Sunday, June 25, 2006

Creating Private Norms for Corporate Social Responsibility in Brazil

The development of the structures, regulations, and enforcement mechanisms for corporate governance, especially for the governance of multi-national corporations has gotten much more complicated. This is an area in which the political community has always played an important part. But the almost monopolistic role of the nation-state as source of all rules has given way to a more complicated system in which international and transnational political actors have become more involved. A more fundamental shift in the locus of regulatory power has come with economic globalization and the embrace of the politico-economic ideology of "democracy-free markets." Regulation has gone private. On the one hand, that has meant that economic collectives have attained more power to regulate themselves. On the other hand, it has meant that individual and non-state collectives have more power to directly participate in the regulation of these entities. For a sense of the complications, see my recent article, Multinational Corporations, Transnational Law.

Corporate social responsibility has been one of the principal areas of development of the private law of corporate behavior. Most academic writing as well as media coverage has focused on the efforts at this form of regulation within the developed world. American and European multi-nationals have spared no expense in crafting systems and webs of institutions producing friendly versions of codes of good behavior. Human rights organizations; comfortably based in the developed world, produce their own equally sophisticated webs of such codes.

My purpose here is to remind us that much of the great work in the area of the private law of corporate regulation is not occurring in the developed world, but outside the frontiers of English speaking America, Europe and Japan. For purposes of illustration I wanted to focus on Brazil. I admit that in many respects, Brazil ought to be included among the world's developed states. But it has served the political purposes of both Brazil and the rest of the developed world to continue to express a belief that Brazil is still developing, though from my perspective it appears to be developing in the same was as one can think of Spain "developing" today.

At any rate, industry organizations in Brazil are quite active in the production of private regulation, and a culture of private regulatory activity. My focus is on one particular business oriented NGO, the Instituto Ethos, which describes itself as "a leading CSR organization in Brazil and a global reference on the theme. Ethos mission is to mobilize, encourage and help companies manage their business in a socially responsible way, making them partners in building a sustainable and fair society" (Id.). Many of the more important businesses in Brazil are associated with this organization, which produces a list of current members.

Like most politically conscious non-governmental actors, the members of the Instituto Ethos are well aware of the changing dynamic of regulatory production in the world. Their vision statement suggests that "The various sectors of society are redefining their roles. When companies adopt a socially responsible behavior, they become powerful agents of change to build, along with governments and civil society, a better world. This behavior is characterized by an ethical coherence in their actions and relationships with the various publics with which they interact, contributing to the continuous development of peoples, communities, and the relationships between themselves and the environment." (Id.). But rather than focus on the actual craft of producing regulation (the usual sets of standardized voluntary codes put out by many similar groups in developed states), the Instituto Ethos focuses on five basic strategies:

1. Expanding the CSR movement. The Instituto seeks to become a leading voice in the construction of behavior norms. For that purpose it has devised a number of projects aimed at “(a) sensitizing companies all over the country and securing their engagement in actions aimed towards deepening institutional relations with - and the partnership between - the business sector and civil society, unions and government, (b) attracting media attention to the CSR theme and, finally, (c) better organizing and structuring the movement itself.” These include expanding partnership networks with business, business associations, other NGO, the media and educational institutions. They recognize that without an audience no voice carries far. It is interesting to note that this seems to be the highest priority strategy on their agenda.

To make this priority more effective, the organization has created a number of awards. One targets students. The Ethos-Valor Award, given “annually since 2000, the Ethos-Valor Award is a national competition for graduate and post-graduate university students - the company directors and managers of the future - that highlights and recognizes graduate and post-graduate theses and monographs on themes related to CSR and sustainable development.” Another is targets the media. The Ethos Journalism Award “annually selects the best journalism conceived and produced in accordance with CSR concepts in the categories of radio, TV, photojournalism, magazines and newspapers.” Yet another is used to develop relationships with other NGO actors in this area. The Balance Award is awarded by the Instituto Ethos in partnership with four other NGOs and is targeted to business, awarding to businesses with the best compliance record on social responsibility practices. One of these awards is give to small companies, the other targets the largest companies.

2. Deepening of CSR practices. The Insituto’s principal method of aiding companies is through an assessment program based on what they call “Ethos Social Responsibility Indicators” (ESRI) described as a “set of tools and initiatives that also serve to strengthen and deepen relationships between the Institute and the companies and between the companies and their partners.” These are administered by means of a “filled in annually, the objective of the indicators is to help companies diagnose, plan for and monitor their incorporation of CSR practices.” These ESRI are customized for the relevant business sector. Instituto Ethos reports that “more than 600 companies have completed the self-assessment and sent their responses back to Ethos for interpretation.”

In lieu of a bank of forms of voluntary codes, the Instituto has developed a “Practices Bank.” This data base includes a description of the practices of model companies which have earned the highest scores on the ESRI. They also produce a social practice self assessment tool for use by companies. This may prove more useful than the quasi-legal codex that seems to be the usually favored vehicle for memorializing appropriate behaviors elsewhere. If code writing tends ot mimic civil law lawmaking models in the public sector, this form of behavior modification tends to mimic common law lawmaking practices and may be more suitable to the decentralized environment of economic globalization based on free and open markets.

Not that the Instituto eschews code writing. “The Ethos Institute also participated in the process of drafting the Brazilian Social Responsibility Norm, the NBR 16001, which was launched in December 2004 by the ABNT, Brazilian Association of Technical Norms. This norm establishes the minimum requisites expected of a social responsibility management system, considering the legal requirements, ethical commitments, the need for transparency and a concern with the promotion of citizenship and sustainable development. The Brazilian Norm will serve as a reference for the creation of the ISO 26000, an international norm that certifies companies in terms of their adherence to social responsibility practices.”

3. Information production. Disseminating information is the crucial step in any private system of rule making. The Instituto produces the usual set of newsletters, distributes publications of various sorts and has developed a fairly sophisticated web presence. The Website (, according to the Instituto itself “is now in its fourth version and has become the Brazilian corporate social responsibility portal. The site receives 40,000 individual visitors per month accessing 450,000 pageviews. . . The objective is to offer companies an oriented navigation through the site, simplifying their access to content that speaks directly to their reality and which could serve as a parameter for their own actions and initiatives. The portal also has an English version, which is to be improved this year, and there is also a monthly newsletter in English entitled 'CSR in Brazil', which aims to publicize the Brazilian CSR movement and the work of the Ethos Institute abroad.” It has also developed a series of targeted web pages. The most visible of which is what they call InternEthos, described as a “platform for the promotion of a structured dialogue and exchange of information amongst people and organizations participating in CSR networks, using the internet as a vehicle and implementing a cycle capable of generating and renewing CSR-related knowledge. InternEthos will function through the Institute’s website as a data and knowledge codification and reference system.”

4. Influence on markets and their most important players. The organization works with business to develop criteria for socially responsible conduct. These will shape relationships with suppliers, the nature of investment, and the provisions in loan agreements. An index of socially responsible companies is also planned, to mimic the Dow Jones Sustainability indexes and the English FTSE4GOOD index series. Unlike many of these organizations, though, the Instituto plans to focus on small companies as well as the usual transnational players. Particularly interesting, from a private law making perspective, is the Instituto’s plans to reach out to labor organizations and non-industry NGOs.

5. Public policies and social responsibility. Lastly, the Instituto has attempted to become a player in private-public partnerships. It has sought to become a voice in the formulation of public policy, especially where it might lead to legislation. This is, of course, a critical step for any organization involved in modern rule making. There is a bit of necessary self-interest involved. “The Ethos Institute has promoted participation in and the formation of partnerships between companies and governmental programs. Given their ability to mobilize and articulate society, companies are a fundamental way of guaranteeing the efficiency of governmental actions.” But this is a necessary role in a world in which overlapping quasi-sovereigns may affect the way in which private actors must adjust their conduct.

Globalization can no longer be thought of a a developed nation’s game. Other states have begun to play, and to shape the discourse in important ways. More importantly, private actors with no necessary allegiance to the culture and values of the developed world, have also begun to contribute to the dialogue. This is not to say that these voices will be antagonistic. Quite the contrary, these voices suggest the reality of the rise of a more truly international class of actors speaking to each other across national boundaries, really beyond national boundaries, working individually but collectively toward the construction of global networks of private governance. See Peter T Muchlinski, Global Bukowina Examined: Viewing the Multinational Enterprise as a Transnational Law-making Community, in GLOBAL LAW WITHOUT A STATE 79 (Günther Teubner ed., 1997); Gunther Teubner, Societal Constitutionalism: Alternatives to State-Centered Constitutional Theory, in TRANSNATIONAL GOVERNANCE AND CONSTITUTIONALISM (Christian Joerges, Inger-Johane Sand and Gunther Teubner, eds.) 3-28 (Oxford & Portland Oregon: Hart Publishing, 2004).


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