The Slippery Slope: Ethical Considerations in Port Business Decisions

The Slippery Slope — Ethical Considerations in Port Business Decisions

By Lori Musser

Improving corporate behavior in a way that positively impacts the world is becoming everyone’s responsibility. Seaports with good corporate citizenship devote more time to the business at hand and spend less time in hot water. Recognizing that, port leaders are looking to ethics as a strategic resource – a measurable differentiator to enhance value and performance.

Unfortunately, there is no real science for moral decision-making and conduct. And ports rarely make decisions on pure moral principles. Ports follow rules, but ethics involve learning what is right or wrong, and then doing the right thing.

Pre-empting Ethical Dilemmas

Headlines hail illegal acts and poor decisions by businesses every day – from dumping toxic sludge in our oceans, to defrauding billions through Ponzi schemes, to poisoning folks with contaminated products. But what about business decisions and activities – such as ones by port authorities, their tenants, their shipping lines, and other partners – that aren’t illegal, but just don’t sit well with some audiences?

On any given day, ports may deal with customers who source from suppliers with unsafe working conditions, tenants who are replacing workers with automation, shipping lines involved in controversial environmental practices, proposed facilities that block sight lines, or terminal operators with out-of-favor ownership, among other issues.

Port Saint John’s CEO, Jim Quinn, spoke about issues with the harbor-based aboriginal fishery that he encountered when he took the port’s helm six years ago. “It was in real turmoil. There were those who said you can’t have fishers in a commercial port.” Quinn wasn’t so sure. He recalls going down to a dock on a snowy and rainy November day. He sat down and talked face to face with the fishers. “We had a great discussion on how to make things better and meet my needs and meet their needs,” said Quinn. It took a bit of work, but in the end, “We were able to actually solidify their presence here.”

That was a trigger for change at Port Saint John. To avoid being blind-sided when controversy about an activity or plan erupts in a community, then getting bogged down in responding, Saint John is now very proactive. It has entrenched two-way communications programs in its culture. Communications may well be the lifeline seaports need to pre-empt many problems.

Increasing Pressure

With information at their fingertips, community members are more aware than ever before of headline-makers and of the status of issues they hold close. Ports have to be extra vigilant to ensure their educational outreach searches out community input on potential hot potatoes, incorporates that input into decision making, and addresses issues through advance and ongoing messaging.

Port Everglades’ CEO, Steve Cernak, said that, as ports become more visible, they are typically subject to a higher level of scrutiny. “Individuals, interest groups and communities have come to understand the diverse benefits ports generate,” said Cernak. Understanding the benefits and engaging in a dialogue with communities helps shape a port’s decisions and defines good corporate citizenship at a local level.

Luis Ajamil, president and CEO of the Miami-based international design firm Bermello Ajamil & Partners, Inc. (B&A), added that in his experience, urban ports, in particular, are under more pressure from their surrounding communities. Waterfront land is at a premium everywhere, but its greater relative value in urban environments, combined with the sheer density of nearby residents and businesses, means scrutiny will continue to grow.

Wendy Zatylny, president of the Association of Canadian Port Authorities, said that the level of activism is a not only growing, but the groups involved are casting their nets much wider with an eye to influencing government policy. She said, “We’ve got some challenges. We are facing greater, more vocal opposition. It is a global challenge.” The solution, according to Zatylny, is for ports to engage with and educate broader audiences.

Beyond Quelling the Contentious

Yesterday’s best practices rarely meet the industry standards and community expectations of today. Past response to ethical questions may have involved reticence, wait and see, avoidance, or simply quelling the contentious.

Tomorrow’s best practices involve new tools – tools to help navigate through concurrent trade, transportation, economic, safety and sustainability responsibilities in an ethical manner.

Tactical support for outreach strategies heavily relies on community advisory groups, but can run the gamut from education to events, and from social media initiatives to scholarships.

Strategic Planning for Ethical Management

With so many choices, before starting to update the outreach toolbox, ports must rely on strategic planning. They consult with stakeholder and constituents, and in the course of developing strategic and master plans, they articulate corporate values and ethics, often committing them to policy. That compels the strategic planning of business practices in a way that enables managers and staff to make good choices.

Port Everglades’ Cernak welcomes the guidance of a county ethics policy. Together with the state’s transparency policies – arguably some of the most open in the United States – they provide guidance for how the port conducts its business. “There is a strong framework for decision-making, and operating in that environment has not hampered our success,” according to Cernak. Of course, not every eventuality can be predicted. “Along with strong ethical policies, there has to be adequate staff training,” he said. A culture of excellence and integrity will always shape better decisions. And, ethical leadership is an imperative, fostering better decision-making port-wide.

An Inclusion Model

Port Saint John’s key tool in ethics management is an inclusion model. Developed to bring stakeholders together through a series of committees and gatherings, the premise behind the initiative is that the port community is a lot smarter collectively than individually, according to Quinn. The input they provide has become essential in guiding both operational decisions and board decisions at the highest level in Saint John. The outreach extends far into the relatively small metropolitan area of 125,000 souls. Quinn said, “I spent my first three or four months at the port going out to talk to folks across the spectrum – community groups, maritime partners, city fathers. There was a common theme. They thought the port was a closed shop that did its business and didn’t include the folks around the port. But it is a public entity and belongs to the taxpayers, so we needed to change.”

Quinn said that, for ethical questions, the inclusion model helps the port see issues through different prisms, and allows it to bring forward and mitigate a variety of concerns, usually improving the decision making for a project or plan. The port authority provides only one out of many prisms. “Others come from communities, cities, provinces. We have to find out what is important to them – their values and sense of purpose – to know where to go. Understanding helps you position the port for congruence with the community,” according to Quinn.

Building Social License

Building social license is made more difficult by an inability to place geographical limits on ethics. If a port tenant has a stellar record locally, but committed brazen acts at a facility in another region or country, the local community may still take umbrage. This may be especially true for environmental infractions.

“It is clearly not the ports’ role to replace policy makers on large environmental debates and take positions on issues thousands of kilometers away. At the same time, you need to realize that nowadays, building social license can involve taking a more proactive approach on issues that go beyond what is located exclusively within a port’s boundaries. A good example of that is how some ports have decided to be actively involved in reducing the environmental footprint of shipping lanes servicing the port, especially with regard to marine mammal protection,” said David Bolduc, Green Marine executive director.

For example, North Atlantic Right Whales are among the rarest mammals in the world, with fewer than 400 in existence. Their winter calving grounds, along a short track between Altamaha Sound, Georgia and Sebastian Inlet, Florida, coupled with the amount of time they spend close to the water surface, make them vulnerable to collisions with ships. Ports along the adjacent coast provide resources and programs that include sighting networks and approaching vessel notification. These activities go beyond federal conservation laws, but they are broadly touted as the right thing to do.

Often, ports are faced with ethical decisions that are far harder to make, or much costlier to implement. Several popular cruise ports, for example, have had to cap passenger counts and vessel calls due to congestion or current or potential environmental stress.

Most ports don’t have the luxury of turning away freight or passengers or other business. And because there is no perfect business – each comes with its own special set of dust, noise, lighting, emissions, congestion and other issues – the economic benefits of handling the cargo usually outweigh a vocal minority.

In Canada, Zatylny said port authorities generally accept any business that is OK per government policy, however they do reject business sometimes for operational reasons. Broadly defined, those reasons might include inadequate facilities, inappropriate safety measures, imperfect aesthetics, or insufficient staff time. Landing in ethical hot water can exhaust staff resources very quickly.

There may be times for ports to step into the role of ethical warrior, and try to intercede on behalf of the victim or potential victim of moral issues – usually the environment, the workforce, the community, or a particular interest group.

Zatylny said that Canadian port authorities are very tightly rooted within their communities. “Staff live and breathe community relations. They listen to the community and are very much aware of potential sources of support and opposition.” That makes decision-making a little easier.

Port Saint John’s Quinn said that his port has encountered a number of situations when they determined interceding was the right thing to do. He said that a port that is cognizant of potential repercussions of, for example, siting a noisy tenant near a residential area, would be well advised to consider alternative locations. Hopefully that alternative can be found within the port, but occasionally, the port will have to say no to the business.

When a problem does arise at a port that gets the community up in arms about, for example, a simple wind change and dust release, there can be simple solutions. However, there is always a danger of the community using the issue as an opening gambit for a broader variety of complaints. Rationalizing that the best defense is a strong offense, Quinn advised that strong lines of communication and robust educational outreach should be permanent weapons in a port’s arsenal.

Integrity Comes First

Port activities become more transparent to communities when staff are in the community, listening and sharing information. For public ports, ethical decisions should be made transparently, according to Luis Ajamil. However, he added, transparency brings with it obligations. “Many decisions have opposing sides; there is a need to have quiet analysis without undue outside influence,” he said, before making decisions.

If ports look to ethics as a strategic resource – odds are that they will enhance both value and performance, according to the Ethisphere Institute, which counts a number of logistics and EPC providers to the port industry among the world’s most ethical companies.

Armed with ethical guidelines, broad maritime and community input, appropriate compliance and legal direction, ports make decisions day in and day out that incorporate ethical considerations, large and small. The vast majority of those decisions are good choices for the port and community.

In the future, ports can expect to invest more time in canvassing their stakeholders to help them avoid slippery slopes and keep the public trust, pride and respect.