Corporate philanthropy: Community benefit or reputation washing
13 August 2020 at 8:00 am
Mining giants BHP and Rio Tinto have been named as some of the country’s most generous corporations during COVID-19, but at what cost?
Australian businesses have been digging deep to support social welfare, according to new corporate philanthropy data which shows over $150 million has been donated to aid relief efforts in the past six months.
Based on publicly disclosed philanthropic commitments, the analysis from Strive Philanthropy revealed BHP Billiton was the top corporate donor, spending $50 million to support regional Australian communities in the mining giant’s area of operation.
Rio Tinto followed with a $25 million commitment towards fighting COVID-19. Newcrest tied third with the Macquarie Group at $20 million, South32 gave $10.8 million and Woodside Energy pledged $10 million for its community fund.
Nearly half of the money donated went towards social and public welfare (45 per cent), followed by health (42 per cent) and education (13 per cent).
Jarrod Miles, the founder of Strive Philanthropy, said that these contributions had come at a time when struggling community organisations needed them the most.
“There is clearly a need for business to support all their stakeholders during this challenging period and that certainly includes their community,” Miles said.
Corporate generosity or reputation advertising?
But some believe these acts of corporate generosity need to be carefully scrutinised. In recent months, a number of the companies that made it to the top of the donor list have attracted attention for the wrong reasons.
In May, two sacred rock shelters in the Juukan Gorge, one of which was rated as being of the highest archeological significance in Australia, was destroyed in a mining blast by Rio Tinto. This was just two months after the company pledged its $25 million to support global grassroots community COVID-19 preparedness and recovery.
In the days following the blast, BHP halted plans to expand part of its South Flank mine in the WA’s Pilbara region to consult with Aboriginal traditional owners after the company received approval to destroy 40 heritage sites in the area.
And in July, BHP was in court in the UK over a lawsuit by 200,000 Brazilian individuals and groups over the 2015 collapse of a dam that triggered Brazil’s worst environmental disaster.
Meanwhile, Woodside Petroleum was put in its place by shareholders after a record number voted in favour of the company setting new science-based climate targets at its AGM in May. This happened despite the company urging shareholders to vote down the motions.
Brynn O’Brien, the director of the Australian Centre for Corporate Responsibility, told Pro Bono News that for these reasons, the community and shareholders had “every right” to scrutinise these contributions.
“When BHP or Rio Tinto donate money, they are undertaking a kind of ‘reputation advertising’ in order to secure or enhance [their] social license,” O’Brien said.
“Ultimately these companies will be judged on their full profile, so if they are undertaking activities that result in the destruction of cultural heritage or the environment, the community will see that.”
In response to the Juukan Gorge blast, Rio Tinto said in a statement that it was determined to ensure the destruction of heritage sites never happened again.
“As a first priority our aim is to strengthen our partnership with the PKKP. That remains our focus. We have also taken actions to strengthen governance, controls and approvals on heritage matters,” Rio Tinto CEO Jean-Sébastien Jaques said.
Brynn said that corporate philanthropy should in no way be a shield against poor governance and decision-making.
“Shareholders should be prepared to address company boards gaps between philanthropic activities and business activities,” she said.
But Miles told Pro Bono News that while scrutinising flawed corporate decisions was critical, he didn’t believe donations were made to cover up bad behaviour.
“These companies are having a significant positive community impact,” he said.
“I also wouldn’t say that it’s done to answer the critics or make up for bad decisions, it’s done with community impact in mind.”
Pro Bono News reached out to Rio Tinto and BHP for comment, but didn’t receive a response.
The full GivingLarge report will be made available by Strive Philanthropy towards the end of the year when corporates publish their annual sustainability reports.
Miles said it was hard to predict how the weakened economy would affect corporate generosity but he hoped corporates used the crisis to step up and continue to support their communities.
“I’m hopeful we will see that total go up in 2020, but what I’m not sure about is future years. Companies are extra good at supporting the community during a crisis, but when they re-evaluate their own financial position moving into 2021, they unfortunately may feel they need to reduce their community budgets to adjust for any economic hardship that they might be going through,” he said.