrupt and callous governance practices. This provides a challenge to MNCs to show their management prowess and win hearts of locals. Businesses need to innovate low cost solutions and generate employment by focusing based on POISED (Poor Oriented Innovation for Sustainable and Environment Friendly Development).

The most immediate thing after the search for victims is completed is the distribution of relief – providing clean water, food, shelter and medicines. There is a danger of epidemics of water-borne diseases, pneumonia, skin infections. Survivors are suffering lung diseases as they have swallowed immense amount of water full of foreign particles.

The next task is reconstruction – rebuilding roads and bridges, electricity and water supplies. Construction companies have a huge opportunity to build low cost roads and housing that can stand the ravages of next tsunami. Here is an opportunity to come out with disaster proof housing and make a lasting contribution.

The really challenging task however is to provide livelihoods to the survivors. Most of those perished lived on the sea. Businesses have to innovate low cost products and services that these communities would need to generate employment. Further aid of billions of dollars is bound to materialise. Finance will not be a problem. What is required is judiciousness in spending it. If spent judiciously it can generate employment that can create the long awaited market economy of the poor. All it needs is transparency and accountability in distribution and delivery. Here is an opportunity to build better fishing nets and stronger boats. Let China think in terms of building fishing nets and boats locally instead of exporting them. There is need to innovate better and stronger boats that can resist the fury of tsunami waves.

CSR means engaging directly with local communities, identifying their basic needs and integrating their needs with business goals and strategic intent. Corporates should also use their knowledge, resources, efficiency know how and technology to tackle the causes of poverty in the affected regions and use the aid skilfully in generating employment. This will create the much needed purchasing power of local communities to create a market.

At the moment the local administration is already overwhelmed. Trained manpower – managers who can put order into the system are the need of the hour. This can be the most important contribution of well managed companies like TATA, ITC, HLL, ICICI, AV Birla group and Bharti who have developed sound management cadres.

Proactive action by corporates can ensure finance would not be a problem. Corporates can pressure and shame governments to match their contributions. US which has spent $60 billion on Iraq war came out with only $35 million aid to tsunami disaster. It was shamed to increase it to $350 million. It is still peanuts. Further pressure can raise this aid many fold. But far more important than aid is to have a vision, strategy and a detailed plan on how to spend this money so tsunami becomes a landmark for transforming lives of locals.

Globalisation which ruined the lives of coastal communities can now come to the rescue of the survivors. Time has come to consider disaster insurance for the poor. One of the arguments against private insurance of natural disasters in the past has been that our insurance companies are undercapitalised and would go bust after the first pay out. Thanks to globalisation reinsurance is now possible. Until this happens there is a case for state-mandated disaster insurance. More and more countries are going for it. Each of these insurance programmes emerged following a catastrophe. The well known programmes include TCIP in Turkey, FOUNDON in Mexico, the Florida Hurricane Catastrophe Funda, the Hawaii Hurricane Relief Fund, California Earthquake Authority, EQC in New Zealand and CatNat in France.

In a World Bank paper presented in April 2004 on “Rapid Onset of Natural Disasters: The Role of Financing in Effective Risk Management and Insurance Contributed Savings Practices,” the authors estimate that the direct losses from natural disasters from 1996 – 2001 were worth $14 billion. As India becomes richer, the economic costs of disasters such as this tsunami, and earthquakes such as of Bhuj and Latur will progressively increase. Disasters cannot be prevented. What is required is to use the opportunity of tsunami to develop an institutional mechanism for insuring the poor against disaster. This will help in immediate rebuilding of better houses and infrastructure without any fiscal burden.

An effective rehabilitation and reconstruction of affected communities, requires public private partnerships of businesses, NGOs, governments and, of course, UN agencies. There are, huge challenges before the UN to effectively coordinate the aid effort.

There are several political overtones in the regions affected by the tragedy. Foreigners are barred from Andaman and Nicober islands. In Sri Lanka the rebels Tamil Tigers refuse to cooperate with the government. In Aceh, though, the Free Aceh Movement by the rebels has ordered a ceasefire, there are little signs of concerted effort to cooperate with the government to ensure relief to the neediest. UN is the only body, which can be entrusted with the job of ensuring that aid goes to the neediest. It is, therefore, imperative for all international aid is routed through the UN. We should be wary of an orchestrated effort to discredit UN to justify Iraq holocaust. In this scenario of strife ridden South East Asian continent, UN is the only body, which can command universal allegiance. Admittedly the UN and its agencies are not the most efficient in terms of delivery but that is the best the world has. It is the job of all the countries involved in the crisis to strengthen UN and mobilise public opinion in its support.

Let tsunami be treated as an opportunity of a life time to lift the communities involved in this tragedy and eradicate poverty from the region. This will be our greatest tribute to the dead.

*Dr Madhav Mehra is President of World Council for Corporate Governance