This Corporate Do-Gooder Gets Dirty

TPG CEO Peter Bakker on why -- and how -- the Dutch logistics giant is working with the U.N. to tackle specific problems in poor nations

As CEO of Amsterdam-based TPG, Peter Bakker runs a $12 billion mail, express delivery, and logistics outfit with 150,000 employees in 62 countries. TPG has seen its sales and net income double since its formation in 1996, the result of a merger between the Netherlands' national postal service and a worldwide logistics business. Bakker admits that even though TPG has expanded its global reach to 200 countries, he hadn't thought much about its broader role in the global economy -- and the responsibilities that come with it -- until the events of September 11.

The terrorist attacks inspired him to rethink TPG's part in globalization and its commitment to philanthropic work. The result is an unusual partnership with a division of the United Nations called the World Food Programme, which provides emergency relief and supports economic and social development in poorer areas of the world. As war broke out in Iraq, he discussed his vision for a new form of activist corporate philanthrophy with BusinessWeek Senior Writer Nanette Byrnes. Edited excerpts of their conversation follow:

Q: You're a businessman. What got you thinking about the other aspect of globalization -- beyond the opportunity for corporate profits?


Around November, 2001, I was on one of those 13-hour business flights to Sydney. I had two bags of reading material. One hour into the flight, I was reading a magazine column about September 11, a whole analysis of different religions, political opinions, and also the differences between poor and rich and how the gap had grown so large. The article said, "Ask yourself: What will you do about it?" And that's what I did.

Q: How did you focus TPG's efforts?


I had one of our senior mangers study [the issue]. They compared maybe 100 aid organizations. After a few months, we selected two big organizations. I then went to see the bosses. My second visit was to the World Food Programme (WFP). They have to do the logistics not just for food [distribution] but also for Unicef and other branches [of the U.N.].

If you look at any emergency in the world today, there are many people and organizations that want to help, which is fantastic. But they pretty much organize their logistics independently. In Afghanistan, one of the biggest problems after the fighting was to get air-traffic control over Kabul Airport organized because so many planes were coming in with aid.

Q: And what's TPG's role?


We claim to be the best logistics company in the world. Can the best logistics company in the world do anything to help the world's problems? Every five seconds a child dies of hunger somewhere. That's terrible. We know there's enough food in the world. We don't get it to them in time.

Q: But what does that have to do with TPG?


I don't believe in corporate philanthropy in the sense that you only donate money. That's not sustainable because in bad economic times, that's the first [budget item] to get cut. Many companies struggle with the concept of sustainable development or corporate citizenship. I believe it's not hype. Corporations like ours are the beneficiaries of globalization. At the same time, businesses have the same responsibilities as individuals. If...there are problems, you need to take some action.

Q: But you advocate involved corporate philanthropy, not just writing a check. How do you do this?


In one initiative, we'll send 40 employees to volunteer in schools in four needy places in the world. They'll be sent on paid leave, three months each. In another, the WFP had a warehouse in Europe it had to refurbish. The budget for the job was more than $10 million. Our engineers went in and in a few weeks they had figured out how to do it for millions less.

That savings means hundreds of thousands of kids being fed for another year. For $35 a year you can feed a child in Africa. In professional time it cost us maybe $100,000 or $200,000. And WFP's air-traffic controllers are even now in our European hub. We're training them so when there's the next Afghanistan we can do high volumes of planes.

Q: Is there any business benefit for TPG?


In a service business only two things are important: Are your customers happy, and are your employees motivated to make customers happy?

I need something that helps motivate our employees -- to make our people a little bit more happy and proud of TPG. I'm sure those volunteers going to Tanzania, Cambodia, Nicaragua, will learn things they could never have learned in TPG.

Q: How are you going know if the program is a success or a failure?


We have a full-time team that's being run like any other of our business units. They don't have [profit and loss, or revenues], but we do monitor their costs and ask them to target the benefits that they should bring.

We'll also ask them to report on employee motivation, cost savings for WFP, service improvement in WFP, shorter response time in emergencies, things like that.

Q: Is it economically defensible for a public company to be giving so much time and effort to a project that doesn't generate profits?


Harvard professor Michael Porter came to speak to our senior management meeting in January. He said make sure [in your philathropy] you truly focus on your skills -- make sure they're something that can be shared -- and not just your money. [He made the argument] that if [corporate philanthropy] were just about transferring money, why wouldn't shareholders transfer it?

Q: Did TPG have corporate philanthropy before this program?


That's even worse. We were title sponsors of the Dutch Open, one of the European PGA stops. It worked well getting our name recognized, but at the end of the day it was sponsoring a golf tournament.

Here are the two extremes. In January, we did a Web-based interview of 900 of our senior management around the world, and 92% thought our corporate philanthropy would improve the way our business works.

Q: Didn't anyone see a down side to moving from golf to hunger? Did people raise concern that it might be too political an issue?


There were some people who said it's a pity we're not doing sexy sporting events because we can bring customers there. You can't take customers to a refugee camp. But that [attitude] was short-lived.

There were lengthy discussions on the board about the risks. There's a risk that we claim to be the best logistics company, and if we can't mobilize or don't really make a difference, that's a risk. So I do believe we run on a path that has not been run on before.

Edited by Patricia O'Connell

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