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Fri, 12 Apr 2013 14:15:00 GMT | By Deirdre McMurdy, MSN Money

RBC’s many mistakes in the foreign workers scandal

Gord Nixon should take a page from IKEA on the importance of corporate social responsibility.

Deirdre McMurdy

The CEO of RBC is sorry.

In a full-page Open Letter to Canadians, Gordon Nixon carefully explains that while RBC is “compliant with the regulations” for outsourcing Canadian jobs, the bank failed to “meet everyone’s expectations.”

He then proceeds to directly apologize to the employees facing displacement by foreign workers, commits RBC to keeping call centres in North America and pledges a “new initiative aimed at helping young people gain an important first work experience in our company.”

He doesn’t mention how sorry he is that thanks to the RBC-induced flap, the Prime Minister of Canada has entered the scene, vowing to crack down on the way Canadian employers use the temporary foreign worker program.

Of course, if the bank had stepped up with all of this just a few days earlier, money and reputations could have been spared. But then, that’s not usually the way it goes down.

Although financial services and Swedish meatballs may not appear to have much in common, RBC’s new tack is straight from the IKEA playbook. Specifically, the outcry over RBC’s actions has clear parallels to the tainted meatball scandal that recently embroiled the furniture maker.

And both cases demonstrate that it’s no longer enough to talk about corporate social responsibility (CSR): empowered stakeholders you may not even realize you had expect you to walk the walk, too.

In other words, if you get bagged by the actions of company in your supply chain, you own a big piece of the blame and your corporate reputation and brand will take a nasty hit.

* Tell us: What do you think of Nixon's apology?

To be fair to RBC, there are few issues that unite this fragmented country quite like bashing banks. It’s a close second to hockey as our national sport.

Of course, only a nation that has not endured the agony of a national banking crisis could be so perpetually furious at the profitability and stability of their financial institutions.

It seems that no shareholder dividends, pension fund returns, school programs, community spending or support can cleanse the apparent sin of making money. But RBC knows — or should know — all that. And it should always be on high alert as a result.

When you combine Canadians’ critical mentality with high national unemployment, a perennial (if utterly misplaced) ambivalence about the economic impact of immigrants, fears about outsourcing jobs and the magnifying power of social media, you’ve got yourself a real powder keg. All it takes is a spark of political opportunism to light the fuse.

And that’s precisely what happened.

It’s also why global companies as diverse as Wal-Mart and Bombardier have formal CSR codes that include ethical and workplace standards that they impose on all parts of their supply chain (something IKEA has done for some time on environmental and sustainability practices for its suppliers).

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