Blogs & Comment

Loblaw: Is compensation for Bangladesh an admission of guilt?

Yes, the "why" matters.

Loblaw CEO Galen Weston Jr.

Loblaw CEO Galen Weston Jr.

Loblaw Companies Limited, owner of the Joe Fresh clothing brand, has announced that it will pay “compensation” to the families of victims of last week’s factory collapse in Bangladesh. Details are sparse at this point, but it’s an interesting development.

The move will of course garner the company plenty of praise. Some of that will be offered only grudgingly, by those who will see it as the least that can be done by a money-hungry corporation in the habit of squeezing profits out of Bangladeshi labour. But it will be praise nonetheless. Any plausible amount of compensation will be trivial to this multi-billion-dollar company, but an enormous boon to those Bangladeshis who were affected.

But I still have questions, in particular about what is motivating Loblaw’s move. Yes it will do a lot of good, but there are many different principles that might underlie any given action that does good. And we typically care not just about outcomes, but about principles too. Upon what principle is Loblaw compensating the victims in Bangladesh?

Cynics are already assuming the move is pure PR, aimed at deflecting criticism (however unfair) and dissociating the Joe Fresh brand from the grimy reality of developing-country sweatshops. This is one possibility.

Another might be that the company sees such payment as a form of charity. Last week’s tragedy resulted in horrible human suffering. Most big companies donate to charitable and humanitarian causes. And even if Loblaw doesn’t see itself as responsible for the collapse, it must see a connection, emotionally at least, and so the families of the dead are an especially apt target for the company’s charity.

But for me, the word “compensate” raises questions.

It’s a word that can mean many things. But in contexts like this, it is perhaps most naturally read as referring to payments aimed at offsetting a loss, payments from someone who is either responsible for that loss or for some reason owes such a payment. “Compensation” is not quite the same as “restitution,” of course. The latter word clearly implies culpability. But still, compensation seems to imply a level of regret, if not guilt. Is that what the company is implying? After all, Loblaw could have opted simply to say, “We’re going to help those affected,” or even more neutrally, “We’re going to send money.” But “compensation” is the word the company itself is using.  Why, specifically, does it think compensation is owed? What level of responsibility does it take—or plan on taking—for the actions of subcontractors on the other side of the planet?

This is more than mere semantics; it’s about the principles underlying corporate behaviour. If, as seems inevitable, we are to regard corporations as entities capable of taking action, and of meriting praise or blame, then we need to be able to talk about what motivates them, and to ask them about the principles upon which they act.

As I say, the money in this case is a drop in the bucket. Giving voice to a set of values and principles upon which corporate behaviour is based is a lot harder than writing a cheque.

Chris MacDonald is Director of the Jim Pattison Ethical Leadership Education & Research Program at the Ted Rogers School of Management