Whether it’s being called ‘corporate altruism’, ‘Corporate Social Responsibility (CSR)’, or ‘Environmental and Social Governance (ESG)’, modern businesses are under greater pressure than ever to serve their communities, even at the expense of profit margins. The general public widely accepts the concept of corporate moral duty, best exemplified in the backlash to the continuation of international business in, and with, Russia. What started as steel and armament companies withdrawing from Russia has quickly transformed into pressure for almost all Western corporations to suspend their business there, however unrelated to the Russian war effort their product offerings may be. The dairy company Danone has been the latest major business to pull out of Russia, with their losses estimated to be around the $1bn USD mark.
Some companies, however, have gone beyond the basic expectation to cut ties with Russia, and have actively aided the Ukrainian military effort, with Elon Musk’s SpaceX donating their Starlink satellites to the Ukrainian government.
Starlink is an internet satellite service, with more than 20,000 satellites in use in Ukraine - and they are critical in keeping communication services up and running throughout the country. As of April 2022, 73% of the Ukrainian satellite system had been donated by SpaceX, with the delivery facilitated by the US-AID program and the maintenance fees heavily subsidised by SpaceX and Musk himself. This gesture of goodwill has proven more expensive to Musk than originally anticipated, with the running cost alone standing at roughly $20m USD every month. After Musk’s tweets in early October advocating a Russia-Ukraine peace deal were rejected bitterly by Ukrainian diplomats, he wrote to the Pentagon to state SpaceX was “not in a position to further donate terminals to Ukraine, or fund the existing terminals for an indefinite period of time”.
The complexity of this dilemma has brought to light broader questions about the ethical intricacies of corporate altruism. If Musk has not received payment for this service, and advises he can no longer fund the project, he is under no obligation to continue providing the satellite signal. Defaulting on his donation, however, leaves the Ukrainian people in a dire situation where they may be unable to communicate domestically, and internationally, or obtain potentially life-saving information. It seems unlikely to consider that the more ethical outcome would have been to turn down a charitable donation, instead depending on additional paid-for infrastructure from arms companies such as Lockheed Martin, whose share price has risen by 14% following the war in Ukraine as more news of lucrative contracts with the US government for tanks and guided missiles are revealed. Of course, in this kind of traditional profit-motivated transaction, Lockheed Martin is contractually bound to continue supplying their services, and no Tweet or memo to the Pentagon could impede that, leaving the Ukrainian government, whilst financially worse off, free from worrying about the whims of their suppliers and able to focus completely on the conflict.
This is not to suggest that altruism always places the recipient in a precarious position. The outdoor clothing company Patagonia has long been commended for its exemplary commitment to the planet, with its majority shareholders, the Chouinard family, announcing earlier this year that they were donating 100% of the company’s shares to charitable trusts aiming to tackle climate change. This is in addition to the company’s long-term production of sustainable goods, and founding of the “1% for the Planet” alliance, a group of businesses both large and small that pledge 1% of sales revenue to environmental causes year on year.
No good deed goes unrewarded, and an indisputable benefit of corporate altruism is the positive PR it generates for your company. For companies like Patagonia, this can become a USP to the point where maintaining altruist policies becomes an economic incentive in its own right. For others, it can backfire; Musk received significant negative media attention when considering pulling out of the Ukraine-Starlink deal, and less than twenty-four hours later reneged on his claims, tweeting “The hell with it… even though Starlink is still losing money & other companies are getting billions of taxpayer $, we’ll just keep funding Ukraine govt for free.”
It appears two components are essential for effective corporate altruism. The first - genuine commitment. As any honourable individual would advise, you will receive the most from a benevolent act when you expect nothing in return. At worst, your courtesy may go unnoticed, but it certainly won’t be punished with negative press. The second - relinquish control. Musk’s Starlink satellites were always retained by SpaceX, always subject to his company, and the direction he chose with his resources. Patagonia has been taken out of the hands of those who founded it and resigned to the direction of experts, who have been waiting decades for the kind of sums Patagonia has access to and have long and detailed plans of what can be done with such heightened financial and social influence. Musk’s bold and brave commitment of such expensive military-grade technology is commendable if its operation is sustainable. Otherwise, sometimes it might be best to get what you pay for.