Brazil’s biggest companies have been quick to embrace global trends in corporate responsibility
“Gooooaal!” The annual Global Reporting Initiative conference is not the usual setting for the cries of football fans. Yet the august gathering in Amsterdam in May witnessed a truly world-class performance by Brazil. The country claimed each and every award for non-financial reporting issued by the global standards body.
True, it may be a far cry from winning the Fifa trophy, but the clean-sweep shows just how much progress South America’s largest economy has made in corporate sustainability in recent years.
Reporting marks the tip of a growing iceberg. A good sustainability report reflects systemic management as well as a proactive approach to stakeholder engagement and issue identification. It proves that a company makes a priority of performance measurement and target setting. Brazil’s leading companies tick all those boxes.
As the country’s economy has expanded and globalised, Brazilian companies are seeking to keep pace with their international peers. That drive extends to corporate responsibility.
The results are impressive. Brazil boasts seven companies in the Dow Jones Sustainability World Index. China and India, the only other emerging markets in the list, count only one component company each.
Government impetus has helped. In contrast to other Latin American countries – with the possible exception of Chile – Brazil has been quick to endorse relevant international corporate responsibility accords and initiatives. The Millennium Development Goals, the OECD Guidelines for Multinational Companies and Agenda 21 (signed at the watershed Rio Earth Summit in 1992) represent notable examples. Together they provide an enabling environment for responsible business.
Leading companies have taken the cue. The Global Compact provides a recent example. Brazil has 338 corporate signatories to the United Nations-backed initiative. Membership of the 10-point scheme covering environmental, social, labour and human rights issues has grown by 48% in the past two years alone. Now only three countries (Spain, France and the US) have more signatories.
As well as providing a simple way to engage companies on universal responsibility themes, the Global Compact also meets a domestic wish to “facilitate interaction between Brazilian and international companies”, says the compact’s national committee president, Vitor Seravalli.
That same desire explains the considerable appetite of Brazilian companies for global management standards. Brazil, for example, features among the top-10 adopters of the framework ISO 14001 standard for environmental management. Similarly, it ranks third in the world for take-up of the SA8000 norm for labour standards.
The influx of foreign companies into Brazil over the past decade or more has acted as a parallel spur to the professional management of corporate responsibility. Fifty large US companies, for instance, have grouped together to push best practices in Brazil under the Unidos initiative. Supported by the American Chamber of Commerce and the US embassy, the scheme counts the likes of Accenture, American Express, Coca-Cola, Dell, Fedex, Esso and Monsanto among its members.
Given the pressure from international civil society groups and consumers, foreign investors have worked especially hard to ensure labour compliance in their direct operations and supply chains. This has served to generally raise the bar, particularly in the agricultural and textile sectors.
The story of Brazil’s race to become a competitive, global economy comes with some important provisos. First are the developmental challenges. But poverty reduction plans appear to be working. The number of people living below the poverty line has decreased by 81% since 2000, according to the Brazilian Institute of Applied Economic Research. Yet access to basic health and education remain key challenges for large portions of the population.
Second is the speed of globalisation. Some sectors, such as banking, mining and energy, can now genuinely claim to compete on the world stage. Likewise, it is from these industries that the corporate responsibility pace-setters emerge.
The vast majority of domestic companies are still playing catch-up. Historically, corporate responsibility has been characterised by non-strategic philanthropy. In the Brazilian business lexicon, “CSR” continues to mean support for education and community projects.
Nor does the emphasis on international norms mean that Brazil has adopted an entirely westernised approach to corporate responsibility. Different stakeholder dynamics account for a local flavour to company approaches. Labour unions and political parties, for instance, exert considerable influence on businesses in Brazil (political contributions remain the norm, for instance). By the same token, the hand of consumer groups and civil society organisations is less prevalent.
Then there are Brazil’s unique challenges. Basic employability and education remain issues of vital importance for the country’s continued growth. With over half (57%) of the country’s land mass covered by the Amazon rainforest, deforestation and biodiversity conservation are also national imperatives.
Brazil continues to face huge social and environmental challenges. Far from being part of the problem, the positive trajectory of corporate responsibility promises to make the private sector part of the solution.
Socio-economic statistics obtained from recent publications by the IMF, the Brazilian government, the CIA Factbook and the Human Development Index.
Corporate responsibility statistics obtained from a June 2010 Ethical Corporation survey.
Guideline and standards statistics obtained in June 2010 from official website of each initiative.