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Segmenting Disaster Relief

Writing in last week’s Poverty Matters blog, Lord Ashdown, the UK President of international aid organization UNICEF, called for “investing in emergency risk reduction and helping to build the economies of developing countries [to] be on international businesses’ agendas.” The reason, he argued was not only that corporations are repositories of skills that are valuable in helping communities prepare for and recover from disasters. He also made the case that it is in businesses’ own interests to do so.

Lord Ashdown and UNICEF are on to something with this line of thinking.

As companies move towards creating shared value as a guiding principle, there is a growing recognition of the interdependence of commercial success and social issues like disaster resilience. Moreover, a recurring insight from FSG’s work with corporations to develop and implement CSV strategies has been that imaginative partnerships are often essential to making progress. By positioning itself as a willing partner in such efforts, aid organizations such as UNICEF have a great opportunity to win new allies and resources for their mission.

To realize that opportunity, though, they need to push further in their thinking. In the article, Lord Ashdown offers a compelling rationale for why businesses in general should care about disaster relief, citing evidence on the number of companies affected by global weather events and the value that can be created through investments in disaster preparedness. However, not all companies have the same interests or ability to act on them. For example, very few of the 7,750 Vietnamese companies mentioned in the piece that are protected from flooding by replanted mangroves, are likely to have sufficient resources to contribute to such efforts.

A better approach would be to look at specific risks and opportunities in specific locations and ask, “which corporations have an interest in solving these problems?” The answer to that question may lead them to different firms in different situations. For instance, a company may have an interest in reducing the incidence of flooding or drought in order to ensure reliable supply of key ingredients. (One thinks of the effects of Cyclone Hudah, which directly hit the vanilla-growing area of Madagascar, source 70% of the world’s vanilla crop, in April 2000, upending the sourcing strategies of flavour & fragrance firms such as Firmenich and Givaudan.) Alternatively, telecoms and finance firms may see a market opportunity in developing a mobile banking business to allow remittances to flow to a disaster-hit area. Finally, other companies may have an interest in mitigating or averting climate change-driven disasters on a global level. Indeed reinsurance firms such as Munich Re and Swiss Re (a past FSG client) have recognized that as a critical business issue, and are implementing interesting programs to address it.

To really uncover the mutual interest Lord Ashdown describes, UNICEF and similar organizations need to segment their audience. Doing so will help them to build fruitful partnerships with business that create value for both parties.