The Political Economy of Corporate Responsibility in Brazil: Social and Environmental Dimensions

Discourse and practices associated with corporate social and environmental responsibility (CSER) have escalated and evolved rapidly in recent years. This paper describes the CSER agenda in Brazil, examines its history, identifies the factors and actors that are encouraging firms to adopt CSER initiatives, and asks whether CSER is really making a difference in terms of social and sustainable development.

Global interest in CSER expanded in the 1990s and spread to many developing countries via processes, policies and institutions often associated with globalization. But many developing countries also have their own CSER history. Interest in improving the social performance of firms in Brazil increased significantly in the 1980s, and was driven to a large extent by domestic concerns, actors and contexts. A crucial element was the diffusion of certain values and ethical principles related to democratization and progressive religious thinking. Democratization also paved the way for the expansion of civil society organizations and social movements concerned with the social and environmental impacts of business.

A key actor in these developments was a sector of the business community, in particular busi-ness associations, that not only represented the economic interests of their members but also addressed philosophical and cultural issues, including the relationship of business to society. Critical of traditional corporate behaviour, this network tried to raise the social awareness of firms and promote philanthropic activities.

In the 1990s the actors and institutions promoting CSER expanded considerably. Political parties, non-governmental organizations (NGOs), trade unions, the media, local government, consumers and shareholders all became involved, along with some business associations and proactive managers and firms. But among civil society organizations there are some fundamental differ-ences in approach. Trade unions, for example, consider firms in large part responsible for the deterioration of conditions in the workplace and demand the universalization of labour rights, while many NGOs tend to promote voluntary corporate social actions.

The momentum behind CSER has also been reinforced by international influences and pres-sures associated with cross-border management of transnational corporations, global civil society activism, environmental certification, and international social, environmental and human rights norms and law.

Another important change occurred in the 1990s. As companies sought to restructure and be-come more competitive internationally, some managers—and business management scholars—recognized the potential of using CSER initiatives as a way of reducing costs, increasing competitive advantage and managing risks and reputation. The international repercussions of Brazil’s unfavourable business image pushed them to prioritize a few specific areas including poverty, violence, child labour, education and environmental protection. And segments of business, particularly the largest firms in more dynamic sectors, assumed leadership roles in social actions, seeking to fill some of the gaps that resulted from the perception or reality of a weak public sector.

CSER became part of a broader strategy to gain legitimacy; a way of cleaning up the soiled image of entrepreneurs and companies that were regarded by many as responsible for the concentration of wealth and growing speculation in financial investment. Brazilian entrepreneurs could use CSER as a tool to restore the climate of trust among workers, enhance their competitive strategy and, above all, increase consumer loyalty and community acceptance. In the context of flexible labour markets and the deregulation of labour costs, corporate social responsibility became a means of partially mitigating the social effects of these policies and processes.

As the CSER agenda broadened in the 1990s, an increasing number of large firms focused attention on a range of initiatives that went beyond philanthropy, including social welfare, environmental protection and community development. Activities traditionally centred on donations or social actions directed at communities where the firm was located. That is, business associations and companies focused their social attentions outside their walls. However, as corporate restructuring intensified, companies directed more attention inward; for example, toward social investments that improved workers’ skills in order to accomplish technological modernization in the workplace, particularly in the metallurgical, chemical, building and textile sectors. Social investments related to employees had the primary goal of increasing productivity. At the same time, such actions could reduce traditional problems on the Brazilian shop floor, such as injury, illiteracy, poor health, absenteeism and weak identification with company goals.

While firms are increasingly adopting CSER initiatives, the dynamics of corporate social responsibility (CSR) and corporate environmental responsibility (CER) vary considerably. CSR has taken place in a context of deregulation and a decline in labour standards and rights. While CSR discourse and practice have expanded, firms and business associations have simultaneously pressured the state to remove workers’ rights and standards from universalized manda-tory law and to make them the object of the bargaining process in the workplace. Along with the deregulation of universal labour laws, big business is cutting back on contractual employ-ment and remuneration. When set against this bigger picture, CSR appears more as a “band-aid” approach adopted by those with a guilty conscience.

CER, on the other hand, is supported and reinforced by regulatory systems defined by national laws and international agreements, as well as diverse civil society pressures and certain business opportunities. But any conclusion about the “greening of business” could be an oversimplification of a complex process that involves different actors and dynamics. Concern for environmental issues is relatively recent in the social conscience and has increased significantly in different sectors of society, including business. But as yet, there are few signs of a really new culture characterized by a critical and self-critical dialogue between the economy and society on environ-mental issues. Gains in relation to CER are fragile. Relations between business and environmental NGOs remain tenuous and some business groups continue to push for the relaxation of environmental regulation, particularly that related to forest conservation and restrictions on the production and marketing of transgenic (or genetically modified) products.

Ultimately, the prospects for CSER depend on an institutional context that combines regulatory, political and business dimensions. There are some signs that such a context may be developing in Brazil. The momentum behind CSER is likely to grow, not least because a range of actors and institutions—old and new, domestic and international—are actively engaged in promoting CSER. Markets for environmental goods and services continue to expand and recent political develop-ments suggest that the state will assume a more proactive role in economic and social development.

Under the new government of Luiz Inácio Lula da Silva, the CSER agenda is meshing with a broader agenda that aims to reinstate universal public policies at the centre of the Brazilian model of socioeconomic development. This government also signals a new culture of social consent and a new relationship between voluntary and governmental regulation.