A new twist on corporate social responsibility

I just read Corporate Knight’s latest list of Canada’s 50 best corporate citizens. Royal Bank tops the list. I don’t think there are any Atl. Canadian firms on the list at all.

Apparently there are a number of criteria used to determine a good ‘corporate citizen’ including the amount of taxes paid, corporate philanthropy, environmental stewardship, etc.

But I would like to propose one more criterion for Corporate Knight’s: support of sustainable regional development in Canada.

Now, before you hyperventilate – hear me out on this one.

How come a company can be a good corporate citizen by putting $100k into some worthy charity in Bathurst but get no similar accolade for putting a manufacturing facility there?

Canada is the headquarters of some very impressive global companies: banks, insurance firms, aerospace firms, auto manufacturing, consumer goods, information technologies, telecommunications. Major players on a world scale.

Consider some examples:

Bombardier recently announced a major aircraft assembly plant in Northern Ireland. Yes, the U.K. government gave them incentives to go there but what are the chances that Bombardier will ever put a major manufacturing plant in the ‘Northern Ireland’ of Canada?

In New Brunswick, TD Bank, with Frank McKenna as Vice Chair, employs 4.9 people per 10,000 population – the second lowest amount of employment (adjusted for population) of all ten provinces in Canada (according to their own corporate social responsibility reports). In Ontario, TI employs 26 people per 10,000 population – over 5 times as many as in New Brunswick. And the story is similar with the rest of Canada’s big banks.

How about GM Canada? The company sells thousands of cars every year in the retail market in Atl. Canada – but outside of retailers how many employees does GM have here? Squat. In fact, they just closed their small warehouse in Moncton.

And the list goes on. HBC/Zellers, Walmart, etc. do hundreds of millions of dollars in business here each year but beyond retail (necessary to get the business) what are they doing in Atl. Canada?

How about the big insurance firms? Aerospace firms? Yes, there are a few in Halifax – but not many.

Back to financial services. How come it is easier for Halifax to attract hedge fund administration firms from Bermuda and New York easier than Toronto? How come Toronto-based financial services firms are actually retrenching from Atl. Canada while growing at a record pace in Toronto?

The truth is that the vast majority – almost all – of Canada’s titans of industry use Atl. Canada as a small retail market and that is it. Manufacturing, almost all warehousing, product development, R&D, information technology, head office administration, etc. – for virtually all of Canada’s Toronto or Montreal-based corporations are done anywhere but here (1).

And, as icing on the cake, many of the lobby groups for these titans of industry – the Canada Council of CEOs, the Canadian Chamber, etc. can be found grumbling about the effect of Equalization on Canada’s ‘productivity’ and how the government needs to lower taxes to be more competitive.

Here’s a little hint.

If corporate Canada spent just a few more hundred million in investments down here every year in non-retail operations, that would go along way to reduce our dependency on Equalization, firm up for them a small but important retail market, and allow them to crow about how they are supporting a strong and vibrant Canada – from coast to coast.

A lot of people complain that the federal government should put more of its employment in the provinces (and idea cut off by Canada’s New Government TM).

But I don’t think that corporate Canada should be let off the hook, either.

And as for Corporate Knights, maybe they should rethink the criteria used to determine a good corporate citizen. I, for one, think that putting a 100 person manufacturing facility in Truro is a far better contribution to Canadiana than just about anything else.

Now, before you freak out and say that I am some form of socialist – suggesting that corporations make capital investment decisions based on non-market factors (i.e. a new form of philanthropy) – calm down. I am just saying that if Halifax is good enough for Bermuda financial services back offices, maybe it just might be good enough for Toronto financial services back offices. Or animation studios, or e-Learning centres, or manufacturing facilities, or warehouses, etc. etc.

Bombardier bragged about their commitment to supporting regional development in their Northern Ireland press release. How about one bragging about their commitment to regional development in their home country? The country that has given them more tax dollars than any other company in history?

1. The exception, of course, is call centres. RBC, CIBC, Scotia have fairly large call centres in the Maritimes – but overall something like 80% of call centres are not from firms based in Canada.