Photo credit: Russell Watkins/Department for International Development
Uneasy bedfellows: the motives and drivers of collaboration between the commercial and humanitarian sectors
by Ellen Martin and James Darcy May 2011

Recent crises have highlighted the role of private sector actors in humanitarian action, as donors and partners to humanitarian agencies, and as for-profit operators in their own right. The growing number, scale and complexity of humanitarian crises is placing increasing strain on the established international system for crisis response, prompting questions about the adequacy of donor funding, the capacities of humanitarian agencies and the continued relevance of the current humanitarian ‘business model’. Together with growing recognition of the opportunities presented by new technologies and new ways of working, this is causing many to reappraise the potential role of the commercial sector in crisis response, as well as in the relatively neglected areas of risk reduction and post-crisis recovery. Harnessed effectively, corporate resources and competencies may potentially fill some of the gaps and deficiencies in the traditional humanitarian system. Yet commercial engagement to date has been limited. Recent research by ODI and the Humanitarian Futures Programme (HFP) at King’s College London explores the likely scope and limits of commercial sector engagement in crisis contexts, and the motives and interests driving it.[1]

Current patterns of engagement

So far collaboration has been ad hoc, typically involving one company and a single humanitarian partner, and most often in a natural disaster rather than a conflict-related crisis. Substantive partnerships have been largely in technical sectors such as logistics, transport, telecommunications and IT. The private sector’s financial contribution has been minimal.

There are efforts to promote the role of the private sector in humanitarian response and facilitate collaboration with humanitarian actors. These include the US-based Disaster Response Network (DRN) of the Business Roundtable, launched in 2005; the Partnering Initiative (TPI) of the International Business Leaders Forum (IBLF), launched in 2003; andthe Humanitarian Relief Initiative (HRI) of the World Economic Forum (WEF), established in 2006. The UN system has also made clear its desire to engage with the corporate sector (see for example www.business.un.org), and donors including the UK government are placing increasing emphasis on commercial partnerships. Initiatives such as the HRI have sought to work with the Office for the Coordination of Humanitarian Affairs (OCHA) to more effectively match humanitarian priorities with industry competencies under the cluster approach.[2]

What is still lacking is a robust understanding of the factors that drive commercial sector involvement in crisis contexts, and the gaps and weaknesses in the humanitarian system that the commercial sector might be able to address.

Forms and drivers of commercial sector involvement in humanitarian action

Commercial actors engage in crisis contexts in various ways, including financial support or in-kind donations to humanitarian agencies, substantive partnership and collaboration, as in the provision of technical support, and direct commercial engagement, for instance as contractors or as for-profit business ventures in crisis-affected or politically unstable contexts.

What drives commercial sector involvement in disaster-affected contexts? Clearly, corporate social responsibility (CSR) policies have an important role, though ultimately judgements about business interests and profitability are the primary drivers. Companies may also see involvement in humanitarian action as a practical demonstration of their corporate values and a way of enhancing staff morale, contributing to a better working environment, generating enthusiasm for the company and helping the company to retain talent. Personal conviction – both among a company’s leaders and its staff – can also be a motivating factor. Engagement in humanitarian action may also have a positive impact on a company’s image and reputation, both broadly and in a particular context or country. In our interviews, for example, one representative spoke about the opportunity to improve the company’s reputation with the government of a particular country in which it conducted business. Another said that humanitarian involvement showed that it was taking responsibility for addressing global problems, which was good for its overall image.

There may also be opportunities to open up new markets and extend a company’s reach into new and untapped areas. Almost all those interviewed from the private sector mentioned future commercial opportunities arising from their engagement in humanitarian action. One corporate actor providing free medical care to children in developing countries stated that a key driver for partnering with a humanitarian agency was to gain understanding of the healthcare markets in these regions. Another stated that collaboration resulted in ‘greater access to rural villagers and an ability sell our products. Our reach will be much greater’. For some actors, these market opportunities are a primary motive for involvement, while others stressed that this was only an indirect benefit, and that they preferred to keep the two issues separate. Their primary rationale for partnering with humanitarian agencies was that ‘we are committed to help, but we are not experts in humanitarian matters’. Partnerships with humanitarian actors may also help companies acquire new and specialised skills.

While each of these motives is in itself potentially consistent with humanitarian priorities, they suggest limits to the likely involvement of commercial companies in crisis contexts. Commercial opportunity will always be weighed against commercial risk, and in many cases will be outweighed by it – particularly in highly volatile or insecure environments where outcomes are hard to ensure and risks to staff and operations may be high. While these are also limiting factors for humanitarian agencies, they make different calculations about the cost–benefit ‘threshold’, allowing them to operate in environments that might not be viable from a commercial perspective.

The potential for commercial engagement in more stable environments appears to be greater. Here the question is whether the combination of CSR and business interest is sufficient to warrant sustained, strategic engagement by commercial actors, beyond the confines of a particular crisis situation.

Hopes, fears and expectations: views from both sides

Until recently, most humanitarian agencies have viewed commercial companies solely as potential cash donors. But this appears to be changing. While some humanitarians have been wary of more substantive collaboration with commercial actors, the majority of those interviewed recognised that partnering with such actors has value beyond simple cash contributions. Many agencies are interested in accessing specific technical areas of expertise, including in transport, supply chain management and telecommunications. Ensuring long-term and consistent commitment from the private sector is still seen as a challenge, however, and agencies still seem unsure whether commercial actors are really prepared to develop the administrative, financial and training systems they need to ensure that their contributions are useful and sustainable: as one interviewee put it: ‘it has to go beyond being a PR exercise – companies need to make a long-term commitment in order to learn how to work in a way that is consistent with humanitarian conditions’. Another area of concern for humanitarians is the need for corporate ‘visibility’. Here, expectations can be higher than humanitarian actors are able or willing to meet. How appropriate would it be, for instance, for agency staff to be seen in the field wearing T-shirts carrying a company logo (as one agency was asked to do)?

Those on the commercial side have plenty of concerns of their own. Some of these relate to the use of donated funds, and how they end up being spent. One corporate interviewee noted that one agency it had supported had not spent the money on the agreed-upon projects, discouraging it from making future financial contributions. More generally, there are concerns about the efficiency of humanitarian agencies and a sense that humanitarian actors are not very good at recognising and explaining the technical gaps that commercial actors can usefully fill. That said, perceptions of efficiency can vary. As argued by one humanitarian actor, what looks like inefficiency to one sector might to the other look like a principled and measured response:

Some may think they understand how the humanitarian domain works. Admittedly, in the more technical areas we are in need of improvement, and should make better use of resources. But it is not always as simple as some people think – a refugee camp might not look very high-tech or efficient, but it is built and managed in a principled and measured manner, and is not too costly. Sophisticated technical solutions are not always what we want to see.

There is also some reluctance among agencies to admit that a given area is beyond their specific competence, and that bringing in commercial expertise in areas such as logistics can save time, effort and money. As one corporate actor commented:

Logistics is our core competency, we can work efficiently and quickly, and we can help NGOs save time, effort and money. Often NGOs will try and do the logistics work themselves, and when it doesn’t work they turn to us. Doing this work is good for [our] image and visibility, there are also commercial incentives as we are contracted to deliver supplies. We [believe] NGOs have a niche role in humanitarian situations. But when it comes to logistics – leave it to the experts.

A number of businesses also say that they see a role for themselves in helping to improve the managerial practices of humanitarian agencies; one corporate interviewee told us that at times humanitarian agencies ‘take on too many responsibilities’, so undermining the response.

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Ways forward

A reappraisal of the role of the commercial sector in the humanitarian world is seen by some as part of a necessary new phase of ‘humanitarian reform’ that includes new forms of partnership with host governments, regional bodies and civil society groups. New donors, changing attitudes among existing donors – not least with regard to efficiency and value for money – and emerging critiques of the existing humanitarian system make a review of current practices necessary. So too does the increasing control being exerted by host governments over humanitarian action.

The case for more strategic engagement by commercial actors in the humanitarian arena is compelling when viewed against the scale and nature of needs and the competencies required to tackle them. This is perhaps most apparent in pre- and post-crisis areas of activity, including disaster risk reduction and post-disaster reconstruction. It seems likely that substantive commercial engagement has most potential in a relatively restricted range of activities, given the limited incentives for longer-term investment and the commercial risks associated with engagement in unstable environments.

Both commercial and humanitarian actors need to be more open about their motives and the nature of their interests in crisis contexts. This might enable both to make more informed decisions regarding whether and how to collaborate. More strategic partnerships involve collaboration that extends beyond a particular crisis to encompass areas such as skills transfer and joint systems development. Nervousness among humanitarian actors about commercial motives might be overcome by a better understanding of the nature of those motives and the limits they impose on collaboration. For their part, commercial actors need to understand the reasons why humanitarian agencies act as they do – and that ‘added value’ may need to be measured in different ways when considered from a humanitarian perspective. Social, economic and political factors all have an important bearing on what constitutes good practice in crisis contexts, and the application of humanitarian principles creates its own demands.

Ultimately, the need to make a business case for engagement is always likely to be the limiting factor for strategic involvement by commercial organisations in crisis contexts. The primary drivers of such engagement – CSR, brand enhancement, market development and staff motivation – all have their limits, as does commercial interest more generally. For their part, humanitarian organisations are not immune from competitive pressures and are themselves driven in part by marketing imperatives. Certainly the privileged position of the traditional agencies within the aid market is not guaranteed, and their ability to meet all the demands placed upon them is already under severe strain. The time has come for the aid and commercial sectors to have a more realistic and more strategic conversation about collaboration, based on a proper understanding of each other’s core interests and bottom lines.

 

Ellen Martin is a Research Officer in the Humanitarian Policy Group. James Darcy is a Senior Research Fellow at the Overseas Development Institute.

 


[1] See HFP and ODI, Commercial and Humanitarian Engagement in Crisis Contexts: Current Trends, Future Drivers, Discussion Paper, 2011. Around 30 interviews were carried out in 2009/10 with humanitarian and commercial actors, together with an extensive review of relevant literature.

[2] Humanitarian Relief Initiative, Report from the Humanitarian Relief Initiative Meeting, April 2009, Geneva.

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