Corporate Social Responsibility in Brazil: actions and perceptions in large corporations
Lilian Soares Outtes Wanderley Lucy Cavendish College
Thesis submitted for the degree of Doctor of Philosophy in the Judge Institute of Management University of Cambridge
March, 2004
Abstract This thesis examines the Corporate Social Responsibility (CSR) projects of twenty-two of the largest corporations operating in Brazil. Its specific focus is on the way in which the perceptions of CSR professional inform and shape their company´s CSR policies, programs and governance structures. My approach is founded on the claim that we need to elaborate positive conceptions of CSR, in terms of business people’s attitudes and business responsibilities towards less well-off members of society, as well as the more current negative definitions, centring on the omission of wrongdoing. My methods of data collection and analysis are qualitative, using semistructured interviews with 22 CSR managers as the means of eliciting professionals’ suppositions concerning businesses’ responsibility for the hunger, illiteracy and general wellbeing of various stakeholder groups. Through this highly contextual attention to the specificities of corporate perception and of different community needs in Brazil, I attempt to move away from an unhelpfully generalised and prescriptive approach to corporate social provision. My argument is that although responsible corporate responses to social need will always be rooted in real situations, it is still possible to offer orienting CSR guidelines to managers through combining empirical data with a broadly universalistic evaluative framework.
Although corporate representatives say they have a commitment to fight social inequality and to tackle social problems, the CSR processes do not necessarily follow those statements. An adapted model of Amartya Sen’s Instrumental Freedoms (IFs) is proposed for CSR actions addressing poverty and social inequality. Once this IFs for CSR model is applied to the data, two cases from a total of 61 CSR projects from the corporations examined are highlighted, which demonstrate the feasibility of translating corporate commitment into action to reduce social inequality in Brazil. Furthermore, the idea of poverty and inequality as a lack of income only, seems to be dominant amongst the interviewees. This prevents social contributions from going beyond initiatives such as education to include others which could potentially enhance people’s choices and ability to exercise citizenship.
LIST OF CONTENTS
Abstract
i
List of Contents
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List of Figures
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List of Tables
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List of Abbreviations
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Declaration
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Acknowledgements
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Chapter 1 INTRODUCTION
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Chapter 2 CORPORATE SOCIAL RESPONSIBILITY: literature review 010 2.1 Business and Society
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2.2 Stakeholders and Sustainable Development
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2.3 Inside the Firms
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2.4 CSR Trends and Critique
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2.5 Conclusion and Summary
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Chapter 3 BRAZIL - CONTEXT OF SOCIAL ISSUES or the paradox of wealth and poverty 3.1 Brazilian History in Brief 3.1.1 503 years of Brazilian history
038 040 040
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3.1.2 Brazil over the last 50 years
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3.2 The Paradox of Wealth and Poverty
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3.2.1 Evidence of Inequality and Poverty 3.2.2 Elite Perceptions of Poverty and Social Inequality 3.2.3 Corporate Social Actions
048 054 068
3.3 Conclusion and Summary
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Chapter 4 METHODOLOGY
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4.1 An Ethnomethodological Approach
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4.2 The Largest Corporations Operating in Brazil
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4.2.1 The Final List of 22 Large Corporations 4.2.2 The Original List of the15 Largest Corporations by Sales and the 15 Largest Corporations by Number of Employees
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4.3 Data Analysis
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4.4 Conclusion and Summary
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Chapter 5 CSR PROFESSIONALS’ PERCEPTIONS OF POVERTY AND SOCIAL INEQUALITY
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5.1 Defining Major Social Problems in Brazil
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5.2 Potential Corporate Contributions: rationale and methods
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5.3 CSR Networking and Policies
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5.4 Summarizing CSR Professionals’ Perceptions of Social Issues
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Chapter 6 CSR ACTIONS IN 22 LARGE CORPORATIONS
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6.1 Corporate Priorities for CSR
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6.2 Groups of People Targeted by CSR actions
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6.3 Decision-Making Process and Company Hierarchies
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6.4 Organisational Structure of CSR Efforts
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6.5 Corporate Actions: major projects
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6.5.1 Choices of CSR Governance
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6.5.2 Assessing Corporate Social Actions: CSR and Sen’s Instrumental Freedoms 130
Chapter 7 DISCUSSION OF FINDINGS AND CONCLUSION
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7.1 Education: “changing everything so that everything can stay the same”
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7.2 Poverty and Inequality as Income Deprivation
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7.3 Corporations’ Social Contribution
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7.4 An alternative assessment: CSR and Sen’s Instrumental Freedoms
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7.5 The Two Best Social Performers: McDonald’s and Telefonica
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7.5.1 McDonald’s 7.5.2 Telefonica
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Conclusion
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Contributions of this Thesis
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Limitations
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Suggestions for Further Studies
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APPENDIX
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I Questionnaire and Data Collection Method
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II CSR Professionals – educational background, previous work experience and job titles
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III CSR actions and Levels of Centrality/Specificity
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BIBLIOGRAPHY
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List of Figures Figure 2.1 – Carroll’s Pyramid of CSR
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Figure 2.2 – Principles of Social Responsibility
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Figure 2.3 – Processes of Corporate Social Responsiveness
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Figure 2.4 – Outcomes of Corporate Behaviour
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Figure 2.5 - Three-Domain Model of CSR
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Figure 3.1 – Map of Brazil and its ten neighbouring countries
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Figure 3.2 – The Brazilian Flag in green, blue, yellow and white colours
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Figure 3.3 – Brazil’s HDI from 1975 to 1999
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Figure 3.4 – Regional participation of companies in community contributions to social action, according to IPEA survey 069 Figure 4.1 – Nationalities of the 22 largest corporations
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Figure 4.2 – Industry sectors of the 22 largest corporations
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Figure 6.1 – Specific Questions in Cases of Social Actions Addressing Local Communities
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List of Tables Table 2.1 – Stakeholders Dialogues: Comments of CSR definition
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Table 3.1 – Gini coefficient in Brazil from 1976 to 2002
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Table 3.2 – Distribution of national income (%) from 1976 to 2002
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Table 3.3 – Numbers for HDI High, Medium and Low Categories
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Table 3.4 – Highest and Lowest Brazil’s HDI Municipality
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Table 3.5 – Gini 2002 in Latin America and other countries
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Table 3.6 – Major National Problems, according to the Elites (Reis, 2000)
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Table 3.7 - Major National Goals for Medium Term (%), according to Reis (2000) 057 Table 3.8 – Educational improvements, poverty and social inequality reduction (%) 059 Table 3.9 – The prospects for Brazil over the next 10 years – the results include the answers ‘some chance’, ‘high chance’ and ‘almost certain’ (%)
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Table 3.10 – The risk of failing to reduce Brazilian inequality within next 10 years – answers aggregate responses ‘some chance’, ‘high chance’ and ‘almost certain’ (%)
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Table 3.11 – Changes in values and standards of behaviour from the 1980s to nowadays – results aggregated to the answers ‘some improvement’ and ‘great improvement’ (%)
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Table 3.12 – Should government adopt a national or a differentiated public policy? (%)
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Table 3.13 – Poverty and racial discrimination (% “completely agree” or “almost agree”)
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Table 4.1 – The final list of 22 largest corporations operating in Brazil for the present study on CSR, in alphabetical order Table 4.2 – Years when these corporations started operating in Brazil
079 082
Table 4.3 – The 15 largest private companies operating in Brazil, by sales - in US$ millions (MM1999 and MM2003)
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Table 4.4 – The 15 largest private companies operating in Brazil, by employee headcount (MM1999 and MM2003) Table 5.1 – Brazil’s main social problems, according to CSR professionals
086 097 vi
Table 5.2 – Brazil’s main social problems - one or multiple answers
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Table 5.3 – How Corporations can contribute to solve social problems
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Table 5.4 – Why Corporations should contribute to solve social problems
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Table 5.5 – CSR organisations known by the interviewees
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Table 5.6 – Other CSR organisations added to the list by the interviewees
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Table 6.1 – Major drivers for CSR actions (multiple answers)
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Table 6.2 – Defining groups receiving attention of CSR actions
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Table 6.3 – Management Positions of CSR Professionals
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Table 6.4 – Number of corporations with pre-defined/allocated CSR Targets and/or Budgets
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Table 6.5 – Number of corporate employees working with CSR issues
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Table 6.6 – Choices of CSR Governance by Husted (2002)
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Table 6.7 – Summary of choices of CSR governance
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Table 6.8 – Corporations and Stages of CSR Structuring
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Table 6.9 – Corporate Forms of CSR Assessment
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Table 6.10 – Assessment of CSR Potential Contribution to the Five Instrumental Freedoms adapted from Sen (1999) 138
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List of Abbreviations AA1000 - AccountAbility 1000 ACB – Ação Comunitária do Brasil AMJ – Academy of Management Journal CAPES - Conselho de Aperfeiçoamento de Pessoal de Nível Superior CC - Corporate Citizenship CEBDS – Conselho Empresarial Brasileiro de Desenvolvimento Social, the Brazilian branch of the WBCSD CEC – Commission of the European Communities CSR - Corporate Social Responsibility CSP - Corporate Social Performance DCA/UFPE - Departamento de Ciências Administrativas at UFPE (Administrative Sciences Department) EBEN – European Business Ethics Network FIDES – Fundação Instituto de Desenvolvimento Empresarial e Social (Enterprise and Social Development Foundation Institute) FIRJAN - Federação das Industrias do Estado do Rio de Janeiro (Rio de Janeiro’s Federation of Industries) GIFE – Grupo de Institutos, Fundações e Empresas (Group of Institutes, Foundations and Enterprises) GRI – Global Reporting Initiative HDI – Human Development Index Ibase - Instituto Brasileiro de Análises Sociais e Econômicas (Brazilian Institute of Social and Economic Analysis) viii
IBGE – Instituto Brasileiro de Geografia e Estatística (Geography and Statistics Brazilian Institute) IFs – Instrumental Freedoms (Sen, 1999) INCA – Instituto Nacional do Câncer (National Cancer Institute) IPEA - Instituto de Pesquisa Econômica Aplicada (Applied Economic Research Institute) JIM – Judge Institute of Management MM1999 or MM(year) - Brazilian Business Magazine, Exame, special yearly edition with Maiores e Melhores Empresas (Largest and Best Companies) NFPOs – Not-for-profit Organisations PNAD – Pesquisa Anual por Amostra de Domicílios (National Household Sample Survey) UFPE - Universidade Federal de Pernambuco UFRN – Universidade Federal do Rio Grande do Norte UFRGS – Universidade Federal do Rio Grande do Sul UNCTAD - United Nations Conference on Trade and Development UNDP or PNUD- United Nations Development Programme or Programa das Nações Unidas para o Desenvolvimento UNRISD - United Nations Research Institute for Social Development UNESCO – United Nations Educational, Scientific and Cultural Organization UNICEF – United Nations Children’s Fund WBCSD – World Business Council for Sustainable Development
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Declaration
Except for commonly understood and accepted ideas, or where specific reference is made, the work in this dissertation is my own and includes nothing which is the outcome of work done in collaboration. The work has not previously been submitted in part or in whole to any university for any degree or other qualification. In accordance with the regulations of the Judge Institute of Management the dissertation contains no more than 80,000 words of text.
Lilian S. Outtes Wanderley
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Acknowledgments
This work, or at least this thesis in its current format, is bound up indissociably with my professional academic life as a university lecturer at the Universidade Federal de Pernambuco (UFPE) in Recife, Brazil. Since 1997, the time of the inception of my first ideas for the project, my major concern has been to elaborate a more integral or socially aware program of business education for students going on middle and high-level management positions in Brazil. My life in Brazil both as a teacher and generally was conducted against a daily backdrop of children begging in the streets, or more specifically, of street urchins touting at the traffic lights. This backdrop became unbearable, forcing me to ask broad questions concerning social justice and my Brazilian culture. By the time when I actually started the PhD, in October 1999, a national survey of the social actions of corporations was taking place. Organised by the IPEA, based in Brasilia, the study included all-sized businesses from the service, industrial and commercial sectors in the five Brazilian regions. Survey results led me towards the principally qualitative and in-depth analysis of 24 very large companies, which after fieldwork became a list of 22. I must thank each of those corporate professionals who dedicated some of their busy time to answer my questions. I am also indebted to CAPES, the source of a full-time doctoral scholarship, and to UFPE, which reserved a lectureship position for me even after years abroad studying for this PhD. I am especially grateful to each of my colleagues in DCA/UFPE who on top of new contract shortages took on a supplementary burden of duties on account of my absence.
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This work has been sustained by many people, even when it has prevented me from giving them the time they deserve. I want to acknowledge here my friends for life, Manolita Correia Lima, Moacir Miranda, Silvana Silveira, Emilia Habegger, Eleonora Vidal, Lucila Batista (in memorium), Levindo Damasceno Junior, Geraldo Albuquerque, Debora Enriconi, Paola Giovannini, and Andrea Rego. In Cambridge the intensive experience of a doctorate has given me the chance to meet a lot of wonderful people, and to develop no less intense friendships. I particularly want to single out Tanya Richardson, and my other College house-mates Rakhee Balaram, Celine Druilhe and Tilottama Mukherjee; in the Judge Institute, the group of graduate students studying CSR, Malaika Culverwell, Domagoj Racic, Han-Kyun Rho, Beth Ahlering and Arlo Brady; and among my fellow Brazilians, Raffaella Mota, Irene Miura, Silvia Lucato, Juliana and Tiago Alves, Zula and Samy Lyre, Marie Anne Macadar and Carlos Cavalheiro, Beatris Kemper and Bruno Fernandes, Rosane Marques, and Luiz F. Kormann. My debt is perhaps greatest to Gerard Toonstra, for his constant companionship and love; from our first meeting in Heathrow airport in Dec. 2000 after a day of snow, we have made the effort to remain close to each other no matter whether it was sunny or raining. Two academic events have helped me to shape my work. I want to thank the Von Hughel Institute for its workshops on Poverty, and especially Flavio Comim; and the European Business Ethics Network, especially Laura Spence, for organising the first EBEN Doctoral Workshop. Cambridge and Oxford are said to have a unique academic organization, mixing faculties and colleges. I want to thank some of my student colleagues from my time in the Judge Institute of Management (1999-2004), besides those already mentioned: Jocelyn Probert, Anthony Miller, Rosemary McDonald and Edna
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Armendariz, as well as all academic and support staff; particularly Jane Milburn in the library and Paul Miller in IT. I also want to thank the dedicated professional secretaries of the Doctoral Programme, Mary-Jane Jerkins and Charlotte Middleton. From Lucy Cavendish College I want to thank Orsola Rath-Spivack, of whose work I am a great admirer, Gaby Jones, Sue Sang, Faith Payne and Christine Houghton. Texts that became the final chapters of this thesis were read at different stages by a number of collaborators to whom I want to give warm thanks: Charles Pentland, Flavio Comim, Emilia Habegger, Chris Hope, Hugh Willmott, John Roberts, Jane Collier, James Griffiths and Alison Tomura. Finally, I want to thank the unstinting love, support and patience of every member of my family and extended family, very specially to Maria Lygia and Joel Wanderley, my parents; and Jorge and Joel, my brothers. To my most beloved sister, Lícia, and her husband, Callum, I want to dedicate this work.
Lilian S. Outtes Wanderley Cambridge, March 2004.
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1 Introduction This thesis examines issues of Corporate Social Responsibility (CSR) in Brazil at a time when interpretations of that term are beginning to impact upon the business and the social landscape of the country. It does this from two principal angles: first, by assessing how some large corporations engage in fighting forms of deprivation such as poverty and inequality; and secondly, by analysing CSR professionals’ perceptions of social problems.
Assuming that some corporations in Brazil are responding to the country’s social problems through the implementation of some idea of CSR, the research question is twofold: firstly, to what extent can some of the largest corporations in Brazil be said to act in socially responsible ways in striving to reduce poverty and social inequality?, and secondly, are there any links between CSR professionals’ perceptions of poverty and deprivation on the one hand and corporate social activity on the other?
The argument of the thesis is as follows: 1.
Notions of what constitutes corporate social responsibility are necessarily context-dependent.
2.
The CSR literature sheds very little light on situations such as that of Brazil and similar countries, where real social problems are of pressing relevance to corporations aiming to contribute to society through relieving poverty and inequality.
3.
Brazil has been a rich country with a poor population (Barros, Henriques et al, 2000) since its colonisation. This situation of inequality has become entrenched owing to an authoritarian culture (Chaui, 2000) that deprives individuals of citizenship in every sense of the word (Telles, 2001).
4.
Results of the Brazilian Instituto de Pesquisa Economica Aplicada’s (IPEA or the Research Institute of Applied Economics’) survey on corporate social actions suggest that corporations of more than 500 employees exercise relatively greater degrees of self-determination in developing more directly managed social actions, compared with companies of other sizes. This is
true of large companies irrespective of their sector – industrial, commercial or service (IPEA, 2002). Corporations in Brazil often undertake social actions in the context of the local communities. 5.
CSR management represents a new professional field for companies operating in Brazil, with jobholders more common in medium and large corporations. Members of this new job category compete for corporate interests when presenting CSR cases in workshops, giving lectures at CSR events and writing reports and articles from the corporate perspective, and they have an influence on corporate CSR decisions. This sociological characterization of the relative prestige and power of CSR professionals resonates with the work undertaken by Reis (1999, 2000a, 2000b) and DeSwaan, Manor et al (2000) on elite perceptions of poverty and society in general. In this sense, elite persons’ perceptions of poverty as something else (“non-poor”) must be understood as an influential factor to the failure or the success to pull significant numbers of people out of poverty, especially cases where potential resources are available, as in Brazil. If we consider CSR professionals as representative of that group we can interpret their decisions as being ‘coloured’ by those perceptions.
6.
The choices corporations are making in deciding to support some social projects rather than others are discussed, as is the organisational form of their efforts – for instance, do they run social programs directly or in partnership, or do they subcontract good deeds to NGOs or other third parties (Husted, 2002)? This fact-finding process is important for the recipient agencies in their planned expenditure of their corporate sponsors’ contributions, and in the evaluation of the potentiality of corporate CSR programmes in achieving their aims.
This thesis then addresses two aspects of CSR: 1. corporate actions aiming to solve or minimize social problems such as poverty and inequality; and 2. CSR professionals’ perception of these issues, insofar as they are expected to affect the prioritisation and funding of corporate social action goals. The first issue entails an examination of what lies behind the choices of the target groups to whom corporate social actions are addressed, CSR evaluation and choices concerning CSR governance in terms of in-house, outsourced or shared forms of organisation. The 2
second heading likewise comprises an analysis of professionals’ educational and professional background in brief, perceptions of the major social problems in the country, the social function of private companies and CSR networking and policies.
Background CSR has recently become a relevant topic not only in management but also in broader social discussions of the place of business in society due to market globalisation and consequently counter-globalisation movements. As the great part of the academic literature on CSR comes out of the USA and UK, the themes that it covers can seem alien to the social priorities of countries outside of North America and Europe. The deep social gap in Brazil, the 5th most populous country in the world and in area the 5th largest1, with a Gini - inequality indicator - of 0.61, makes it a prime candidate for social scientific investigation into its resident businesses’ social actions. This situation is characterised by Beck’s expression, the “Brazilianization of the West” (Beck, 2000), going further into suggesting that such degrees of inequality may represent an emerging risk for societies across the globe. This study aims to explore CSR issues within the context of inequality.
Looking at CSR in Brazil, the issues here addressed mainly relate to corporations’ actions in tackling poverty, social inequality, the lack of social cohesion and consequent urban violence. Education, health, housing and hunger also represent important social concerns. It seems unlikely that corporations would be able to rectify this long list of complex problems single-handedly. Nevertheless, their actions individually, collectively in charitable foundations and in partnership with the government may serve to indicate the limits of CSR in Brazil. Searching for theoretical frameworks, this work goes through an extensive list of readings on CSR, from Europe, where the U.K. leads the way, especially in being the first country to have a minister charged with its overview; from the USA, where the field originated; and from Brazil, which has adapted the subfield’s language to its reality, with the Ethos Institute representing the most influential institution. While 1
Precisely 8,511,965 sq km (total), 8,456,510 sq km (land). The four largest are Russian Federation, Canada, China and the US.
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otherwise substantial and illuminating, none of the theoretical CSR contribution offers any approach to the different context of CSR in Brazil. Because of this, use was made of broader social sciences, including sociology, political science and development economics when formulating a contextual approach for CSR in Brazil. No organisation lives in a social vacuum and it would not be different in a country like Brazil, where ignoring its social environment would threaten business survival. Companies’ neglect of the conditions of degradation that afflict their workforce and actual or potential clients can cause damage to their reputation, as well as representing sub-optimal business strategies. Foreign corporations, in particular, may attract intense resentment, expressed in the form of counterglobalisation demonstrations. In this sense, Brazil is no different from the rest of the world. Expectations seem to be higher when looking at social actions of large, more powerful companies, even if people agree theoretically that every constituent of society must take its share of responsibility in bringing about social improvement. The urgency with which Brazil needs to come up with solutions to tackle poverty may make its case atypical and thus deserving of closer inspection. As a country, Brazil shows reasonably high average social indicators, but an enormous social gap between the haves and have-nots. Although it is true that there are other countries whose poor population face similar condition and where inequalities are even higher, Brazil stands in the paradoxical position as a wealthy country of poor population. As bodies primarily dedicated to profit-generation, it is not expected to be the core competence of businesses to run social projects. Yet, some large businesses do that. Until recently, government and not-for-profit organisations (NFPOs) dominated the field in defining and executing social projects. An alternative lies in the form of close partnership among businesses themselves or corporations and government and/or NFPOs, who pool resources and expertise and work towards shared goals.
Specific Research Questions
The employees charged with devising companies’ CSR strategies are in this work referred to as ‘CSR professionals’ giving a general ‘title’ to in practice jobholders designated CSR manager, community relations officer or other titles. This aggregation of the holders of these various positions as a socio-professional category of persons whose influence upon CSR is large and potentially defining derives from 4
the work of Reis on Brazilian elites’ perceptions of poverty, for whom "whether measures will be taken to ameliorate the lot of the poor depends upon the willingness of those who control available resources" (Reis, 1999: 131). Furthermore, Reis argues that it is important to analyse the discourse of Brazilian elites in attempting to disentangle broad attitudes towards social problems among the higher echelons of Brazilian society. Among professionals, there is unanimity on the need to eradicate poverty as a precondition of national advancement, first for positive reasons of fairness, justice and equal opportunity, and second, on account of fears that any violence stoked by inequality threatens wealthy individuals and businesses (Reis, 2000a).
The thesis also asks more specific questions. It enquires into the corporate motivations behind CSR actions (1), and seeks to find out the target groups companies aim to benefit when supporting certain social projects (2), the organisation of CSR efforts (3) and the nature of the companies’ major social projects (4). In identifying methodologies of policy formation and intended beneficiaries, I seek to determine how explicit and how transparent companies’ CSR policies may be said to be (5).
The CSR professionals’ experience and work background become of some importance when we analyse their professionals’ views of social problems in Brazil and their expectations concerning the goals and scope of corporate action. As people deciding or having influence over available resources allocation, CSR professionals from large corporations form part of an elite. Other specific questions raised regarding their role and status thus become: what are the major social problems in the eyes of these CSR professionals? (6). How and why, in their personal views, should corporations help in solving social problems? (7). What is the background, educational and professional experience, of managers in this new job category as professionals in charge of CSR issues? (8).
Structure of the thesis
This thesis is comprised of eight chapters. This Introduction, chapter 1, makes a case for studying how large corporations in Brazil are addressing CSR, in particular 5
asking whether the sphere of their responsibilities extends to people not necessarily affected by the direct interests of the core corporate business. Chapter 2 presents a literature review under a CSR umbrella. Although these publications cover much of the field, little attention has been paid to the context in which corporations are located. While general definitions of corporate responsibility, citizenship, partnerships etc. incline to vagueness, the merit of an adequate contextual approach lies in its ability to capture and assess specific actions, as these target real problems. Chapter 3 specifies Brazil as the context of the social issues examined in the thesis, presenting secondary data on relevant social indicators, and introducing the methods of a survey undertaken into CSR actions and two other surveys about the perceptions of the elites. The main conclusions of a first survey on social actions broadly found that large corporations are more likely to run structured social projects than small and medium size ones (IPEA, 2002). It corroborates other surveys attributing more conservative perceptions of society and social needs to corporate than non-corporate leaders (Lamounier and Souza, 2002). In turn this is found to influence the ways in which they manage available resources and define allocations and priorities for social investment (Reis, 1999; DeSwaan, Manor et al, 2000). Chapter 4 describes the methodology of the work as primarily qualitative, drawing data from semi-structured interviews with CSR professionals from large companies operating in Brazil. As described in this chapter, large corporations represent critical instances in the context of CSR since survey results suggest they are more likely to have CSR policies and directly managed social projects than companies of other sizes (IPEA, 2002). Based on this evidence, a group of 24 companies was initially selected from the 1999 special yearly issue of the Brazilian business magazine Exame Melhores e Maiores. After fieldwork, this group of participating companies fell to 22. The empirical matter of this thesis is divided into two parts: CSR professionals’ perceptions of the major social problems in Brazil, covered in chapter 5, and CSR actions targeted at people not directly related to core business activities, covered in chapter 6. On the matter of perceptions, professionals in CSR management positions were asked for their views on the major social problems affecting Brazil; two previous surveys of the Brazilian elites had identified poverty alleviation unanimously as very important primarily because it fostered equal opportunities (Reis, 2000a). 6
The issue when interviewing CSR representatives of large corporations operating in Brazil was to determine to what extent they perceived poverty as the major social problem and obvious target of social investments. The main question posed took an open format: “What is in your personal view the major social problem in Brazil?” Professionals’ answers to this question are, in chapter 5, interpreted in the light of elites’ perceptions of social issues (Reis, 1999 and DeSwaan, Manor et al, 2000). The thesis is not merely intended as a report on professionals’ perceptions of poverty, but also comprises a consideration of some models according to which corporate social action might be assessed. This field is both embryonic and highly contentious, as generalised or normative metrics (lifting so many out of poverty, if you like) may be insensitive to the particular context in which projects operates. On one side, writers and activists propose universal measures, as represented in absolute grades of inequality or of the degree of human flourishing, as the yardstick against which relief efforts must be judged. On the other side, theorists and practitioners reject this universalism, regarding it as prescriptive and misleading in its representation of priorities, preferring a contextual approach to addressing the real needs of target communities. The drawback of the first approach is its potential inapplicability to given local circumstances; that of the second is its vulnerability to manipulation by project managers, who define the goals of their social actions in such a way as they are already achieved. This thesis attempts to move beyond the parameters of the debate over evaluative metrics as it has been conducted in management literature, looking to the broader social sciences for relevant models of human well-being. It seeks to evaluate the efficacy of social actions through an examination of the degree to which people’s life-choices can possibly be enhanced. The representation of such choices is taken from a generic model of the forms of human capability offered in the work of the economist Amartya Sen. Analysis of the effectiveness of corporate action against a taxonomic template of outcomes for communities must involve the examination of corporations’ own records. This work will also take into account the criteria corporations apply to evaluate their own policies. Mapping the CSR actions undertaken by the final list of
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22 large corporations in Brazil is a pioneer work in itself, from the perspective of a variety of social issues being prioritised. The empirical sections (chapters 5 and 6) of the thesis show that companies have targeted a wide range of issues in formulating CSR policies. This description of the range of projects underway must distinguish between those directly managed by funding corporations and those that companies merely fund via partnerships or outsourced projects. It is unlikely, however, that running social projects in general can lie within corporate core competences considering their profit-oriented nature. Therefore the circumstances in which corporations might choose to develop their own schemes, or partnerships with other businesses, are especially worthy of attention. Chapter 7 discusses the findings of chapters 5 and 6, presents conclusions, admits the limitations of this work and offer suggestions for further research. Surprisingly, in interviews, contrary to survey results, no CSR professional nominated poverty as Brazil’s major social problem. Attempting to justify the discrepancy between the results of interviews and survey findings, one can look to the open questions method used in the semi-structured interview context. One could argue that if poverty and inequality are not perceived as major problems, then social projects aiming at their alleviation as such cannot be expected. This may however be misleading insofar as education, hunger, racial discrimination and urban violence, the problems raised by respondents, all pertain to deprivation. In the last five years, CSR actions have been increasingly undertaken through the programs of foundations or institutes established by businesses. There is a legitimate expectation that these institutes will begin to coordinate their efforts with each other and with those of the government in order to address the roots of social inequality in Brazil more systematically. In this context, the broader aim of the dissertation is to mediate between criteria-driven approaches to assessing corporate action, which risk imposing impossible standards, and entirely autonomous business approaches, which allow corporations to devise programs ultimately geared to their business self-interest.
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2 Corporate Social Responsibility: literature review This chapter offers an overview of definitions of CSR advanced in current management literature. Rather than trying to make sense of “CSR” holistically, as a broad category of corporate actions, I am concerned to identify ideas and practices that provide some purchase on corporate actions dealing with social problems in Brazil. These exclude the so-called triple bottom line, which regards companies as achieving a ‘win-win-win’ when it achieves good scores for each of economic prosperity, environmental quality and social justice (Elkington 1999). Rather than concerning itself with such measures, the present work more modestly looks at some, though not all, aspects of sustainability, or more specifically, some aspects of the social bottom line.
I ask texts dealing with CSR two leading questions. First, to what degree do approaches rely on an appreciation of the context of corporate actions? Alternatively put, to what degree do they overlook context in presupposing a theoretical model or normative framework? Second, in what sense, if any, do analyses relate CSR to solving or alleviating social problems such as poverty or inequality? CSR is not a new field of research, although this acronym is nowadays seen more often in business magazines and professionals’ discourse than it has been in the recent past. I am particularly interested in the evolution of CSR as a rubric for sensitively registering the different practical circumstances in which companies design and implement social policies. In the course of the environmental and development conference organized by the UN in Brazil in 1991, the UN Secretary General diagnosed a need for change in economic behaviour across international borders (Schmidheiny, 1992: 2). At that time it was believed that the future security of the planet lay to some degree in jeopardy because economic growth was concentrated in the industrialized nations, while population growth was concentrated in developing countries. It was also suggested that “[p]overty, rapid population growth, and the deterioration of natural resources often occur in the same regions, creating a huge imbalance between the quarter of the planet living in rich, industrial nations and the three quarter residing in developing nations”. Now, years later, we can see the equation is not as simple as that. Industrialized countries like the United States and the United Kingdom, also known 10
as wealthy countries, are living with respectively 16.5% and 15.1% of their populations under conditions of poverty (Zadek, 2001: 5). Nevertheless little work has been carried out connecting CSR to contextual social needs, particularly as these might relate to individuals’ opportunity, to lack of opportunity, to alleviate their deprivation. The provision of such opportunities will be a theme of this thesis.
CSR can be represented as an umbrella-term covering a diversity of subjects, including negative and positive company responsibilities and voluntary and nonvoluntary measures. My account focuses particularly on the organizational structures through which companies deliver CSR policies—whether through stand-alone programs, or in conjunction with governments and NGOs. This section also considers those processes by which companies plan their CSR provision, defining policies and targeting social investments. Dialogue amongst the World Business Council for Sustainable Development’s stakeholders in eight different countries (Holme and Watts, 2000; WBCSD, 1999) reveals markedly divergent understandings of CSR. Appreciating this diversity of view provides the rationale for the first question asked in this chapter. My second question, related to the practical needs of CSR project beneficiaries, arises out of the national situation of Brazil. Brazil has one of the largest income gaps in the world, with some 20% of its population facing deprivation2. Since many large corporations operating in the country claim to be acting towards the reduction of social misery3, it is worth asking in what ways these efforts have aimed at the alleviation of Brazilian social problems. Poverty has always been an item on the BCDS4´s agenda alongside other social and environmental issues (Schmidheiny, 1992). It is nevertheless a genuine question as to whether the emerging CSR literature has embodied this concern—that is, whether it describes CSR actions in relation to their effect on poverty. This is partly
2
Data on poverty in Brazil places variously “10 to 45 million people” (Schwartzman, 2003: 15) in poverty, with no single poverty line being supposed. According to nationmaster.com (http://www.nationmaster.com/graphT/eco_pop_bel_pov_lin) 22% of Brazilian population face poverty - 1998 estimate. 3 See for instance the Instituto Ethos website (www.ethos.org.br) and the Zero Hunger Campaign (www.fomezero.org.br) which describe companies as having formed civil partnership for the reduction of poverty. In a 2002 UN symposium, Nestle’s Vice-Chairman said: "our greatest social impact is not through funding projects, but poverty reduction through our basic business development." (BrabeckLetmathe, 2002: 9). 4 BCSD stands for Business Council for Sustainable Development and it is the WBCDS before its ´W´ has been added.
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because CSR designates a nebulous set of concepts; the term CSR is open to definition to a marked degree (Eilbirt and Parket, 1973; Beesley and Evans, 1978; Goodpaster and Matthews Jr, 1982)5. Even the outwardly uncontroversial statement that CSR relates to a society’s needs and goals (UNCTAD, 1999) would still appear to need the more explicit specification of those ‘needs and goals’.
This chapter’s literature review will thus seek out frameworks that can be operationalized in the Brazilian context. Highlighting the diversity of perspectives on CSR offered by current writers, it concludes that a contextual approach addressing individuals’ lack of opportunity has yet to be developed for the analysis of CSR. It is further suggested that making these opportunities available might enable individuals to achieve what they value. A framework taking account of such considerations would determine which social problems need to be addressed, based on a philosophical analysis of corporations’ social responsibilities which conceives of corporations as moral agents. This approach would present a contrast with other studies in the literature on CSR, which sometimes concerns themselves with abstractions outlining the role of corporations in society, rather than working through grounded analysis. This chapter is structured in four parts: firstly, it reviews the writings on business and society perspectives, the original field from which CSR arises. Secondly, it considers the expansion of interest groups pressuring business on behalf of various shareholder and stakeholder factions. Thirdly, it examines internal corporate mechanisms of organisation relating to CSR performance; and fourthly, it covers the latest publications in the field, an emerging critical literature offering new theories or methodologies which allow CSR to be part of a mainstream international and academic research. This fourth part aims at an up-to-date review of the field, drawing attention particularly to publications from the last three years (2001-2003). These works advance themes of Corporate Social Accountability (CSA), external monitoring and global governance as it relates to CSR. In this chapter, I set out to distinguish between different types of responsibility imputed in different contexts to corporations. These forms of responsibility have variously been categorised as negative and positive, voluntary and regulatory, and 5
For Goodpaster and Matthews Jr (1982), discussion of moral responsibility tends to vagueness: “But vagueness is a contextual notion. Everything depends on how we fill in the blank in ‘vague for ___ purposes.’ ” (reprinted in Chryssides and Kaler, 1993: p.268). “A precise definition of social responsibility, especially for its contents or boundaries, is not easy to formulate”, say Eilbirt and Parket (1973: 6).
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before and after-profit. In order to determine or seek to prescribe which type of responsibility may be appropriate for any one company, it is necessary first of all to understand the context in which that company operates. Pressure groups, governmental policies and many other external forces all exert influence on corporate decisions relating to CSR. In particular, this chapter pays particular attention to a group of people perhaps not directly involved with companies’ main business or profit-making activities: in other words, the community living next to the business’s sites of operation, who in Brazil often face deprivation.
2.1 Business and Society Standard presentations of the CSR literature start from Bowen (1953), and go through Friedman (1962), Carroll (1979) and Freeman (1984) tracing the development of various concepts of business responsibility. ‘Corporate Social Responsibility’ is more than a new term for the academic study of ‘Corporations in Society’, ‘Business and Society’ or even ‘Business in Society’. All these loosely demarcated fields deal with the social function of private companies or the social role of businesses. More than a fashionable expression, CSR responds to the contemporary circumstances of globalisation, in which capitalism is expected to play a social or ameliorative role besides returning profits for owners. My analysis of CSR is predicated on a refusal in advance to rule for or against capitalism as a tool for enfranchising poor people. Rather than taking a preemptive fixed position, then, on the social projects of companies, which extend beyond their core business activities, I insist that it is necessary to submit individual initiatives to contextual scrutiny. As a matter of clarification, let me say that this thesis does not apply any Marxist or Neo-Marxist approach, though it does attempt to free itself of conformity to business rhetoric. Authors have undertaken broad reviews of CSR, covering a vast and 50-606 year-old literature (Wood, 1991a, 1991b; Carroll, 1999; Birch, 2003). Yet the history 6
It was stated even earlier, in 1916, that: "the world is familiar enough with the conception of social responsibilities. These do not need to be rediscovered in the year of our Lord 1916. But the fact that a large part of them are business responsibilities has not yet penetrated, and this fact does need to be brought home to a community in which business affairs and theoretical economics alike are still shadowed by the fading penumbra of laissez-faire. This issue is deeper and more far-reaching than anyone can realize who has not tried earnestly to
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of publications in CSR is characterized by a succession of phases in each of which theorists and practitioners systematically forget earlier contributions as they attempt to set out new frameworks: “Corporate social responsibility has suffered from a lack of definition as an issue and, as a consequence, discussion has been amorphous and ill-focused. To some extent this is because of the absence of well-defined terminology. More seriously, because of the intrinsic difficulty and strangeness of the issues involved, little systematic analysis has been undertaken and discussions have tended to be cursory or polemical.” (Beesley and Evans, 1978: 9).
This statement from the late 1970s illustrates the confusion surrounding CSR, which persists to this day. One tradition of considering corporate moral responsibility makes an analogy between the agency of corporations, which comprise a complex organisation of specific individuals, and the more readily accepted moral agency and responsibility of the individual subject. This equivalence between persons and corporations has had to be refined because of differences between the natures of the two putative moral agents. Because corporations are not merely accretions of individuals, i.e., they are more than the sum of their parts, the hypothesis that they possess a form of moral agency (Werhane, 1985; Collier, 1995, Collier and Esteban, 1999; Moore, 1999; Kaler, 2002) is based not only on causality or consequentialism, but also relates to their “purposes, practices and processes” (Collier and Esteban, 1999: 182). In these terms, for the development of CSR as an academic field, corporations should be conceptualised as moral agents, rather than as moral persons as is sometimes suggested (French, 1984). Thus “moral responsibility is an attribute that can manifest itself in organizations as surely as competence or efficiency.” (Chryssides and Kaler, 1993: 277). A similar perspective to this envisaged corporations as moral agents, basing itself on a ‘principle of moral projection’, means that corporations were expected to behave no differently than individual moral agents (Goodpaster and Mathews Jr, 1982; Goodpaster, 1983). This approach to the responsibilities of corporations in understand the sources of the deep sense of injustice that animates the discontented classes. The trouble is not that the unfortunate are not helped, but that they are helped in the name of charity, regardless of whether they are victims of their own weakness or of the misfit grindings of our none-too-perfectly-adjusted industrial machine. To many the word 'charity' is as a red rag to a bull, and this will never be otherwise as long as so much that passes for charity is merely repairing the damage or salvaging the wreckage for which industry is the chief responsible cause; the same industry which distributes the dividends out of which charity funds so freely come." (Clark, 1916: 229).
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society is usually treated under three broad conceptual headings: 1) the invisible hand of the market, 2) the hand of government and 3) the hand of management whereby CSR is made possible.
The idea of the invisible hand – namely, that the market itself produces an optimal distribution of social benefits – would confirm the famous argument that ‘the business of business is business’ (Friedman, 1970), denying all business responsibility to any other party than shareholders. Friedman’s argument was first published in 1962 and has attracted both criticism and support since (Henderson, 2001a, 2001b). The impossibility of distinguishing positive from negative responsibility or the ‘active pursuit of good’ from the ‘passive avoidance of evil’ (Chryssides and Kaler, 1993: 231) form an alternative tradition to Friedman’s, culminating in such contemporary formulations as Sen’s: “The power to do good goes almost always with the possibility to do the opposite” (1999: xiii). Such statements in effect turn Friedman’s - and his followers - criticism concerning the analytical looseness of CSR upon themselves. Certain seminal works in organizational studies explore some possible meanings of business responsibility (Kaler, 2002; and Takala and Pallab, 2000). The work of Bovens (1998), based on Hart´s explanation of responsibility (1968), extends the field of application for this concept to complex organizations. For now, even agreeing that positive and negative, or passive and active, perspectives of responsibility may in practice be inextricable, Bovens (1998) suggests five central definitions of business responsibility. These five areas or categories are not only related to one another, but cannot be reduced to any overarching term capable of subsuming all the others. In fact, however, there are times when Bovens argues for the predominance of certain definitions. Bovens’s five constructions of responsibility are (Bovens, 1998):
1. Responsibility as cause – ‘responsible for’ in the sense of causal consequence; 2. Responsibility as accountability – ‘being responsible’ in the sense of carrying liability for the results; 3. Responsibility as capacity – in the sense of having the means to perform an action of some moral character; 4. Responsibility as task – in the sense of a function resulting from competence; and 15
5. Responsibility as virtue – involving the active commission of good deeds or the advocacy of positive value judgements.
Each of these definitions may be illustrated. In the case of ‘cause’, businesses have caused damage and bear a responsibility to repair it. ‘Accountability’ usually concerns issues of legal compliance, but may be extended in the direction of morality. ‘Capacity’ deals with the knowledge and skills of a company in such a way that companies may choose or not to involve themselves in practical problems and claim responsibility. Responsibility as a ‘task’ arises when a corporation acknowledges that its knowledge and skills take the form of a competence, and make a certain course of action incumbent upon it as a duty. ‘Virtue’ comes about when an active, and positive, contribution takes place. To look at these concepts with reference to corporations, in the case of CSR as cause, corporations take responsibility for their negative actions and consequent impact; for CSR as accountability, they implement changing legislation and regulatory rulings and are aware of changing social expectations; for CSR as capacity, corporations’ sphere of responsibility is limited to that of their competence; for CSR as task, corporations’ responsibilities are defined as concomitant with the performance of their core business processes; and for CSR as virtue, corporations actively undertake voluntary collaboration to better society. Within Bovens’s category of ‘responsibility as virtue’, corporations are free to make whatever contributions they choose, according to company-specific CSR policies and priorities for social investment. This social contribution is distinct from duty in the sense expounded by Singer (1997: 589). “J.O. Urmson suggests that the imperatives of duty, which tell us what we must do, as distinct from what it would be good to do but not wrong not to do, function so as to prohibit behavior that is intolerable if men are to live together in society. This may explain the origin and continued existence of the present division between acts of duty and acts of charity.” Concluding this section on Business and Society, we can ground corporations philosophically as moral agents with certain responsibility, but not as moral persons (Werhane, 1985). CSR makes sense when there is a prospect of some agreement between the perspective of the ‘hand of management’ and Goodpaster’s principle of 16
moral projection (Goodpaster and Mathews Jr, 1982). In this context, the idea of CSR can be understood in five predominant ways as: cause, accountability, task, duty and virtue (Bovens, 1998).
2.2 Stakeholders and Sustainable Development Friedman (1970) controversially stated that business was justified in looking after the interests of its shareholders; it is now accepted that such actions are in themselves insufficient for corporate survival. More up-to-date accounts of business responsibility acknowledge other key interests in place in the form of labour forces, customers and local communities, or stakeholders in general. The argument for a negative, Kantian perspective (corporations should refrain from wrongdoing) needs to be supplemented by an acknowledgement of stakeholders’ right to be treated as an end in themselves. This need not, however, take the form of a transformative Rawlsian intervention into the process of a business’s activities. Some advocates of the stakeholder theory (Evan and Freeman, 1993; Jones, Wicks and Freeman, 2002) have called for a change in corporate governance7 structures, so that the interests of a diversity of non-traditional participant groups are represented on company boards. However, the claims of this theory go beyond the immediate demand for participation into a call for the interests of business to be more broadly consonant with those of society. Stakeholder theorists themselves (Jones, Wicks and Freeman, 2002: 28) admit that in their field: “… more theoretical work is needed. (…) To date only one formally presented instrumental stakeholder theory has been advanced. Jones (1995) argues that firms whose managers are able to create and sustain mutually trusting and cooperative relationships with their stakeholders will achieve competitive advantage over [other] firms… The real challenge to stakeholders theorists is the creation of [a] theory that is simultaneously morally sound in its behavioral prescriptions and instrumental[ly] viable in its economic outcomes.”
7
A stakeholder Board of Directors is proposed as a structural mechanism by which this idea could be practically implemented.
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The definition of stakeholders published by Freeman in 1984 became a turning point for the recognition of corporations as having to look beyond the traditional view of shareholders only, when setting corporate strategies. To do justice to the extent of academic discussions of stakeholders’ rights and input, I must mention two important conferences on the topic. The first is the 1993 Toronto Conference attended by Carroll, Cochran, Donaldson, Freeman and Jones, among other authors (Clarkson et al, 1994: 84), with the following text as its conference call: “The idea that corporations have ‘stakeholders’ has now become commonplace in the management literature, both academic and professional (…) and a diagram purporting to represent ‘the stakeholder model’ has become a standard element of ‘introduction to management’ lectures and writings. Unfortunately, anyone looking into this large and evolving literature with a critical eye will observe that the concepts ‘stakeholder’, ‘stakeholder model’, ‘stakeholder management’ and ‘stakeholder theory’ are explained and used by various authors in very different ways, and supported (or critiqued) with diverse and often contradictory evidence and arguments.”
This variety of stakeholder theories has likewise hampered the development of any consistent model of corporate responsibilities to dependent groups. Proceedings from the second notable conference in this field were published in the 1999 issue of Academy of Management Journal (AMJ), focusing on stakeholder management together with Corporate Social Performance8 (CSP). The journal number issued from a special research forum on the subject of “Stakeholders, Social Responsibility and Performance” (Agle, Mitchell and Sonnenfeld, 1999; Berman and Wicks, 1999; Harrison and Freeman, 1999; Luoma and Goodstein, 1999; Ogden and Watson, 1999; and Weaver, Trevino and Cochran, 1999). This publication began to grapple with empirical evidence of companies’ social behavior, while the earlier discussion had more abstractly pointed out incoherences in the concepts of “stakeholders” and “stakeholder management”. Here I want to summarize four articles from these proceedings dealing with applied research.
First, in a case study of a recent privatised water industry in UK, it was shown that two measures could demonstrate the validity of companies’ claims about serving stakeholders: firstly, companies could seek to define stakeholders’ interests, and monitor their performance in serving such interests; and secondly, companies could 8
Corporate Social Performance or CSP is a branch of CSR which seeks to evaluate companies’ actions towards certain defined stakeholder groups or according to certain undertaking or compliance measures. More on this topic will be shown on p.27.
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commit themselves to transparent measures and measuring processes (Ogden and Watson, 1999).
Next, a CSR construct adapted from a previous work by two of the article’s authors (Mitchell, Agle and Wood, 1997) examined the relation between three variables with reference to 80 large U.S. companies. The hypothesis being tested is that managers take greater account of stakeholder needs when stakeholders are conceived of as being powerful and legitimate. The variables under measurement are CEO perceptions of stakeholders’ attributes – power, legitimacy and urgency; stakeholders’ identity and “salience”, as employees, customers, governments and communities; and corporate performance – profitability, employee relations, products, community relations and environmental sustainability. Drawing on a rich bibliography in CSR and business literature, the authors confirm the 1999 article model, suggesting that stakeholder attributes such as power, legitimacy and urgency indeed affect the way in which senior managers prioritise competing interests and demands. The statistical representation of parametrised variables, however, is inconclusive, meaning “much more work will be necessary before research will be able to fully understand these phenomena” (Agle, Mitchell and Sonnenfeld, 1999: 520)9.
In a third work a sample of 128 companies was drawn from the 1994 American Fortune 500 to test hypotheses concerning the influence of, on the one hand, government, media and business communities’ perspectives, and, on the other, management goals of profitability on firms’ implementation of either “integrated” or
9
In this work, power is defined as the ability to apply a high level of direct economic reward or punishment, coercive or physical force and positive or negative social influence. Legitimacy refers to the perception of the justness and relevance of group claims. Urgency relates to the importance of the claim as understood by the firm. Using the less sophisticated quantitative analysis of descriptive statistics applied to a sample of 70+ companies, the data shows a higher stakeholder salience for shareholders, employee and customers (with means equal to 6.3, 6.4 and 6.6 and standard deviation to 0.8, 0.6 and 0.5, respectively) than for government and communities (5.1 and 4.0; 1.6 and 1.6). Similar results are generated for the four different types of CSR classified as economically, legally, ethically and philanthropically motivated actions (from Carroll, 1979), with means equal to 3.3, 2.7, 2.6 and 1.1, and standard deviations of 1.0, 0.7, 0.8 and 0.7, respectively. Both groups of data reinforce the primary role of corporations as business-and profit-oriented organizations, prioritizing what the authors call “the traditional production function view of the firm” (p.520).
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“decoupled”10 ethical policies. Here “integrated” policies refer to “joined-up”, corporate-wide or cultural rules of governing corporate behaviour. The article suggests that more attention should be paid to the motivations of managers in seeming to set and meet ethical criteria, and to the role of managers as genuine moral actors. It concludes that “external factors are more likely to influence the development of easily decoupled ethics program practices” and that “top management commitment to ethics appears to be required if more integrated practices are to develop.” (Weaver, Trevino and Cochran, 1999: 547).
The fourth article analyses the relationship between institutional investor and governance devices and two dimensions of Corporate Social Performance (CSP). Pension fund equity and mutual and investment bank funding are regarded as institutional stakeholdings, while management equity holdings and options and external director representation are considered as relevant governance mechanisms. Corporate social performance is defined in human terms in one dimension as “the contributions firms make to communities, to their hiring of women and minorities, and employee relations dimensions”, and as products in another, with reference to product, quality and environmentally sound manufacture. The article tested eight hypotheses against a random sample of 252 firms from the KLD11 database. It found that institutional investor and pension fund equity was positively correlated to both people and product CSP dimensions, while there was no direct relation between mutual and investment bank funds and CSP. Both people and products were positively significant in cases of corporate governance measures being in place, while in cases of top management equity there was some positive relationship to products but none to people. These results show the feasibility of assessing relationships between some dimensions of corporate responsibility and some issues 10
“Decoupled” refers to stand-alone measures suggesting specific measures or forms of compliance. The authors propose that the presence of these two classes of external factors together are responsible for “decoupled” programs; while senior management’s commitment to corporate ethics as such tends to generate and implement “integrated” practices. Factor analysis were run using policy communications, an easily decoupled ethics practice, and ethics-oriented performance appraisals, as an integrated ethics practice; these were set as dependent variables, with four independent variables as: 1. management awareness of USSC10 guidelines; 2. negative media attention; 3. company presence at Conference Board ethics meetings and 4. stated top management commitments. A fivepoints Likert scale was used for each variable. 11
KLD stands for Kinder, Lydenberg, Domini. This company makes available to the public a large multidimensional CSP database.
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in corporate governance. Its main finding is the tolerance of pension fund holdings to long-term measures taken by the company to ensure the human and environmental sustainability of businesses.
This 1999, volume 42, of AMJ as a whole, questions whether theoretical and pragmatical approaches to CSR are necessarily distinct, or might valuably be integrated. However, before approaching the next section, 2.3, about internal processes of CSR, there are two initiatives that make use of stakeholder dialogues I want to mention: the World Business Council for Sustainable Development (WBCSD) and the UK based AccountAbility and its AA1000. The British Institute of Social and Ethical Accountability has provided a socalled AA100012 framework offering businesses guidance on improving accountability and establishing effective forms of stakeholder engagement. Reviewing some figures, Utting (2002: 80) claims that most multi-stakeholder initiatives are new and proceed according to new frameworks, having emerged in late 1990s; and that so far, the number of firms participating13 is fairly minimal.
From September 1998 to September 1999 the WBCSD, based in Geneva, Switzerland, organised discussion groups in eight countries resulting in the following definition (Holme and Watts, 2000: 7): “Corporate Social Responsibility is the commitment of business to contribute to sustainable development, working with employees, their families, the local community and society at large to improve their quality of life”. An important aspect of these ‘stakeholder dialogues’ - and one which has not received much attention - is the different definition each country’s discussion group gave CSR. In Argentina, Brazil, Ghana, Taiwan, Thailand, the Netherlands, the Philippines, and the United States, groups of business and non-business people all presented subtly variant understandings of the concept.
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Their website is www.accountability.org.uk, in 26/11/2003. The author presents a list of fourteen multi-stakeholder initiatives starting with AA1000, and including the Clean Clothes Campaign, the Ethical Trading Initiative, the Forest Stewardship Council, the Global Alliance, the Global Compact, Global Framework Agreements, the Global Report Initiative, ISO 14001, the Marine Stewardship Council, SA8000, Worldwide Responsible Apparel Production and the Worker Rights Consortium (Utting, 2002: 75-80). These initiatives allow companies to pursue responsible or ethical trade and development without resting on a legally or morally enforceable base. 13
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Argentina, Buenos Aires - “CSR is about a corporation’s ability to respond to social challenges. It starts with developing good relations with neighbors. Companies should make a strong commitment to education, worker rights, capacity building, and job security. CSR [entails] stimulating the economic development of a community”. Brazil, Rio de Janeiro – “CSR [entails a] commitment to strive for the best economic development [of] the community, to respect workers and [to] build their capacities, to protect the environment and to help create frameworks where ethical business can prosper”. Ghana, Accra - “CSR is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunities in building the skills of employees, the community and the government”. Taiwan, Taipei - “CSR is the contribution to the development of natural and human capital, in addition to just making a profit”. Thailand, Bangkok - “CSR must be locally relevant and [is] meaningful only if backed up [by] action”. The Netherlands, Noordwijkerhout - “CSR is about making a leadership commitment to core values and recognizing local and cultural differences when implementing global policies. It’s about companies endorsing the UN Convention on Human Rights and the ILO Rights at Work”. The Philippines, Manila - “CSR is about business giving back to society”. USA, Detroit - “CSR is about taking personal responsibility for your actions and the impacts that you have on society. Companies and employees must undergo a personal transformation, re-examine their roles, their responsibilities and increase their level of accountability”.
Once each ‘local’ group had built up its own definition for CSR, priorities were consequently differently shaped.
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Table 2.1 – Stakeholders Dialogues: Comments of CSR definition Country
Comments resulting from CSR definition
Argentina
Stressed business commitment and sustainable development and reinforced stakeholder participation as essential. Highlighted the common responsibility of businesses, communities and stakeholders and the relevance of high ethical standards within business and also within broader community. Included partnerships for CSR, access to information, global approach respecting local culture, development of local capacity, enablement of communities’ self-sufficiency, empowerment and ownership. Addressed environmental protection, damage prevention and remediation; and quality of life for future generations. Gave attention to the need for transparency; environmental mitigation, protection and change in people’s attitude towards the environment; the protection of consumers; highlighted the relevance of youth and gender issues; and of corporate obligations proportionate to company size. Suggested that CSR should focus on defining ethical behaviour, determining the real needs of stakeholders and the form of partnerships. Emphasised the role of individuals and the need for greater transparency and also criticised ‘economic development’ as not being an appropriate term for the economic role of business in society.
Brazil
Ghana
Taiwan Thailand
The Philippines The USA
Source: adapted from Holme and Watts, 2000.
What becomes clear from these stakeholder dialogues is that different societal expectations are placed upon corporations within specific social contexts. In this work, the WBCSD also centrally define the social good of CSR as being “about helping to meet people’s needs”. If we ask for more specific definitions, these diverge according to national and geographical context. A survey of this initiative would therefore suggest that the reason that “a universally accepted definition of CSR has yet to emerge” (Holme and Watts, 2000), is because it never can. The counterargument would be that globalisation will come to impose a broadly similar level of social expectation upon business as costs, wages and environmental impacts equalize. This remains, however, unlikely to happen when taking into account the existing diversity of contextual conditions.
Another perspective in many respects similar to the stakeholder approach is actually that of sustainable development. The term ‘sustainable development’ gained currency in the 1970s in relation to Maurice Strong’s efforts to link the international
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environment and development concerns following the UN Conference on the Human Environment in Stockholm in 1972, which he headed (Schmidheiny, 1992; Murphy and Bendell, 1997). The UN’s World Commission on Environment and Development (WCED) defined sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs… It contains two key concepts… the essential needs of the world’s poor … should be given overriding priority; and the idea of [there being] limitations … on the environment’s ability to meet present and future needs “ (WCED, 1987: 43, apud Murphy and Bendell, 1997: 18).
Advocates of sustainable development have spoken of promoting alternative solutions to a vast range of social, environmental and economic problems; but these expectations would seem to be too lofty to figure in businesses’ own CSR metrics and criteria. Such aspirations are even too high for partnerships between businesses and stakeholders like government and local communities. The fact is that even when certain measures of sustainable development rank well in some CSR indicators, more often than not, other measures do not feature, having been discarded by businesses, who feel able in this way not to reflect the full diversity of expectations in their procedures. This assertion may be borne out by looking at some large companies highlighted in the BCSD’s book, namely Royal Dutch/Shell, Dow Chemical, Du Pont, Norsk Hydro, ALCOA, Aracruz, Asea Brown Boveri, and Mitsubishi, among others, as successful case studies in sustainable development (Schmidheiny, 1992). Exactly the same list of companies also featured in an expose by the environmental activists Greenpeace of companies which misinform the public on environmental issues in order to project a green image (Greer and Bruno, 1996). Companies are learning that it is not always possible to define the terms in which they are perceived; reality, as it were, has more than one face and both Greenpeace’s and the BCSD’s studies to some extent acknowledge different aspects of the businesses they describe.
Even after the WBCSD’s submissions defining CSR were made available in 2000, no further work has explored differences between countries or contexts in perceptions of CSR. One can certainly argue about the existing distinctions between first and third world countries or between North and South. Some national CSR deliberations seem to want to place business at the service of society, and some merely believe that business leaders and owners should temper or moderate their 24
greed. The WBCSD’s initiative is useful to research in providing a body of divergent data that in many ways complicates preconceptions about countries’ varying levels and stages of economic development. Despite these contextual distinctions of CSR definitions, some frameworks for analysing corporate practices have been elaborated. This subject is taken up in the next sub-section 2.3, called ‘Inside the Firms’.
2.3 Inside the Firms Attention to internal corporate mechanisms of planning, execution, governance and compliance within the CSR dimension represents a new approach to the topic of CSR. If before the 70s publications on CSR focused on the businessperson (Bowen, 1953), as the first empirical studies became available (Eilbirt and Parket, 1973; Holmes, 1976) the focus tended to shift towards the functional firm (Drucker, 1984a, 1984b; Carroll, 1999). The earlier stress upon the individual may be explicable in terms of family ownership, which from the 30s to the 60s was the most common form of business management; that is, companies tended to be run by heirs rather than trained professionals. Furthermore, the difficulty or impossibility of collecting data for corporate social performance during the earliest stages of the twentieth century means that CSR had to be described in definitional and predominantly ethical terms (Clark, 1916, 1928). Therefore writers like Clark tended to present abstractions stating how businessmen and businesses should operate.
The first categorization of CSR activities which related business responsibilities to business’s functional parameters came from Carroll in 1979. His model of CSR –projected three dimensions and four categories: namely the economic, legal, ethical and philanthropic activities of business. This specification of sub-fields launched an entire branch of study under the name of Corporate Social Performance - CSP (Wartick and Cochran, 1985; Wood, 1991a, 1991b; Wood and Cochran, 1992; Pinkston and Carroll, 1996; Swanson, 1995, 1999; Maignan, Ferrell, Hult, 1999).
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According to Carroll (1979, 1991), the economic aspect of CSR pertains to the basic choices businesses make in strategising their survival and path to profit; the legal deals with compliance with the law; the ethical is the most difficult to define, touching on practices that are impermissible such as some forms of bribery and human rights violations; and the philanthropic concerns actions going beyond corporate obligations (see figure 2.1).
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Figure 2.1 – Carroll’s Pyramid of CSR
Source: Carroll (1991: 42)
Source: Carroll (1991: 42)
The idea of performance measurement has evolved from this first perspective and often addresses stakeholder issues such as the determination of the identity of stakeholder groups. Agreeing with the claim that “Carroll’s CSR domains and pyramid framework remain a leading paradigm of CSR” (Schwartz and Carroll, 2003: 504), I would add in effect Carroll’s framework has been supplemented by Wood’s CSP model as a continuing paradigm of CSR (Wood, 1991a , 1991b). Wood’s CSP model acknowledges previous publications (Wartick and Cochran, 1985; Miles, 1987 apud Wood, 1991a; Carroll, 1979) and importantly: 1) specifies three levels of corporate responsibility: institutional (relating to legitimacy); organizational (relating to corporate ethics); and personal (relating to personal ethics); 2) proposes environmental assessment, stakeholder management and issues management as processes; and 3) suggests a further broadening of CSP criteria to include such outcomes as social impacts, social programs and social policies. CSP is then integratively presented on a three-level scheme, as a “function 27
of motivating principles, responsive processes, and social outcomes [which] provides a logical structure both for understanding existing research and for identifying the gaps where new research is needed” (Wood, 1991b: 397). The figures 2.2, 2.3 and 2.4 present the main points proposed as the three levels of corporate responsibility, or definitionally the principles and processes of corporate social responsiveness, and the outcomes of social behavior (Wood, 1991a, 1991b).
Figure 2.2 - Principles of Social Responsibility Principles: Levels of Application -----------------------------------------------Legitimacy: Institutional Public Responsibility: Organisational Managerial Discretion: Individual -----------------------------------------------Source: adapted from Wood (1991a, 1991b)
Figure 2.3 – Processes of Corporate Social Responsiveness Processes -----------------------------------------------Environmental assessment Stakeholder Management Issues Management -----------------------------------------------Source: adapted from Wood (1991a, 1991b)
Figure 2.4 – Outcomes of Corporate Behaviour Outcomes -----------------------------------------------Social Impacts Social Programs Social Policies -----------------------------------------------Source: adapted from Wood (1991a, 1991b)
Unsurprisingly, very little work has been done on the third part of the model, the outcomes or assessment – necessarily in default of an agreed definition of
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responsibility. This comment only underlines the fact that CSP “has not developed into a viable theoretical or operational construct” (Rowley, Berman: 2000: 397).
Business associations around the world have developed their own CSR indicators, more often than not suggesting tools for corporate self-assessment (Ethos, 2000a, 2000b, 2001b, 2002b, 2003; GRI, 2000; Business in the Community, 2000). The limitations which business people have most frequently pointed out in the academic frameworks relate to their ‘operationalizability’, that is, their unhelpful level of generality and high degree of abstraction. Businesses’ own guidelines, by contrast, are more flexible or less stringent towards business. Very recently, an alternative model excluding the philanthropic level from Carroll’s framework has been suggested, in which the pyramid structure is replaced by a three-domain schema (figure 2.5).
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Figure 2.5 – Three-Domain Model of CSR
Source: Schwartz and Carroll (2003: 509)
In this new model what was formerly defined as philanthropy is subsumed under the ethical domain. The lack of grounded frameworks still makes the gap between the normative schemes of the previous section and any set of industry rulesof-thumb a very wide one. In effect, it is very difficult for CSR proposals to bridge theory and practice, and this is reflected in what seems to be a division in the literature between normative and empirical works.
2.4 CSR Trends and Critique CSR as a field of research has expanded academically and developed new methodological alternatives such as the use of institutional theory (DiMaggio and Powell, 1991; Kondra and Hinings, 1998), particularly in the field of environmental 30
studies (Levy and Rothenberg, 2002). A range of English-language documents originating variously in Europe, Brazil and the United States contribute a number of critical perspectives on CSR from the viewpoints of other fields of knowledge than business economics. Corporate governance (Boatright, 2002; Monks, 2001; Rho, 2002; Silveira, 2002), development economics (Clark, 2000 ), the analysis of varieties of capitalism (Korten 2001a, 2001b; Litvin, 2003;), and political economy (Kirschner, Gomes and Cappellin, 2002; Silva, 2002); do not make up the entirety of this literature, but certainly represent major areas of growth in work seeking to characterise the contributions of corporations to society. From Brazil in particular, the literature on Business Ethics (Arruda, 1996, 1997, 2000; Srour, 1994; Zadsznajder, 1994, 1995) and the Third Sector (Fischer and Falconer, 1998), has more recently started to touch on issues of CSR (Arruda, 2001, 2002; Fischer, 2002; Srour, 2003). These approches have begun to instigate new works in the field (Aligrieri, 2001; Ashley, 2002; Berger, 2001;CEATS, 2001; Queiroz, 2001) including the social audit initiative under the auspices of Ibase (1998; Torres, 2001; Sucupira, 2001).
It was in the context of this more critical literature that the expression “greenwash” was born14 in the 1990s (Greer and Bruno, 1996: 41) to suggest essentially cosmetic actions taken by big business to seem to be conforming to environmental criteria. Commentators have claimed that “TNCs [transnational corporations] in the chemical, fossil fuel, resource extraction, waste disposal, and nuclear industries have thrived on industrial development strategies which are fundamentally unsustainable” despite corporations’ discourses of corporate responsibility. This suggests the need to replace the voluntary approach to CSR espoused by most companies with a more normative framework which could in theory place businesses under some expectation of compliance, possibly by threatened penalties for default. CSA has been suggested as the acronym for this new approach, standing for Corporate Social Accountability (Bruno, 2002).
14
The expression was first used in the title of a Greenpeace book: “Greenpeace Book on Greenwash” (Greenpeace International, 1992). Greenwash has been defined as “Disinformation disseminated by an organization so as to present an environmentally responsible public image” (Concise Oxford Dictionary apud Bruno, 2002).
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“Our views of business today hang in the balance. On one hand, business is in the limelight of increasingly concerned public scrutiny. (…) Grass-roots, anti-corporate demonstrations adorn the streets outside city offices, and regularly sorround meetings of the world’s leaders and major international institutions. On the other hand, recent years have seen the emergence of the philosophy and practice of ‘corporate citizenship’. Corporations have sought under this umbrella to gain broader trust and legitimacy through visibly enhancing their non-financial performance. Today, the focus is shifting from philanthropy to the impact of core business activities across the broad spectrum of social, environmental and economic dimensions represented by the vision of sustainable development” (Zadek, 2001: 1).
As expected, in practice corporate behaviour towards the amelioration of society is not so straightforward. The call for regulation becomes stronger once it is indisputable that the audit which corporations give of their own contributions differs from reality, and criticism of soft and self-regulation becomes harder for businesses to counter (Richter, 2001). Another contribution made by the emerging critical literature concerns the degree to which the normative structured of CSR may legitimately be different in different contexts, that is, in the developed North and developing South. At the same time as observing this difference, writers have argued for new partnerships between corporations and NGOs (Bendell and Murphy, 2002). This perception of the necessity for CSR measures to be approved and comprehensible in context has led to the idea of civil regulation as potentially governing questions of businesses’ CSR compliance. However, it has also been cautioned in this connection that NGOs from the South need some connection with their first-world affiliates in order to have their cases heard more effectively, leading to the danger that “… Northern NGOs impose solutions on them, demonstrating an approach which could be described as ethical imperialism” (Murphy and Bendell, 2002). Even after taking account of the possibility of policies ensuring sustainable development coming from the Northern part of the world, it is arguable that businesses themselves are likely to be better placed to formulate and implement measures safeguarding the ecological future of the planet. This is especially so at a time when corporations’ power is effectively increasing and governments’ ability to regulate business activities declining. There is also the possibility that business will draw up its plans to meet widely accepted imperatives, given that the terms of a stronger civil society on a global basis are emerging through a globalised mass media (Environics, 1999, 2001, 2003; Hertz, 2001).
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The following chapter applies some of these perceptions regarding measures of CSR to the specific Brazilian context that is the subject of this study.
2.5 Conclusion and Summary This review has tracked major trends in the field of CSR, concluding that almost all current framework methods and models are deficient in the sense that they lack an understanding of what CSR means in contextual situations or locations. By clarifying the meanings typically attached to voluntary and regulatory CSR (Utting, 2002), negative and positive responsibilities (Chryssides and Kaler, 1993), and types of responsibility (Bovens, 1998), it is possible to generate categories which might fit an appropriate idea of CSR for Brazil, dealing with social problems, specifically poverty and social inequality. Presently, businesses tend to define their activities as voluntary, while their responsibilities being of a positive and ‘virtue’-like kind.
Rather than summarily attempting to erect a new, more flexible normative framework, however, I want to suggest the pertinence of basing an analysis on the viewpoints and opinions of CSR professionals implementing CSR policies. This elicitation of opinions does not represent a traditional top-down approach, nor indeed a bottom-up. My interest is rather in investigating the nature of the processes around CSR policies determining companies’ choice of social projects and investments.
The conceptualisations of the local community as respectively a stakeholder (Freeman, 1984) and a recipient of corporate philanthropy are in effect antithetical though not necessarily exclusive of each other as companies undertake specific actions. The stakeholder conception, however, is more likely to dispose a corporation to avoid certain actions such as dumping and mass redundancies, while Carroll’s philanthropic level encourages voluntary and positive schemes of amelioration. Analysis of Carroll’s philanthropic level offers a plausible approach when discussing corporate social actions against poverty and social inequality in Brazil. Nevertheless, the distance of philanthropic actions from business’s economical survival, or their core competences, means that accounts of CSR essentially based on voluntarity 33
potentially present an opposite view to accounts considering the inclusive interests of the stakeholders as presented by Freeman (1984). The application I aim at in my work on CSR in Brazil concerns the ethics of business actions impinging on groups of people not directly related to core business activities – in other words, local communities coinciding with the ‘narrower definition’ of stakeholders “vital to the survival and success of the corporation” (Freeman and Reed, 1983, apud Evan and Freeman, 1993: 255). Such an approach would hope to offer an inclusive set of managerial concerns arising from the interests of the totality of the groups related to a corporation. My interest is less with the leverage exercised by various stakeholder groups or their “salience” (Agle, Mitchell and Sonnenfeld, 1999), than with the experience of local communities in the evaluation of CSR measures, whether they are adjudged central to firms’ core business activities or not. Again, stakeholder perspectives are valuable in classifying different groups of people as suppliers, consumers, local communities or otherwise. When shareholders, employees and consumers exercise a comparatively greater degree of influence over corporate decision-making than other stakeholders (government and local communities), businesses tend to conform to their identity as profit-generating entities, as “it is the firm’s management which determines which stakeholders are salient and therefore receive management attention” (Mitchell, Agle and Wood, 1997: 871, apud Agle, Mitchell and Sonnenfeld, 1999). So far, when considering the diversity of CSR contexts, the most meaningful work has been the aforementioned WBCSD’s initiative covered in 2.2. It brings different understandings of CSR from eight countries around the world.
Another cross-cultural study was carried out by Maignan (2001), whose survey in France, Germany and the US shows that US consumers are more concerned with businesses fulfilling their economic responsibilities, while their French and German counterparts pay more attention to legal and ethical standards. Aaronson and Reeves’ review of CSR responses in some European countries (2002) including Great Britain, Belgium, Germany, the Netherlands, Austria and Denmark interestingly examines how public policies related to CSR have taken off in Europe and not in the USA, where CSR was first born.
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Besides the studies already noted, Holmes (1976) has analysed executives’ perceptions of social responsibility, and Coldwell (2001) directed attention to the implicit social values of business students. Consumers’ perceptions of CSR have been analysed by Environics through their Millenium Poll on CSR (1999), repeated in the years 2001 and 2003 (Environics, 2001, 2003). In Brazil, the Instituto Ethos has been undertaking a similar survey yearly since 2000 (Zulzke, 2000; Ethos, 2001a, 2002a). Possibly those studies of greatest value in relation to the present work are those which capture the emergence of CSR values, and a consciousness of CSR issues outside of the industrialised West. In a thesis on Development Ethics, Clark (1999) described human development from the perspective of poor groups in South Africa. In his words: “the most significant finding is that most poor people appear to share a common vision of development (…) [with relation to] (1) the practical side of survival and development in poor countries; (2) the psychology of human well-being (…); and (3) some of the ‘better things’ in life, such as recreation.” (Clark, 2000: 1).
What has not yet been done—and what this thesis appoints as its own task— is to relate the perception of elite decision-makers in relatively poor or developing countries to the kind of social investments which this class chooses to make. In one sense, then, my work runs in the opposite direction to Clark’s. That is, the new professional category of CSR manager and his (or her) equivalents are the subject of my interest. This specification of attention is accounted for in more detail in the next chapter.
As this review has demonstrated, neither problem-solving research nor welldocumented empirical works have been central to the CSR literature, particularly not in the case of treatments of CSR in Brazil. So vast a literature is available on poverty and inequality that one would expect writers to agree overwhelmingly on its reduction as the baseline criterion for any program of corporate remediation. The theme of poverty and inequality reduction has been introduced into CSR discourses in occasionally controversial ways, with some writers defending open markets and free trade as the optimal means of fighting long-term poverty (Holliday and Pepper, 2001).
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Two important contributions to the debate have come from the level of national states or international commissions. The European Commission Green Paper on CSR (CEC, 2001, 2002), yet to yield a white paper, includes poverty reduction in the context of a scheme of voluntary action expected from corporations. The United Nations’ Global Compact likewise mentions poverty15 in a follow-up to its 1995 target of reducing global poverty by half. These two initiatives work as guidelines only and do not reinforce transparency or monitoring. When Utting (2000: viii) from the United Nations Research Institute for Social Development (UNRISD) looks at unemployment and poverty, he states:
“The number of people living in income poverty fell in the mid-1990s but then started to rise again in almost all regions. This is not because the world as a whole has been getting poorer but because the benefits of growth are very unevenly spread. There has been a striking increase in inequality over the past decade.” Yet no academic has attempted to qualify poverty in such an analytically serviceable way that its reduction can be used as a criterion for the potential effectiveness of corporate action. This might be at least partially fulfilled by this work, which I believe receives Utting’s support when he claims: "renewed emphasis on poverty alleviation is perhaps the most visible new departure" (Utting, 2000: 3) in emerging work on CSR. Briefly, the specification of poverty as part of a broad criterion for CSR action avoids the charge of prescriptivism insofar as the term is itself broken down into a number of sub-components, which I understand as universal capabilities frustrated in different ways by different forms of deprivation (Sen, 1999). My presentation of these universal capacities, however, has to wait until chapter 6, after I have described the particular Brazilian situation more fully in the following chapter.
15
http://www.un.org/News/facts/business.htm in 30/03/2004
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3 Social Issues in Brazil: the paradox of wealth and poverty This chapter dealing with the Brazilian context of social issues falls into three sections. Firstly, it offers a brief presentation of the 503-year history of Brazil (3.1.1), highlighting important facts and dates, while focusing more intensively on the last five decades (3.1.2). My description of the strategic introduction of industrialization in the 1950s, supposedly ushering in the ‘economic miracle’ of the 1970s, arrives at a paradoxical characterisation of Brazil as a wealthy country whose population contains a large proportion of poor people. The longer second section aims to substantiate this ‘Paradox of Wealth and Poverty’ (3.2) by inserting and explaining Brazilian scores in such indicators of social inequality as the Gini, which measures inequality in income distribution, and the HDI, or Human Development Index16 (3.2.1). The data presented illustrates both national averages and the swingeing disparities between regions such as the prosperous São Caetano do Sul in Sao Paulo state, whose value of 0.919, similar to countries like Iceland, the United Kingdom, France and Finland, is above the average of High HDI countries (0.908), and Manari in Pernambuco, whose value of 0.467 compares to a national mean of 0.75. These inequalities, I argue, may only be understood against a backdrop of the social history of Brazil, and an appreciation of its foundation myth. I then correlate these more intangible findings with the theme of this thesis, companies’ CSR provision, through reporting the results of surveys on elite perceptions of poverty and inequality and the one undertaken by the Research Institute of Applied Research (IPEA) on the social actions of corporations (3.2.2). A conclusion and summary of qualitative research ideas closes this chapter (3.3). Brazil is presented as a society in the throes of a recent democratisation process, while still bearing the traces of a historical authoritarian culture. Brazilian society is not only paradoxical, but endowed with a measure of stable inequality
16
From the UNDP’s website: “The Human Development Index measures a country's achievements in three aspects of human development: longevity, knowledge, and a decent standard of living. Longevity is measured by life expectancy at birth; knowledge is measured by a combination of the adult literacy rate and the combined gross primary, secondary, and tertiary enrolment ratio; and standard of living, as measured by GDP per capita (PPP US$).” http://www.undp.org/hdr2000/english/FAQs.html#1 in 19/03/2004.
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thought unacceptable (Barros, Henriques and Mendonça, 2000: 124). It may be assumed that addressing poverty and social inequality constitutes an important motivation for companies to engage in ameliorative social action. The leading incidents and themes of Brazilian history may be sketched lightly here. Brazil was alternatively invaded or discovered in 1500 and governed for more than three centuries by the Portuguese monarchy (up to 1822). King Joao VI transferred his court to Rio de Janeiro in 1808 in anticipation of the invasion of Portugal by Napoleon’s armies. Although Portugal had been released from Napoleon’s dominance since 1815, Joao VI only returned to Portugal in 1821. Brazil gained independence on 7th September 1822 framing its first Republican Constitution in 1891 (the latest was promulgated in 1988 by the National Congress after more than five decades of military dominance). A 31st March 1964 coup delivered the country up to a military dictatorship, in which state it remained until 1984. Brazil has held direct elections for the presidency every four years since that time as a ‘new democracy’, with direct elections for state governors starting in 1982. Geographically, Brazil is the largest country in South America, bordered by all other continental nations apart from Chile and Ecuador. The country’s eastern coastline measures 7,367 km. Figure 3.1 shows the ten countries with which Brazil shares borders. Anti-clockwise they are French Guyana, Surinam, Guyana, Venezuela, Colombia, Peru, Bolivia, Paraguay, Argentina and Uruguay.
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Figure 3.1 – Map of Brazil and its ten neighbouring countries
Source: http://www.cia.gov/cia/publications/factbook/flags/br.html in 10/11/2003
3.1 Brazilian History in Brief 3.1.1 503 years of Brazilian history Brazil was officially “discovered” on the 22nd April 1500 by Pedro Alvares Cabral, along with a fleet of 13 vessels, as he was seeking to emulate Vasco da Gama’s discovery of a new trade route to India in 1498. Before sailing on, Cabral sent one ship back to inform the King that he had struck land. A major determining influence on the history of the continent was the Treaty of Tordesillas signed between the Spanish and the Portuguese in 1494. The treaty proposed that any land on the west side of an imaginary line 1,770Km west of Cape Verde belonged to the Spanish and any to the east to the Portuguese. The terms of this agreement explain Brazil’s status as the only Portuguese-speaking country on what is sometimes taken as the Spanish-speaking continent of Latin America. Colonisation did not get underway until 1532, with settlers deriving the name Brazil (Brasil, in Portuguese) from the red-coloured Pau Brasil wood. Given the
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greater importance to the Portuguese of commercial trade from India and Africa, settlement was slow, attracting Dutch and French invasions. Both arriving Europeans and imported black African labourers bore mixed-race children with the indigenous population, who are estimated to have numbered between 1 and 8.5 million in 1500 (Caldeira, 1997). Brazilian territories were extended along 15 east-west zones called ‘capitanias hereditárias’. Essential facts and dates in the country’s history may be tabulated as follows: 1500 – Pedro Álvares Cabral lands on ‘Brazil’ 1532 –Colonization begins with the founding of Sao Vicente village. 1549 – The Portuguese crown assumes the administration of Brazil 1554 – Sao Paulo is founded by the Jesuits 1637 – North-east Brazil falls under the sway of the Dutch Maurits Van Nassau, to be reconquered by the Portuguese in 1661 1717 –The French occupy Rio de Janeiro for a short period 1727 – Coffee is introduced to Brazil from French Guiana 1763 – Brazil’s capital relocates to Rio de Janeiro (from Salvador/Bahia) 1777 – The Treaty of San Ildelfonso redraws the border between Brazil and Uruguay to the benefit of the Portuguese 1808 – The Portuguese Royal Family moves to Rio de Janeiro 1822 – Brazilian independence from Portugal 1850 – The importation of African slaves is outlawed 1888 – Slavery is abolished in Brazil (the last country to do so) 1889 – The Republic is proclaimed formalizing the separation of church and state. 1914 – Brazil joins World War I but does not send combat troops 1920s – Industries are developed in Minas Gerais and Sao Paulo 1930 – The first coup d’etat by Getúlio Vargas takes Brazil into a dictatorship. 1942 – Brazil joins the Allies in World War II, this time sending 20,000 men to fight in Italy alongside the Americans in 1944. 1958 – Brazil wins the soccer World Cup (as it does in 1962, 1970, 1994 and 2002). 1960 – The capital moves from Rio de Janeiro to Brasilia under the Presidency of Juscelino Kubitschek 1964 – The second military coup subsequently dissolves all political parties the following year.
The coup or “revolution” of 1930 consigned the country to more than fifty years of military government, ending in 1984 with the first direct presidential elections. The history of Brazilian democracy more properly, however, starts with the reaction of the 1964 ouster of President Joao Goulart, on account of his supposed progressive 41
policies. I will revert to a narrative format at this historical juncture, before setting up the discussion with data on contemporary Brazilian social inequality.
3.1.2 Brazil over the last 50 years Industrial Development from the 1950s Industrialization in Brazil started in the 1950s in the urbanised southeastern region, with Volkswagen and Mercedes-Benz laying down assembly lines in 1953. The decade’s development strategy was characterized by “import substitution” policies, in which the government selectively traded off the balance of payment surplus for tariff reduction on items necessary to Brazilian industrialisation. Some aeronautical companies (Aerotec, Avibras and Motortec) were also founded in this decade, benefiting from ITA17- or government-trained engineers who also staffed the state-owned Embraer from 1969. The Banco Nacional de Desenvolvimento (BNDE) was founded in 1952 to provide internal resources for projects on highways, electricity generation, and ports infrastructure and to compete in international markets18.
Brasília, the 1964 coup d’etat and Dependency Theory President Juscelino Kubitschek built Brasilia, the current national capital, in the centre of the country in view of the interior’s potential for agrarian, heavy and light industrial, and urban development. Previously, industrialization processes (and investment in them) had been concentrated in the large cities, which developed near or alongside the coast. The coup in 1964 delivered a succession of military governments, but the fundamental orientation of policy towards growth did not change. The military republic, under Field Marshal Castelo Branco as its first president (1964-1967), laid the groundwork in terms of economic reform for the next decade’s ‘economic miracle’
17
ITA stands for Insituto Tecnológico de Aeronáutica, a federal government institution created in 1950 to provide high education and research related to the aerospace sector. 18 See www.bndes.gov.br/english/book50years/Book_presentation.PDF in 12/11/2003.
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overseen by Field Marshal Artur da Costa e Silva (1967-1969) and General Emilio Garrastazu Medici (1969-1974). In 1969 the academic Fernando Henrique Cardoso published a groundbreaking book on dependency, accounting for the inequality of developing countries in terms of structural mechanisms in capitalism. Cardoso centrally sets out a historical argument to the effect that European countries both stimulated the productivity of their former colonies in creating export markets, and rigged the rules of international trade to their own benefit. The subsequent history of economic interaction between rich capitalist and poor developing countries is then explained in terms of the former seeking to protect their national economic interests (Cardoso and Faletto, 1969, 1979).
Torture and the 1970’s Economic Miracle Brazil enjoyed a “miraculous” 1970’s, winning the World Cup and becoming a country with a great power-generating capacity with the construction of the Itaipu hydroelectric station (12,600 MW). Along with the ‘60s, the ‘70s are known for their economic growth and political censorship and repression. President General E.G. Medici, a former chief of the National Information Service (1967-1969), deployed this body to control the selection of candidates at local elections, imposing further restrictions on the press enforced by detention and torture. The period’s grave human rights violations extended to killings, leading a number of Brazilian nationals to flee to Chile, France and Britain. The economic boom (1968-1974) owed its existence to 1950s industrial investment and the availability of foreign capital. There was significant growth in the GDP, only coming to an end in 1975 largely on account of the petroleum crisis; Petrobras, the state-owned oil company created in 1953, had stepped up from a production of 2,500 barrels a day to 126,000 in 1972 (nowadays it produces 1.525 million)19. General Joao Figueiredo became the last military president in 1979, after which Brazil returned to democracy, culminating in the 1984 presidential elections.
19
www.petrobras.com.br
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Direct elections in the 1980s After the military regime, the first elected president was the civilian Tancredo Neves who died before taking charge. Vice-president Jose Sarney, first leader of the “New Republic”, took the reins, striving to control inflation and to ground democratic institutions. While his political efforts bore fruit in the 1988 Constitution and the legalization of political parties and the unions, on the economic side his 1986 Plano Cruzado failed to check inflation. Sarney’s term most of all succeeded in laying a framework that has preserved the election of the Presidency through the direct ballot.
Impeachment (1992) and Plano Real After defeating the labour candidate Luiz Inácio Lula da Silva, Brazil’s first truly directly-elected President Fernando Collor de Melo acted so as to make possible what had been previously unthinkable: his legal removal. Supported by public opinion and street demonstrations, the National Congress pursued an enquiry into governmental corruption, leading to Collor de Melo’s 1992 impeachment. Stepping up, Collor’s deputy, Itamar Franco, nominated Fernando Henrique Cardoso as Finance Minister; his 1994 Plano Real succeeded in stabilizing the economy and finally taming inflation. Elected himself in 1994, Cardoso could not repeat his economic achievements in the sphere of social policy. Though high unemployment and interest rates continue to plague his administration, he was reelected in 1998 on a majority of the vote (53.05%). This decade was also marked by the liberalisation of the economy as such state-owned sectors as telecommunication and electricity, and businesses such Embraer, were privatised. This latter, Embraer, is one of rare cases when control was retained by Brazilian nationals. The result of the 2002 election promises (or threatens) to put an end to the dominance of liberal rightist economic policies with the overwhelming triumph of the veteran leftist Luis Inacio Lula da Silva.
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Brazil thus inherits its contemporary social problems from centuries of slavery, decades of military power and a short recent period of democratisation. The data in section 3.2 illustrates the country’s endemic levels of inequality. The case for racial discrimination negatively weighing on Brazil’s economic prospects became central only in 2002, with the challenge to the white dominance of education. It may be thought that Brazil has a long road to travel before it can adequately frame social issues, let alone resolve them. What we will see next is that some changes are already on the way, through public policies, social action and increased public and company awareness.
3.2 The Paradox of Wealth and Poverty Brazil is a paradoxical country where some 50 million Brazilians live under poverty, according to 1998 data (Barros, Henriques and Mendonça, 2000: 124), while according to the World Bank, our GDP has at certain times been amongst the top ten in the world. For instance, in 2000, Brazil had the 9th largest GDP with the UK the 3rd and the U.S. occupying the top position. But the fact remains Brazilian GDP per capita was in the same year (2000) the 55th highest in the world, amounting to US$ 4,624.4. This level of mean income still does not equate to a country with a mass poor population. Only when we look at the Gini indicator, which measures the deviation of income distribution from a perfect equal distribution, where Brazil has the 4th worst position, with a score of 60.1, can we begin to take a true measure of inequality in Brazil. Even for political scientists, Brazil must represent both a real socio-economic entity comprising a set of relations of production, exchange and consumption, and a bundle of myths orienting people’s ideas of its nature and development. Chaui (2000) describes Brazil as being governed in quasi-psychoanalytic terms by a foundational myth of harmony and abundance, which in effect repeatedly blocks off any perception of its social realities, forestalling efforts to deal with real social problems. The Brazilian flag may quite pointedly be analysed from the perspective of Chaui’s theory (see Figure 3.2). The flag is green, representing Brazil’s lush tropical vegetation and rainforest; yellow, representing its natural wealth, gold; and blue for the navy clear sky, with 27 stars for each state plus the federal district. The written line reads ‘order 45
and progress’, following August Comte’s motto: ordre et progrès. Chaui’s reading emphasises how the flag represents the state of Brazil as rich in natural resources and, as figured in the clear blue sky, close to God.
Figure 3.2 – The Brazilian Flag in green, blue, yellow and white colours
Source: http://www.cia.gov/cia/publications/factbook/flags/br.html in 10/11/2003
The admittedly long citation below can be thought to epitomise how Brazil is conceived by its inhabitants: “In school, all of us [Brazilians] learn about the meaning of the Brazilian flag: the green rectangle represents our forests and the green wealth, the yellow lozenge signifies our gold and mineral wealth, the blue circle with stars represents our sky lit by the Southern Cross indicating that we are a people blessed by God, and the white strip represents us as an ordered people governed by progress. Because of this we know that Brazil is a ‘giant on account of its own nature’, that our sky has more stars, our parks are more flourishing and that our seas are greener. We also learned that through our land flows the largest river in the world and on our land grows the largest rainforest, that we are a country cut by the Equator and the tropic of Capricorn, which bestows on our country unmatched natural and cultural wealth and unparalleled contrasts between its regions. We learned that we are “a gift of God and of Nature” because our land has never seen natural catastrophes (cyclones, twisters, volcanoes, deserts, snow storms, earthquakes) and that here in the land ‘once you plant it, grows’. 20 (Chaui, 2000: 5) .
20
Translated from the original in Portuguese: “Na escola, todos nos aprendemos o significado da bandeira brasileira: o retângulo verde simboliza nossas matas e riquezas florestais, o losango amarelo simboliza nosso ouro e nossas riquezas minerais, o circulo azul estrelado simboliza nosso céu, onde brilha o Cruzeiro do Sul, indicando que nascemos abençoados por Deus, e a faixa branca simboliza o que somos: um povo ordeiro em progresso. Sabemos por isso que o Brasil é um ‘gigante pela própria natureza’, que nosso céu tem mais estrelas, nossos bosques teem mais flores e nossos mares são mais verdes. Aprendemos que por nossa terra passa o maior rio do mundo e existe a maior floresta tropical do planeta, que somos um pais continental cortado pela linha do Equador e pelo tropico de Capricórnio, o que nos faz um pais de contrastes regionais cuja riqueza natural e cultura é inigualável. Aprendemos que somos “um dom de Deus e da Natureza” porque nossa terra desconhece
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Chaui’s ‘foundational myth’, which she traces back to writings penned between 1325 and 1482 and illustrated by maps of the Insulla de Brazil or Isola de Brazil, posits a bounteous imaginary land unspoilt, at the time of its invention by any form of human intervention or even discovery (Chaui, 2000: 60). It may be thought surprising that Brazilian society and culture have never seen fit to explode this myth, rather tending to acknowledge it with pride, with many works of imaginative literature indeed reinforcing the idea of Brazil as a natural paradise. Beyond that, in daily life, we Brazilians are fond of invoking the harmonious unity of our country and tend to explain social problems with reference to an external cause (natural or foreign). “In sum, this representation allows that a society, which tolerates the existence of millions of children with no childhood and that, from its very beginning, practices social apartheid, can still retain a positive image of itself as characterised by fraternal unity” (Chaui, 2000: 8). On the matter of this social apartheid, which would support the claim of Brazil being an authoritarian society, effective segregation of races began in the colonial period with the introduction of slavery, which was only ultimately abolished in 1888. Brazil, moreover, has never successfully implemented land reform.
catástrofes naturais (ciclones, furacões, vulcões, desertos, nevascas, terremotos) e que aqui, “em se plantando dá””. (Chaui, 2000: 5).
47
3.2.1 Evidence of Inequality and Poverty This work acknowledges the findings of Barros, Henriques and Mendonça (2000) on poverty and social inequality in Brazil. These authors declare that that in order to eradicate poverty in Brazil, a definition of social inequality and a reduction strategy are needed. Since inequality represents the predominant causal factor behind Brazilian poverty, its elimination has to be constructed as an achievable target, not merely discussed rhetorically as a moral imperative.
An important inequality measurement within this parameter is the Gini, which is less a representation of mean life-chances and outcomes than of the gap between different segments of a population. This measure records the degree of deviation of actual population incomes from a theoretically perfect equal distribution of national earning. The Brazilian case becomes even more troubling, given that the United Nations Development Report rates it at a Gini of 0.61, against a world measure of 0.66 (UNDP, 2003). Table 3.1 below presents data from IPEA, showing the Gini coefficient in Brazil fluctuating from 0.583 in 1992 to 0.637 in 1989.
48
Table 3.1 – Gini coefficient in Brazil from 1976 to 2002 Year 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Gini 0.623 0.625 0.604 0.593 --0.584 0.591 0.596 0.589 0.598 0.588 0.601 0.616 0.636 0.614 --0.583 0.604 --0.601 0.602 0.602 0.600 0.594 --0,596 0,589
Source: www.ipeadata.gov.br in 05/04/2005, based on IBGE’s PNAD (1976-2002).
From the same source, IPEA in Brasilia, data showing the income distribution in Brazil is given in table 3.2. This time the columns present years followed by the percentage of total income received by the 20% poorest segment of the population. In the period between 1976-2002 this segment never owned as much as 3% of the national wealth; while the bottom 50% owned a proportion of 10.62% (1989) and 13.11% (1992). The third column presents the share owned by the top 10% of the population which varies between 45.78% (1992) and 51.50% (1989). Finally the allocation of the top percentile is shown, with a score of 12.67% of total national income in 1981.
49
Table 3.2 – Distribution of Brazilian national income from (%) 1976 to 2002 Year 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
20% 2.43 2.42 2.05 2.67 --2.66 2.53 2.55 2.76 2.54 2.67 2.36 2.17 2.01 2.14 --2.36 2.26 --2.31 2.16 2.21 2.31 2.41 --2.32 2.52
50% 10% + 1% + 11.58 51.04 17.08 11.68 51.64 18.47 11.96 47.71 13.64 12.77 47.45 13.61 ------13.14 46.40 12.67 12.70 47.91 13.02 12.51 47.38 13.47 12.99 47.27 13.19 12.46 47.75 13.61 13.02 46.95 13.77 12.22 47.75 14.11 11.46 46.47 14.41 10.62 51.50 16.48 11.45 48.78 14.20 ------13.11 45.78 13.23 12.31 48.64 15.09 ------12.35 47.85 13.81 12.09 47.52 13.53 12.12 47.67 13.78 12.34 47.80 13.86 12.69 47.27 13.24 ------12.58 47.45 13.90 12.98 47.02 13.42
Source: www.ipeadata.gov.br in 05/04/2005, based on IBGE’s PNAD.
Income disparities between families are high with the top 20% receiving between 24 to 35 times more than the bottom 20% of the population along the time series. In most of the countries for which this data is available, the inter-class income gap is no higher than 10 times (Barros, Henriques and Mendonça, 2000: 132). The UN Human Development Index (HDI), a compound measure of the wealth, standards of living and opportunities offered to populations, shows a record of Brazilian improvement in the years up to 2002. Figure 3.3 presents Brazil’s HDI data in comparison to Latin America and the world . Values range from 0.541 in 1975 to 0.775 in 2002. As an average measurement, the HDI shows Brazilians attaining a standard close to that of other Latin Americans and inhabitants of the Caribbean.
50
Figure 3.3 - HDI trends: Brazil compared to the region and the world
Source: 2004, Human Development Report21 Table 3.3, as follows, presents the United Nations rankings in defining national or regional HDIs. A mean value under 0.5 represents a Low HDI, a value from 0.5 to 0.799 a Medium and between 0.8 and 1 a High. Table 3.3 – Numbers for HDI High, Medium and Low Categories
High Medium Low
HDI Categories 0.8 to 1.0 0.5 to 0.799 0 to 0.499
Since 1975, Brazi
l has fitted into the Medium category rising from ratings of 0.55 to 0.775. The national score compares with the disaggregated scores of local regions, which range from levels indicating deprivation (0.467) to indications of prosperity (0.919).
Table 3.4 – Highest and Lowest Brazil’s HDI Municipality
21
http://hdr.undp.org/statistics/data/country_fact_sheets/cty_fs_BRA.html, access in 03/04/2005. 51
Brazil HDI-M (Municipality) Highest 2000 0.919
Lowest 0.467
Source: IPEA, UNDP, Fundação João Pinheiro apud www.pnud.org.br in 05/08/2003.
The macro perspective presents a national HDI or gross score of 0.75 in 2000, while in the same year the lowest-scoring Brazilian state or UF (Unidade Federativa), Alagoas (0.633), ranked far lower than the best, the Federal District, with 0.84422.
Brazil then roughly matches its peer South American countries on both the Gini indicator of inequality and the HDI. Data shown on Table 3.5 presents data from the PNUD for Latin American countries. It reveals Brazil as the most unequal country in the region, Gini=0.589, according to IPEA.
22
Source: IPEA, UNDP, Fundação João Pinheiro apud www.pnud.org.br in 05/08/2003.
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Table 3.5 – Gini 2002 in Latin America and other countries Latin America Country
Gini
Paraguay
0,577
Chile
0,575
Colombia
0,5
México
0,519
El
0,508
Salvador Venezuela
0,491
Costa Rica
0,459
Uruguay
0,448
Other Countries Country
Gini
United
0,408
States France
0,327
Canada
0,315
Source: adapted from Global Justice (2004), using data from UNDP, 2003.
It should be said at this point that different measures present different impressions of Brazil’s capacity for inward investment and growth. On the one hand, Social Watch seems strongly to endorse Brazil’s governmental or regulatory trustworthiness23; in recording levels of Foreign Direct Investment (FDI), this measure places Brazil fourth after Germany, the USA and China. Brazil receives of 30,499 million dollars of capital inflows, exporting 64,754.1 million of dollars’ worth of production, the 27th largest in the world24. Brazilian imports over the same year were 72,240.4 (US$ millions), generating a current account deficit of some 8 million dollars. The above data shows that Brazil is not an average country by any means. Its 2002 GDP of US$ 812,11 million, the eigth largest in the world after the US, Japan, Germany, France, United
23 24
Referring to data from year 2000. The United Kingdom is in 4th position.
53
Kingdom, Italy and China. In terms of the classification of the OECD25, Brazil ranks amongst the top 10 global countries with an economy of about one trillion dollars of purchasing power parity. On the other hand, however, Brazil tops all charts in external debt, owing a total of 237,952.9 (US$ millions) while the second-placed nation, the Russian Federation, owes 160,300.3 (US$ millions).
In a society characterised by poverty and inequality, the deprived suffer in absolute terms, enduring malnutrition, disease, illiteracy and poverty. The rich suffer too from a society in which the rule of law is increasingly hard-pressed to safeguard their possessions. Corporations, the focus of this work on Corporate Social Responsibility, have sometimes got involved with government and NGOs to help find solutions to poverty and poverty-related problems26. More recently, with some relevance to the Brazilian case, comparative surveys of people in leadership positions in South Africa and Bangladesh (De Swann et al, 2000) have related elite perceptions of poverty and its relief to the social and CSR strategies of business organizations and other leading institutions. These studies find that the allocative effectiveness of measures of relief is often compromised by the class-specific perspective of their organisers.
3.2.2 Elite Perceptions of Poverty and Social Inequality Whether in the industrial era or the network society theorised by Castells (1996, 1997, 1998), corporate managers form part of an elite, at least in the sense of being the persons who decide the allocation of available resources (Reis, 1999). For Castells, the managerial class still constitutes the central cadre of capitalism, along with the holders of property rights and stakeholders in the global financial market (1998: 362). Three surveys deal with corporations’ possible role in social problem alleviation, two of which are covered in the present sub-section on Elite Perceptions
25
See http://en.wikipedia.org/wiki/List_of_countries_by_population (in 18/03/04). The four most populous countries are the People’s Republic of China (1,286,975,468), India (1,049,700,118), the United States (290,342,554), and Indonesia (234,893,453). According to the same source, Brazil has 182,032,604 inhabitants. 26 See in particular the list of companies participating in the government’s Zero Hunger campaign, www.fomezero.gov.br, ‘Fome Zero’ is also an example of Ford Brazil’s marketing campaign (www.ford.com.br in 30/11/2003).
54
(3.2.2). I then summarize the results of the third, the IPEA’s data collection initiative insofaras it also pertains to corporate actions in Brazil (sub-section 3.2.3).
Reis’s works on elite perceptions of poverty and inequality (1999, 2000a, 2000b) suggested to me the relevance of investigating the perceptions of corporate CSR managers, centrally influencing my own process of empirical data collection and analysis (chapters 5 and 6). The focus of attention given to the elite and not to the people facing deprivation is not common in academic studies. The direction of attention flows in the other sense to that of Clark’s thesis (1999, 2000) which traces community priorities. Given that the revenues of just five of the world’s largest corporations are more than double the combined GDP of the poorest 100 countries (Utting, 2000a: 17), corporate decision-makers’ understanding of social issues is critical for their framing any strategy of poverty alleviation through CSR agenda. Furthermore, there is evidence to suggest that "the way in which elites perceive and define poverty can powerfully affect social policy and the quality of life of the poor" (DeSwaan, Manor et al, 2000: 43). In Europe, it was a policy elite that crafted a number of social democratic welfare states (DeSwaan, 1988 apud Reis, 2000b). Referring to a survey undertaken between 1993 and 1994 (Tables 3.6 and 3.7), Brazil’s outstanding social problems as seen by the elite were: Inflation, 17.5%; Education and Health, 15.9%; and Poverty, 14.3% (Reis, 2000b: 146). Reis also contends that “whether measures will be taken to ameliorate the lot of the poor depends upon the willingness of those who control available resources” (Reis, 1999: 131). “Poverty and inequality are traditional themes in the social sciences, but in Brazil, economists seem sometimes more concerned with this issue than sociologists, anthropologists or political scientists. One could attempt to justify [this focus] by saying that Economics is closer to issues related to elaborating social policies, once these include choices to be made about allocation of limited resources. However, it is not easy to explain why poverty and inequality are neglected in the other social sciences as – beyond their irrefutable ethical dimension – they insert central theoretical questions into our fields of knowledge (or disciplines).27” (Reis,
2000b: 143). 27
From the original: “Pobreza e desigualdade são temas tradicionais das ciências sociais, embora no Brasil os economistas pareçam às vezes mais preocupados com essa questão do que os sociólogos, antropólogos ou cientistas políticos. Poder-se-ia buscar justificar isso argumentando que a Economia está mais próxima às questões de formulação de políticas sociais, uma vez que estas envolvem opções quanto à aplicação de recursos escassos. Contudo, não é fácil explicar por que a pobreza e a desigualdade são relativamente negligenciadas nas outras ciências sociais, já que - além da indiscutível dimensão ética - colocam questões teóricas tão centrais em nossas disciplinas.”
55
Table 3.6 Major National Problems according to the Elites, by Reis (2000b) Problems Inflation Education and Health Poverty Lawlessness Income Distribution Other Political Factors Other Economic Factors Corruption Recession and Unemployment Elite Behaviour External Dependence Moral Crisis Other Social Factors Total (n=314)
% 17.5 15.9 14.3 11.5 8.3 8.3 8.3 4.8 4.1 3.5 3.2 2.2 1.0 100
Source: Reis, 2000b: 146, 1993-1994 survey
The whole group of respondents most often chose educational improvements as Brazil’s most pressing medium-term goal, 23% of the total as against 29.8% of the corporate elite. Other possible answers revealed a divergence between the elite and other social sectors in terms of these groups’ different perceptions of the gravity of certain social issues. For example, 18.2% of the total and 33% of the corporate elites selected reduction in state size, while 17.6% of the total and only 9.6% of the elite singled out the eradication of poverty.
56
Table 3.7 - Major National Goals for Medium Term (%), according to Reis (2000b) Goals
Total
To improve educational levels To reduce size of the state To eradicate poverty and reduce inequality To increase popular participation in political decisions To preserve democracy To ensure economic growth To integrate the economy into international markets To guarantee order To integrate Brazil in Mercosur To protect the environment Total
23
Political Bureaucratic Corporate Union Elites Elites Elites Elites 14.8 24.7 29.8 18.5
18.2
22.2
13.5
33
3.7
17.6
25.9
19.1
9.6
19.8
16.4
5.6
14.6
5.3
38.3
11.3
20.4
7.9
8.5
12.3
9.7
7.3
14.6
10.6
4.9
2.2
1.9
2.2
3.2
1.2
0.9 0.3
1.9 ---
2.2 1.1
-----
-----
0.3
---
---
---
1.2
99.9 (n=89)
100 (n=94)
99.9 (n=81)
99.9 100 (n=318) (n=54)
Source: Reis, 2000b: 146, 1993-1994 survey.
Answers exhibit a noteworthy divergence between the views of corporate representatives and all classes of respondent, with businesspeople being more concerned to shrink the state and strengthen education. The corporate elite grants the lowest level of priority to poverty reduction of all social fractions surveyed.
Another survey, entitled “National Brazilian Development: aspects of agreement and disagreement” (Lamounier and Souza, 2002), was carried out before the latest presidential elections in 2002. Four themes as treated in this work are particularly relevant to our current characterisation of social attitudes: (1) politics; (2) economics; (3) poverty, social and regional inequalities and social policy options in seeking to relieve these; and (4) institutions, values and social behaviours. The third part of the survey, on poverty and inequality, relates most closely to my subject. The survey defines the elite as people with prominent positions in 57
Brazilian public life or elite opinion-formers. 500 people answered questions on their attitudes, representing nine employment sectors28: 71 were corporate professionals or owners (Corp); 40 SME representatives (SMEs); 37 union leaders (Unions); 46 National Congress representatives (NCong); 53 Federal Executive representatives (Exe); 44 professionals from the judiciary system (Jud); 60 professional from the press (Press); 33 research or academic intellectuals (Int); and 116 not-for-profit organization executives (NFP). Six questions were asked on the subject of poverty and poverty-related issues. The first sought respondents’ views on access to education as a means of reducing poverty and social inequality. The second asked respondents to think ahead 10 years into the future. The third asked respondents to consider the risks of Brazil being unable to reduce poverty and social inequality within 10 years. The fourth took stock of changes in Brazilian society’s values and behaviour from 1980s to the present. The fifth question concerned the desirable scope of affirmative action in amending inequalities. The sixth and last question asked respondents to assess the relationship between racial discrimination and poverty. Respondents’ answers are presented in percentage terms, showing totals and scores for each sub-group. I want to present the complete data for these six question-responses as analysis reveals differences among elite subgroups, which partially registers through their different interpretations of the question wordings. The tables highlight the average numbers of affirmative responses in the last column (of the total cohort of respondents) and the first (the answers of corporate professionals or owners - Corp). The questions took the form of definitive propositions, to which respondents had either to agree or disagree. Table 3.8 illustrates the answers given to the first question29. It shows corporate representatives agree more with the first statement (34%) than other subgroups, and agree less (48%) with the second, suggesting their greater faith in educational improvement being in itself the major solution to social problems. 28
The data was collected between August and October, shortly after the period of my CSR interviews with corporate professionals. 29 The question asked was: It has been said that a vigorous educational improvement is good enough to effectively reduce poverty and social inequality. On the other hand, it is claimed that beyond educational improvement the implementation of an active policy of income redistribution is also needed. With which of these two statements would you mostly agree? (translated from the original question in Portuguese: “Tem-se afirmado que uma vigorosa melhoria educacional é suficiente para reduzir efetivamente a pobreza e as desigualdades sociais. Argumenta-se, por outro lado, que além da melhoria educacional, é necessário implementar uma política ativa de redistribuição de renda e de patrimônio (por exemplo, reforma agrária). Com qual dessas afirmações o Sr. (a) concorda mais?”
58
Table 3.8 – Educational improvements, poverty and social inequality reduction (%)
Vigorous educational improvement will be good enough to effectively reduce poverty and social inequality. Beyond educational improvement the
Corp SMEs Unions NCong Exec Jud Press NFP Int 34 24 3 4 23 7 7 9 11
Total 14
48
63
14
13
04 100
00 100
97
83
60
89
83
78
78
74
11
15
2
10
9
10
10
2 100
2 100
2 100 100
3 99
1 2 100 100
implementation
of an active policy of income redistribution is also needed
Other answers No opinion Total
100
Source: adapted from Lamounier and Souza (2002)
The second question, related to poverty issues, concerns the future of Brazil over the next 10 years. Questions took the form of asking whether respondents believed that Brazil had a virtually assured, a high or some chance of meeting certain national economic targets. Table 3.9 presents an array of six statements, as representatives of various groups gave them their consent or demurred30.
30
The question was: Despite the control exerted over inflation and the reforms of the last 8 years, Brazil still faces major social and economic problems. In the next 10 years, what are the chances of reaching the targets below? (from the original in Portuguese: “Apesar do controle da inflação e das reformas implementadas nos últimos 8 anos, o Brasil ainda enfrenta graves problemas econômicos e sociais. Nos próximos 10 anos, quais são as chances de alcançarmos as metas abaixo”)
59
Table 3.9 –Brazil’s prospects over the next 10 years –results include the answers ‘some chance’, ‘high chance’ and ‘an almost certain chance’ (%)
Of maintaining an annual economic development rate of between 4 and 5% Of keeping inflation rate under 10% p.a. Of significantly improving the quality of basic education Of significantly increasing the share of national income of the 50% poorest Of reducing income inequality between North/Northeastern and Central/Southern regions Of reducing the level of unemployment from 8% to 5%
Corp SMEs Unions NCong Exe Jud Press NFP INT Total 82 84 68 69 91 61 73 72 64 73
90
87
78
87
98
86
91
94
82
88
89
87
73
89
98
84
87
87
80
85
70
60
57
72
76
41
55
66
57
61
63
60
38
67
75
52
52
59
59
59
82
84
70
70
87
59
65
75
67
73
Source: adapted from Lamounier and Souza (2002)
Respondents from corporations and the Federal Executive are the most optimistic, with an above average score on every item from controlling inflation and boosting economic development to reducing inequality and increasing the poorer half’s share of the national wealth. The unions and the judiciary express an opposite view, scoring lower than average on every item. The redistribution of income inequalities not only between classes but also between regions is seen as the hardest task facing any program of social amelioration (affirmative answers are below average across the board of respondent classes).
60
The results depicted in table 3.10 relate to the risks of not achieving reductions in poverty and social inequality. Again, six hypotheses suggesting possible futures for Brazil were offered to respondents, who again estimated the likelihood of each. Results are presented in the same format as before.
Table 3.10 – Possible risks of Brazil’s failing to reduce inequality within 10 years – answers aggregate the responses ‘some chance’, ‘a high chance’ and ‘an almost certain chance’ (%)
A return to military regime Reaching a situation of social ‘apartheid’ The break-up of national territories A chronic state of social convulsion An extremist movement getting into power The market economy becoming impossible
Corp SMEs Unions Ncong Exe Jud Press NFP Int 81 13 13 15 2 14 2 13 12
Total 10
45
37
57
54
47
61
68
68
67
57
11
24
16
17
2
2
7
6
14
9
67
63
70
72
57
77
65
75
68
68
35
29
22
35
17
25
17
25
24
25
51
63
56
52
53
61
40
28
46
50
Source: adapted from Lamounier and Souza (2002)
Unexpectedly, only corporate respondents would seem to envisage in large numbers (81%) a serious prospect of Brazil’s returning to military government (the average is a low 10%); at the same time, this group believes most strongly in the efficiency of education and markets to deliver greater social equality. When analysing the risk of polarizing the social classes absolutely (the second proposition), business respondents from large (45%), and medium and small (37%) enterprises are more sanguine than other groups (the average is 57%), with the exception of National Congress members (54%) and members of the Federal Executive (47%). Respondents from the press (68%), the not-for-profit sector (68%) and intellectuals (67%) fear social division the most, anticipating to a greater extent a state of convulsive social unrest (the average is 68%). Few people see Brazil splitting up 61
(with an average answer of 9%, and range between subgroups of 2 to 24%). The prospect of an extremist movement getting into power appears most likely to respondents from the National Congress and large corporations (35% each), with 25% as an average. The market economy is here to stay for the non-profit sector representatives (only 28% believe in the possibility of rolling back capitalism), while small and medium business representatives (65%), union leaders (56%), Federal Executives (53%), the judiciary and large corporate respondents (51%) all take the threat of a return to military leadership much more seriously.
Question number four asked: “It has been said that Brazilian values and standards of behaviour have changed a good deal from the 80s to nowadays. With respect to the categories below, would you say that Brazil has improved, worsened or is about the same31?” The ten possible statements reflect upon institutional politics, the public sphere, electoral politics, awareness of poverty issues, tax evasion, the environment, equality and non-discrimination, social mobility, national self-esteem and the observance of due legal process in respecting human rights. More than 80% of the respondents thought that the country had improved in at least three respects, either marginally or by a significant degree. 87% on average thought environmental awareness had increased (94% in the subgroup of corporate representatives). Poverty reduction as at least an imperative was thought by an average 83% (also the figure for the corporate subgroup) to have penetrated more deeply into the national consciousness. The functioning of institutions and institutional leaders’ behaviour was perceived to have improved between the late 80s and 2000 at least to some degree by 81% of respondents.
On the other hand, some areas are held to have improved so little that fewer than 50% of survey-takers see any uplift at all. These areas of perceived stagnation relate to: the impartial and competent treatment of subjects before the law (an average 21% see improvement; among corporate representatives, 14%); compliance with tax collection (40%; among corporate representatives, 44%); and national selfesteem (48%; among corporate representatives, 53%). This last measure, however,
31
In Portuguese: “Tem-se também afirmado que os valores e padrões de comportamento dos brasileiros mudaram muito dos anos 80 para cá. Nos aspectos abaixo, o Sr. (a) acha que o Brasil melhorou, ficou na mesma ou piorou”
62
exhibits a wide variation between subgroups with 74% of small and medium-sized businessmen sensing greater pride in Brazil, but only 34% of intellectuals.
63
Table 3.11 – Changes in values and standards of behaviour from the 1980s to nowadays – results aggregated to the answers ‘some improvement’ and ‘great improvement’ (%)
Institutional politics –leaders’ probity and institutions’ functioning The public sphere – ethical behaviour of the public, the press and corporate leaders Electoral politics – level of public information and voter responsibility and insight Social mindedness – consciousness of the need of reduce poverty, and to create universal conditions of wellbeing through full social participation Tax evasion – the legal compliance of every citizen and company with tax levies The environment – the reduction of urban pollution and reversal of the degradation of natural resources through universal efforts Equality of treatment, particularly between classes Social mobility through work and education. Self-esteem and pride in Brazilianness Justice – impartial and competent treatment of all legal parties.
Corp SMEs Unions Ncong Exe Jud Press NFP INT Total 84 82 70 74 85 91 93 75 76 81
72
55
35
56
83
59
70
59
57
62
66
79
62
78
81
77
77
72
75
76
83
89
81
72
94
75
82
91
82
83
44
53
19
30
60
27
32
44
44
40
94
87
70
90
94
89
87
81
83
87
66
45
27
54
62
50
38
50
55
52
68
82
40
59
68
43
32
56
55
56
53
74
35
61
60
45
35
53
34
48
14
26
13
26
23
57
12
16
19
22
Source: adapted from Lamounier and Souza (2002)
64
Questioning then moved to possible measures by which the government could seek to rectify inequality. Question five32 first considers the possibility of the government seeking universal improvements in living standards, before question 6 raises the prospect of more particularistic procedures of affirmative action. The accepted way to differentiate between universal provision and affirmative action as effectively alternative social programs for tackling inequality is to refer to them as ‘national’ and ‘differentiated’ policies respectively. Table 3.12 – Should government adopt a national or a differentiated public policy? (%)
Government should seek to improve the lives of all Brazilians indifferently Government should rather implement affirmative policies in favour of minorities and ethnic groups.
Other answers No opinion Total
Corp SMEs Unions NCong Exe Jud Press NFP INT Total 75 84 59 54 62 45 63 42 53 60
15
8
38
33
36
41
28
36
37
30
4
8
3
11
0
14
8
19
9
8
6 100
0 100
0 100
2 100
2 0 0 100 100 99
3 1 2 100 100 100
Source: adapted from Lamounier and Souza (2002)
While 60% of respondents believe in an idea of national equity in redistributing opportunity and other benefits, this percentage rises to 75% among corporate representatives. 30% of the total and 15% of the corporate representatives would prefer the government to target its efforts of social improvement on previously excluded groups. Brazilian society is conservative when it comes to repairing the effects of secular racial discrimination (30/60 – for/against affirmative action), and 32
Question : In a country like Brazil, there are many who say that the government should adopt a national perspective, seeking to improve everyone’s life without exception. Others suggest that government must take up a particularized or more specific perspective in the sense of adopting affirmative action protocols for minorities and ethnic groups (women, blacks and indigenous people). With which of the above statements do you agree most? (In Portuguese: “Num país como o Brasil, muitos afirmam que o governo deve adotar uma perspectiva nacional, buscando melhorar a vida de todos, indistintamente. Outros ponderam que o governo deve adotar uma perspectiva diferenciada, implementando políticas afirmativas em relação a minorias e comunidades étnicas (por exemplo, mulheres, negros, índios). Com qual das afirmações o Sr. (a) concorda mais?”)
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corporate representatives are even more conservative than average (15/75). Of these, small owners (8/84) most of all perceive racial remediation as a cost or regulatory burden, rather than a potential benefit. The final set of questions sought to connect poverty and race. Respondents were asked to agree or disagree to certain degrees with three statements hypothesising causes for and remedies to Brazilian social inequality among races. Responses demonstrate a high level of agreement with a recently passed Constitutional Bill making overt, racial discrimination in public punishable by imprisonment without bail (an average of 86%, though only 77% businessmen agree); 70% generally and 55% of corporate respondents grasp racial discrimination as a factor contributing to poverty. The most controversial claim among the three statements, that universities should offer a proportional number of places to black students in relation to their representation in the overall population, drew the most mixed responses, of between 10% agreement – corporate respondents – to 54% union leaders, with an average of 27%.
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Table 3.13 – Poverty and racial discrimination (% of “completely agree” or “almost agree” answers)
Many people say that racial discrimination deepens black community poverty In order to ensure more opportunities for black people, universities should reserve a number of places for black students equal to black representation in society as a whole The 1988 Constitution is correct in making racist abuse an imprisonable offence without the possibility of bail
Corp SMEs Unions NCong Exe Jud Press NFP INT Total 55 53 73 72 68 79 80 81 73 70
10
18
54
41
19
36
27
44
23
27
77
92
89
93
89
84
95
91
80
86
Source: adapted from Lamounier and Souza (2002)
Analysing these results, we can say that, in some respects, the views of corporate representatives do not differ much from those of other elite Brazilian opinion-formers. Classes of respondent begin to diverge, however, on such questions as whether education will be sufficient in itself to pull Brazil out of inequality. Businesspeople in particular are inclined to think that it can, and to doubt the efficacy and justice of remedial programs like affirmative action. The other ‘standout’ answer for corporate representatives (81%/10%) - that Brazil is likely to revert to dictatorship without growing prosperity - exemplifies at once business’s faith in capitalism as an efficient distributor and nervousness as to the deep-rootedness of the country’s democratic culture. Generally, the data supports the analysis that corporate respondents are more conservative than other groups.
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3.2.3 Corporate Social Actions A national survey of business companies of all sizes and sectors was carried out by the IPEA33 between 1999 and 2002. Its final report makes clear the contribution that businesses have been making to national improvement. In a phrase full of implications for my research: “these results show that across the country businesspeople have been contributing in their own way to alleviating the poverty affecting a large number of Brazilians. There is in fact a transfer of private resources into social issues.” (IPEA, 2002: 3). In 1999, a survey concerned with corporate social actions, sponsored by OXFAM-GB, the Catholic Relief Services, Save The Children Fund and World Vision, canvassed the 300 most profitable corporations from three major cities in the Brazilian Northeast, Recife, Natal and Salvador (Mello, 1999). Its main results showed that about 2/3 of businesses in the region support some business philanthropic activities. Most survey results into corporate social action suggest that corporations voluntarily make some contributions to society, but that they tend to understand these under the heading of philanthropy, as managers perceive their financial support to NGOs as a form of charitable donation as they exercise their social responsibilities. The IPEA’s survey sent a questionnaire to each company of a sample of 9,140 businesses, with a statistical projection to the universe of 782,000. The survey found that in general, 59% of companies undertake voluntary social actions aimed at their local communities, with an even higher percentage in the southeastern region, the base for 67% of large corporations. Companies with more than 500 employees participate disproportionately in social action (88%). There were very few significant differences between the sectors of industry, commerce and services with 61%, 60% and 58% respectively engaging in relief action. The amount invested by the private sector in voluntary social contributions in 2000 is estimated to be about 1.5 US$ billion34. According to this survey, businesses make contributions to such areas as nutrition (41%) and social assistance (54%),
33
IPEA stands for Instituto de Pesquisa Econômica Aplicada [Applied Economic Research Institute] and it is attached to the Ministry of Planning. Website: www.ipea.gov.br 34 Ipea, 2002: 8: R$ 4,7 billions in 2000.
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rather than the health (17%) and education (19%) of the wider population understood as such. These areas may still be thought the preserve of collective state provision. Companies’ regional location makes a significant difference in the nature and size of their typical social contribution. Companies from the southeast participate at higher rates (67%, see figure 3.4 below) than other regional organisations - levels are 55% for the northeast; 50% for the centre-west; 49% for the north; and 46% for the south. The southeast is home to about half of Brazil’s companies, generating about 60% of national GDP. An estimated 30% of the population suffering conditions of poverty also live in this region (Peliano, 2000, 2002). Figure 3.4 – Regional participation of companies in community contributions in social action, according to IPEA survey
70% 67%
60% 55%
50%
50%
49%
46%
40% 30% 20% 10% 0% Southeast
Northeast
Centre
North
South
Source: IPEA (2002)
Taken together, these surveys results show that representatives of large and small companies are aware of Brazilian social deprivation, and are taking positive steps to help alleviate it. Yet the question has to be put whether companies’ current methods and organisational designs of relief represent the most effective means they could have chosen to reduce national hardship. There are problems both with the specific actions taken by corporations, and with corporations’ conceptualisation of their efforts as charity, rather than the discharging of their social responsibilities. 69
According to the same source, the social actions of corporations in Brazil address these themes: social assistance, 54%; nutrition, 41%; education, 19%; community development, 19%; health, 17%; culture, 17%; and sport, 17%.
3.3 Conclusion and Summary Brazil’s political culture has been shaped by hundreds of years of slavery and decades of military power. The recent brief period of democracy has been unable to bridge the distance in Brazilian society between the poor and non-poor, or indeed to suggest beyond doubt to Brazilian leaders and opinion-formers the desirability of bridging it. It is possible to see in the polarization of wealth and poverty in Brazil, sometimes within geographically small communities, a version of the imbalance of wealth between nations obtaining in political scientists’ dependency theories. Just as countries’ trade policies work towards the consolidation of national interests, so the skewed system of income taxation in Brazil consolidates the upper classes’ hold on power and other available resources. Yet companies are beginning to move towards a position where they can see a business case for relieving social inequality. The relief of poverty helps grow their markets, while dispelling any possible reputational taint arising from the suspicion of malpractice. Corporations are increasingly acting as moral agents in a globalised market, getting involved with social responsibility movements in tandem with governments and NGOs. We must now ask how this movement towards corporate involvement in social issues is playing out in contemporary Brazil. The current dismal state of the distribution of wealth in Brazil, however, may mean that the country is currently at a paradigmatic stage for the definition of corporate social responsibility as such. Sometimes, corporate actions manifest themselves as guided by a definition of responsibility as virtue (Bovens, 1998). In a country as contradictory as Brazil, it is more likely that social problems will be resolved through an appeal to businesses’ interests or self-interest than through a more idealistic or general ethical demand. All the same, in question of social governance, companies would do well to note that Adam Smith defined that “justice, not benevolence, is the virtue of economic affairs” (Werhane, 1991: 2). 70
Academic and practical analysis, confronted with such complex and structural social deficits as Brazil’s, has the difficult decision of how adequately to characterise national inequality. I have isolated poverty and inequality between classes as problems symptomatic of Brazil’s history, yet never adequately addressed within concepts of CSR. There are important works, however, that do discuss poverty. Telles (2001) claims that citizenship is only partially and defectively vested in poor Brazilians. Another, complementary approach argues that Brazilian income taxation policies play separate regions off against each other. In South Africa, by contrast, policy is universalistic and cooperative in intent (Lieberman, 2003). For a country which is not poor, but where a large proportion of the population live under conditions of poverty (Barros, Henriques and Mendonça, 2000), Brazil shoulders an unbearable social injustice and inequality, despite the theoretical capacity of its resources to meet people’s needs. The empirical work reviewed here tests opinion formers’ perceptions of social issues. The result shows a society hardly envisaging affirmative action, coddled by a myth of education solving all the country’s social problems. Social contributions from corporations thus risk fragmentation and the diffusion of their effectiveness, even if companies participate in proportion to their size.
This section has attempted to fill in some context in the form of a description of social conditions in Brazil; corporate representatives’ private analyses of these conditions will determine their attitudes towards corporate social programming. The existing literature on CSR does not always show the actual context implementation of CSR policies in loco. Moreover, it does not always define the values or courses of actions which it believes companies should be pursuing, or specify the formal procedures by which they may evaluate competing priorities. There is thus a need to disclose the criteria by which policy and policy implementation may be assessed. These evaluative, rather than only descriptive, topics are the subject of my present work. My choice of methodology, presented in chapter 4, adopts a qualitative approach using semi-structured interviews.
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4 Methodology This chapter introduces the dissertation’s methodology in assessing the CSR measures of large corporations operating in Brazil. Researchers dealing with CSR have employed both quantitative and qualitative methods, with the gains in sophistication achieved through any refinement of data-collection methods having been offset thus far by a loss of clarity over results35. The approach selected by this thesis, as described in chapter 2, is in part determined by an appreciation of the contextual situation of Brazilian companies in attempting to implement CSR initiatives in an environment of obvious need. I seek to emphasise the value of a contextual approach in my thesis’s title, “CSR in Brazil: actions and perceptions in 22 large corporations”. In this study, data is primarily collected through a qualitative method of semi-structured interviews. Results obtained through this means will then be analysed through content analysis and descriptive statistics. This chapter offers a justification for my methodological choice of an ethnomethodological approach; it lays out the rationale for turning to large corporations operating in Brazil as the source of this study’s empirical data in arguing that such corporations are the most likely to be developing better-structured, directly managed social actions; and describes the organisation, presentation, validity and reliability of data analysis.
4.1 An Ethnomethodological Approach
This section builds upon the two previous chapters’ characterisation of Brazil as a socially divided country, with about 20% of the population facing poverty despite its good average performance in other social indicators. It argues that the specificities of the Brazilian national situation create a need for a context-based approach to CSR insofar as companies may be seen - and may see themselves - as being in a position 35
The 1999 issue of the Academy of Management Journal offers a representative spread of the variety of choices of statistical methods available to researchers in this field. It should be noted that certain sophisticated forms of data analysis may only yield inconclusive results or confirm findings obtained through descriptive statistics; see for instance, Agle, Mitchell and Sonnenfeld, 1999.
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to at least begin to address Brazil’s lack of social cohesion. Taking its inspiration from the IPEA’s survey of corporate social actions in Brazil, which presents some 88% of large companies as developing social actions, this study examines a group of 22 large corporations based on a list drawn from a 1999 number of the Brazilian business magazine, Exame Maiores e Melhores, of the 15 largest companies by number of employees and the 15 largest by sales. Putting these together resulted in a list of 24, which was reduced to 22 after fieldwork. These large companies were chosen as critical instances of CSR in Brazil by virtue of their company size and the likely social impact of their CSR programming. It should be noted that these large and in many ways exceptional companies do not represent a sample but rather a group to be analysed by cross-section (Patton, 1990). Within the terms of the usual categorization of methods of qualitative research, the method applied fits into the ethnomethodological approach or so-called the Interpretive Paradigm (Burrell and Morgan, 1979). This choice can now be justified according to five pieces of reasoning. Firstly, it should be remembered that the present work does not represent an initial sortie into the field, but has available to it a substantial, quantitative body of research on which it must aim to build. The IPEA’s survey in particular studied CSR on a national level in Brazil, producing a dense body of data without focusing on especially noteworthy individual cases. This current work was thus presented with the opportunity to refine analysis to something in between 20 and 25 cases, shifting attention to particular company perspectives on CSR. The perspectives taken up in this thesis are those of CSR professionals in relation to their companies’ corporate actions. Secondly, in comparing present survey results with IPEA data it was found that the universe of my current data in no way approximated to a sample of Brazilian business as a whole. This finding was valuable in suggesting that the best method for analysing the data in question was a qualitative one, eliciting particular features from the responses of individual corporate representatives. Thus analysis makes no attempt to generalise results across the spectrum of business as captured by the work of the IPEA (2001, 2002). This work rests on the claim, supported by IPEA data,
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that large corporations are more likely to operate structured CSR projects than othersized companies36.
Thirdly, the nature of the semi-structured interview process itself invited a complementary process of analysis receptive to particular respondent answers. The survey’s use of open questions in the context of a semi-structured interview process is intended to provide further depth to the aggregate numerical findings of previous surveys. Fourthly, the choice of a qualitative method of analysis was also inspired by a contextual investigation of CSR issues in India (Sundar, 2000).
That study may be thought genuinely groundbreaking in establishing the study of CSR in a new national and business environment. Brazil has already been the subject of a number of usefully orienting works in this area, including the IPEA surveys (IPEA, 2001, 2002); the Ethos Institute’s work on consumers’ perceptions (Ethos, 2001a, 2002a), using methods similar to those of Environics (1999, 2001, 2003) around the world; the WBCSD’s dialogue between stakeholders, in its explicit and implicit contribution to the definition of CSR in Brazil (WBCSD, 1999; Holme and Watts, 2000); and other books (Arruda, Whitaker and Ramos, 2001; Arruda, 2002; Ashley, 2002; Duarte and Dias, 1986; Melo Neto, 1999; Melo Neto and Froes, 2001; Srour, 1998, 2000, 2003), conference material (Aligreri and Borinelli, 2001; Arruda, 2000; Ashley, 2000; Mendonça and Amantino-de-Andrade, 2002; Ventura, 2003; Wanderley, 1999, 2000, 2002) and corporate reports37. Sundar’s book (2002), however, demonstrates the potential pertinence to this study of deploying an approach to CSR taking into account a nation’s recent social history. Finally, my methods are qualitative because that approach best faciltates a consideration of what will be collectively needed in Brazil. Just as the responses of companies’ CSR repesentatives seek to define an ideal form of CSR in Brazil, so my 36
While the IPEA’s findings defined large companies as those with more than 500 employees, as stated in chapter 3, sub-section 3.3.2, there are also indications of a positive relationship between company sales and CSR activity (Eilbirt and Parket, 1973: 11). These authors comment: “We feel obliged to conjecture that giant firms may simply be or feel themselves to be ‘targets’ [of anti-corporate activism] and thus find it necessary, because of their dominance, to make visible efforts to establish social responsibility credentials. But this is clearly an area where further research might yield highly significant findings.” These remarks were made in connection with a study of 70 American companies. 37 More than 200 companies make their social reports available in a form of public audit on the website Balanço Social – www.balancosocial.org.br.
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qualitative approach allows me to investigate the possible criteria of effective CSR in the Brazilian context. In this way, ethnomethodology may be thought peculiarly apt for projecting ideas of future need or use (Patton, 1990: 75). For this present work, I felt the need to make further explicit my choices of a subjectivist approach in terms of four sets of assumptions (Burrell and Morgan, 1979), relating in turn to ontology, epistemology, psychology and method. Arguably, I need to make the implications of my assumptions clear because I am contributing to a filed structured according to the procedures of the social sciences; most of my audience is likely to be accustomed to positive findings, and I was myself trained as a positivist. Ontologically speaking - that is, bearing upon “assumptions which concern the very essence of the phenomena under investigation” - this work assumes that reality is made up of a series of constantly changing structures if it can be said to possess any structure at all. In epistemological terms - or bearing on “assumptions about the ground of knowledge” – I have lived around positivist assumptions long enough to understand that such presuppositions alone may be inadequate for elucidating the entire truth. My past as a management scientist is not so easy to shed, meaning that these justifications are made within a positivist format if not consisting in a positivist content. As this study’s methods diverge from a deterministic outlook, they approach a conception of voluntarism, which holds that free will forms an essential part of human nature even when constrained by social environment. Thus individuals are considered capable of making a difference if they genuinely have a mind to do so. The process of collecting primary data through semi-structured interviewees with people working for large companies in the field of CSR represents a fit with this collection of norms and presuppositions, confirming ethnomethodology as an appropriate choice for this work. Large corporations were chosen as the subject of semi-structured interviews on the assumption that they were more likely to include structured CSR departments and social actions as part of their planning, strategically or otherwise (Eilbert and Parket, 1973). These companies thus offered themselves as extremely significant examples likely to throw up critical cases of CSR inaction or remedy. In this way, a more general notion of CSR effectiveness might yet be extrapolated from the goals and efficacy of these companies’ projects. Furthermore, it was thought that if reasonable expectations of public-spiritedness were not fulfilled by these cases of 76
major companies contribution, they were very unlikely to be fulfilled by other-sized corporations.
4.2 The Largest Corporations Operating in Brazil This sub-section concerns the identification of company survey participants on the basis of their appearance in Exame Melhores e Maiores 1999. Since the publication of that stock-taking exercise, many large state-owned services have been privatised. This study only deals with corporations in private hands at the time of the drawing up of the list, ignoring companies that joined the roster of Brazilian largest corporations afterwards through either growth or privatisation. This list of Brazil’s biggest corporations was derived with reference first to volume of sales in the country, according to Exame, then with reference to number of employees. Taking the top fifteen organisations according to each criterion yielded a provisional listing of 24 companies. The sub-sections that follow present these corporations by subsector and core activity, describing how the twenty-four were whittled down to a final working list of the twenty two that participated in the interview process. It should be borne in mind that these companies were selected with the expectation that they were be running ambitious social programs, as suggested by the IPEA surveys, and could conceivably be held to a higher standard than less well-endowed players in the same market (Environics, 1999, 2001, 2003; Ethos, 2001, 2002; Zulke, 2000). Nowadays, with the growth in mergers and acquisitions, drawing up a list of large corporations may seem arbitrary, especially given the tendency of companies’ competitive positions to fluctuate in any market environment. Different indicators, moreover, can suggest different findings as to which companies are the largest and most worthy of attention. In order to limit these measures of variability, two readily comprehensible qualitative criteria were adopted in selecting companies for inclusion in this survey: volume of sales in the previous year and size of workforce. With the first criterion, the first thinking is that there should notionally be some criterion between sales and the amount of resources which a corporation can deploy to invest in social projects. For 77
companies with a large number of employees, the rationale, comparably, is that the company’s need to sustain its workforce makes it likely to be implementing some program of social welfare. The social investments that companies make in looking after their skilled and unskilled labour are furthermore capable of extension over a larger body than employee groups alone, thus representing genuine forms of social provision.
4.2.1 The Final List of 22 Large Corporations 22 corporations make the final list of candidates for data analysis. This data was elicited through their appointed corporate representative, as shown in the following Table 4.1. The table gives the home nationality of the corporate parent in the case of subsidiaries operative in Brazil.
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Table 4.1 – The final list of 22 largest corporations operating in Brazil for the present study on CSR, in alphabetical order
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
Corporation Nationality AES Eletropaulo American Aracruz Brazilian Carrefour French Casas Sendas Brazilian Daimler-Chrysler German Embratel American Empresas Ipiranga Brazilian Fiat Italian Ford American General Motors American McDonald’s American Nestlé Swiss Pão de Açúcar Brazilian Perdigão Brazilian Sadia Brazilian Shell British/Dutch Souza Cruz British Telesp Telefônica Spanish Texaco American Unilever British/Dutch Varig Brazilian Volkswagen German Source: adapted from Exame Melhores e Maiores, 1999
Industry Sector Public Utility Paper Food Retailer Food Retailer Automobile Telecommunications Oil and Gas Automobile Automobile Automobile Restaurants Food Processing Commerce Food Processing Food Processing Oil and Gas Tobacco Telecommunications Oil and Gas Household Goods Transport Automobile
In the final group of 22 corporations, seven are domiciled in Brazil, six in the United States and nine in Europe. It may be surprising that, despite the effects of industry consolidation, there are still seven nationally-owned Brazilian companies among this group of the largest operating in the country (see figure 4.1).
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Figure 4.1 – Nationalities of the 22 largest corporations Nationalities
6 9
American Brazilian European 7
Source: adapted from Exame Melhores e Maiores, 1999 The process of the privatisation of national assets in Brazil, however, has seen the dispersion of wealth out of national hands. The former state-owned generator AES Eletropaulo, and the two telecommunications companies – Telefonica and Embratel (Worldcom) –were publicly owned but during Brazil’s phase of market liberalization in the 90s passed into foreign ownership, either Spanish or American. The following figure 4.2 presents a breakdown of selected companies by industry sector.
Figure 4.2 – Industry sectors of the 22 largest corporations
Sectors
4 Service Commerce
11 7
Industry
Source: adapted from Exame Melhores e Maiores, 1999 Industry sectors are here defined as industry, commerce and services. 11 corporations find themselves in the industrial sector industries, five of them in automobiles – Daimler-Chrysler, Fiat, Ford, General Motors and Volkswagen, three in food– Nestle, Perdigao and Sadia, and one for each of (1) hygiene and cosmetics Unilever, (2) tobacco – Souza Cruz, and (3) paper and cellulose - Aracruz. While 80
Unilever in its market listing in Britain and the Netherlands is classified as primarily as a food producer, for the purposes of this survey it is accounted a manufacturer of household and hygiene products on the strength of its Brazilian operations being concentrated in that area. Four companies are classed in the service sector, one in a public utility – AES Eletropaulo, two in telecommunications – Telefonica and Embratel (WorldCom) and one in transport - Varig. The remaining seven companies’ activities are in commerce, with three supermarkets Carrefour, Casas Sendas and Pão de Açúcar; three oil companies: Empresas Ipiranga, Shell and Texaco; and the seventh and last the the well-known fast-food chain McDonald’s. Identification of the companies raises the question of the time the multinationals in particular have been active in Brazil. Apart from the privatised utilities, each of the corporations participating in the survey has been in the country under its own name since 1979, the data of McDonald’s first Brazilian restaurants. The participant of longeststanding, Eletropaulo, began life as the Sao Paulo Tramway, Light and Power Co. Ltd., under Canadian ownership; it was first authorised to trade by President Campos Salles in 1899. Following Caldeira’s periodisation (1997, 2000), Brazilian history may be split into three, with the Old Republic starting in 1889 and ending in 1930, and a subsequent period of Industrialization running up to 1964, before being abbreviated by a period of Military Regime taking us from 1964 to 1985. Table 4.2 below presents the years when each of these largest companies under study started operating in Brazil. Nine out of 22 corporations can trace their origins to the Old Republic period. These are Eletropaulo (1899), Souza Cruz (1903), Shell (1913), Texaco (1915), Ford (1919), Nestle (1921), General Motors (1925), Varig (1927), and Gessy Lever (1929).
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Table 4.2 – Years when these corporations started operating in Brazil
Corporation Old Republic Period – 1889 to 1930 1. AES Eletropaulo
Year 1899
Formerly Sao Paulo Tramway, Light and Power Co. Ltd.
2. Souza Cruz
1903
Now part of British American Tobacco (BAT)
3. Shell
1913
Dutch/British multinational oil company
4. Texaco
1915
American oil company
5. Ford
1919
American automobile company
6. Nestle
1921
Swiss food producer and processor
7. General Motors
1925
American automobile company
8. Varig
1927
Brazilian airline
9. Gessy Lever (Unilever)
1929
Dutch/British producer of food and personal items
Industrialization Period – 1930 to 1964 10. Empresas Ipiranga
1937
Brazilian oil company
11. Perdigão Agroindustrial
1939
Brazilian food producer and processor
1944
12. Sadia Brazilian food producer and processor
13. Volkswagen
1953
German automobile company
14. Daimler Chrysler (Mercedes-Benz)
1953
German automobiles, truck and bus company
15. Pão de Açúcar
1959
Brazilian retailer
16. Casas Sendas
1960
Brazilian retailer
Military Regime – 1964 to 1984 17. Embratel (WorldCom)
1965
American telecommunications company
18. Aracruz Cellulose
1972
Brazilian cellulose and basic materials conglomerate
19. Fiat
1973
Italian automobile company
20. Telesp (Telefônica)
1973
Spanish telecommunications company
21. Carrefour
1975
French retailer
22. McDonald’s
1979
American fast food company
Source: author
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Another seven companies were launched during Industrialization, namely Ipiranga (1937), Perdigao (1939), Sadia (1944), Volkswagen (1953), Mercedes-Benz (1953), Pão de Açúcar (1959) and Casas Sendas (1960). The remaining six were founded or began operating in Brazil under the auspices of the Military Regime; this group numbers Embratel (1965), Aracruz Cellulose (1972), Fiat (1973), Telesp (1973), Carrefour (1975) and McDonald’s (1979). All these large corporations have been market participants in Brazil since 1984, that is, since democratisation and the opening up of the Brazilian market and potentially the ownership of Brazilian natural resources to the highest international bidder. The democratisation period has also seen the privatization of many of the country’s industries, most notably in this connection power generation and state telecoms. As the newest company in the group, McDonald’s has been in Brazil for 24 years although some owners in the list could be considered later entrants in the sense of having bought up local assets since 1984. Eletropaulo, for instance, was bought by AES, Embratel is owned by WorldCom, Telesp is part of Telefonica and the longer-standing Brazilian operations of Mercedes-Benz were absorbed into Daimler-Chrysler.
4.2.2 The Original List of the 15 Largest Corporations by Sales and the 15 Largest Corporations by Number of Employees The initial group of 15 corporations drawn from the list of Exame Maiores e Melhores 1999 (MM1999) was later reduced to 14, as one listed company - Brahma (which later became Ambev) - did not allow a recorded interview on CSR issues. Table 4.3 below ranks the selected companies by 1999 sales, also showing companies’ sales in 2003 (thus registering any relative increase or decline) and employee numbers. The parent company nationality, when applicable, is also shown. Sales in US$ millions are aggregated in the last line of the table, with the companies’ generating 68,689 US$ millions of revenue from Brazilian sales in 1999 and 56,355 US$ millions in 2003. The number of employees in MM1999 add up to 172,561 in total.
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Table 4.3 – The 15 largest private companies operating in Brazil, by sales - in US$ millions (MM1999 and MM2003).
MM MM Corporation 1999 2003 Industry sector private private 1
4
2
7
3 4 5
8 14 6
6
2
7
---
8
10
9
11
10
5
11
9
12
15
13 14
-----
15
17
Total
VOLKSWAGEN automobile GENERAL MOTORS – automobiles CARREFOUR - retail FIAT – automobiles SHELL – oil distribution and sales TELESP TELEFONICA – telecommunications SOUZA CRUZ BAT – tobacco PÃO DE AÇÚCAR – retail EMBRATEL WorldCom – telecommunications Empresas IPIRANGA – oil distribution and sales BRAHMA/AMBEV beverages AES Eletropaulo – public utility FORD – automobiles Gessy Lever UNILEVER – food and personal items producer TEXACO – oil distribution and sales
Sales (US$ millions) MM99 6625,9
Sales (US$ millions) MM03 5295,2
Number of Nationality Employees MM99 28240
German
6419,5
4092,7
17916
American
5812,8 5424,1 4892,1
4044,9 3121,4 4096,8
11476 11476 1922
French Italian British/Dutch
4496,2
5480,5
17185
Spanish
4481,6
2375,9
7202
English
4260,9
3837,5
31343
Brazilian
4252,4
3668,3
8220
American
3973,8
4214,1
1836
Brazilian
3960,
5329,8
6806
Brazilian
3769,0
3078
7668
3536,3 3390,7
2387,6 2456,9
10788 9159
Brazilian American American British/Dutch
3336,1
2805,2
1324
68689
56355
172561
American
Source: adapted from Exame MM1999 and MM2003.
The companies included in this study under the heading of ‘largest corporations by sales’38 are thus: (1) Volkswagen, (2) General Motors, (3) Carrefour,
38
MM 2003 sees some new entrants in sales volumes among the list of the top Brazilian companies. Topping the new list is the Brazilian telecommunications company Telemar, with US$ 6303,7 million of sales revenues. Both Telemar and Brasil Telecom failed to appear in MM1999 (and are thereby excluded from this analysis) on account of still being publicly owned. Three companies on the MM1999 list have fallen away from the top twenty by sales in 2003. These are Souza Cruz, Ford and Unilever (in MM1999 ranked 7th, 13th, and 14th.respectively).
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(4) Fiat, (5) Shell, (6) Telesp Telefonica, (7) Souza Cruz, (8) Pão de Açúcar, (9) Embratel – WorldCom, (10) Empresas Ipiranga, (11) AES Eletropaulo, (12) Ford, (13) Gessy Lever – Unilever, (14) Texaco.
The overlapping but different list of the ‘largest companies by employees’ also suffered some form of reduction. As with Brahma, one company, the Brazilian-owned Lojas Americanas S.A., declined permission for the interview to be recorded, causing it to be removed from the list. In another case, the French company Tickets, underwent a drastic loss in headcount between 1999 and 2000 from12,000 to about 2,000, meaning that it was no longer suitable for analysis on the strength of this criterion. Table 4.4 ranks companies by 1999 employee headcount, also noting employee numbers in 2003, industry sector, latest sales figures and parent nationality. Comparison between 1999 and 2003 figures makes it possible to track relative employment growth in Brazil among the multinationals over the four-year period. The table’s bottom list aggregates the number of employees under contract to the country’s largest fifteen employers MM1999. From MM1999 the total came to 283,095, while for MM2003, the same companies employed 320,815. These companies achieved 49,548 US$ millions of total sales, according to MM1999.
The greatest loss in sales from MM1999 to MM2003 was clearly felt by the automobile industry. Daimler-Chrysler’s sales declined by 57.41%; Volkswagen’s 20.08. , These companies faced more competition with the entry of Peugeot, Renault, Honda, Suzuki, Seat and Toyota into the Brazilian market. Car companies responded through slimming down their workforce, with Ford implementing the largest cull (39.93%) and General Motors the smallest within this sector (4.35%). Sales (in US$ millions) MM1999
Sales (in US$ millions) MM2003
Difference over period
Number of employees MM1999
Number of employees MM2003
Difference over the period
Daimler-Chrysler
2717,2
1157,2
-57.41%
12161
11035
-9.25%
Fiat
5424,1
3121,4
-42.45%
11476
7686
-33.02%
Ford
3536,3
2387,6
-32.48%
10788
6480
-39.93%
General Motors
6419,5
4092,7
-36.24%
17916
17136
-4.35%
Volkswagen
6625,9
5295,2
-20.08%
28240
26129
-7.47%
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Table 4.4 – The 15 largest private companies operating in Brazil, by employee headcount (MM1999 and MM2003) MM MM Corporation Number of Number of Sales Nationality 1999 2003 Industry sector Employees Employees (US$ private private39 MM99 MM03 millions) MdDonald’s – fast 1 3 33010 36000 1103,6 American 2 3
1 5
4 5
2 4
6
11
7 8
-----
9
7
10 11 12
17 ---
13
---
14
---
15 Total
---
food Pão de Açúcar – retail Vollkswagen – automobiles Carrefour – retail Sadia – food producer and processor General Motors – automobiles Varig – airline Telesp Telefonica – telecommunications Perdigao Agroind. – food producer and processor Ticket – service sector41 Casas Sendas – retail Mercedes-Benz – automobiles Nestle – food producer and processor Lojas Americanas retail Fiat – automobiles
31343 28240
57898 26129
4260,9 6625,9
Brazilian German
28195 22331
46171 32067
5812,8 1484,7
French Brazilian
17916
17136
6419,5
American
17741 17185
1699340 9515
3085,4 4496,2
Brazilian Spanish
15192
24151
1160,7
Brazilian
12449
200742
462,1
French
12257 12161
13353 11035
1587,6 2717,2
Brazilian German
11918
13041
3310,4
Swiss
11681
7633
1529,4
Brazilian
11476 283095
7686 320815
5424,1 49548
Italian
Source: adapted from Exame MM1999 and MM2003.
The 14 corporations forming the group of largest companies by the criterion of employees are: (1) McDonald’s; (2) Pão de Açúcar; (3) Volkswagen, (4) Carrefour, (5) Sadia, (6) General Motors, (7) Varig, (8) Telesp Telefonica, (9) Perdigao Agroindustrial, (10) Casas Sendas, (11) Mercedes-Benz, (12) Nestle, (13) Fiat, (14) Aracruz.
39
Blank data entries indicate that the company does not feature amongst the 20 largest by number of employees. Information is taken from MM2002 as the company does not disclose headcount in MM2003. 41 Ticket reported 1690 employees in MM2000, 1827 in MM2001, and 2007 in MM2002 and no longer features on the list of 500 MM2003 anymore. Ticket’s sales plummeted to 189,6 in MM2000, 162 in MM2001, and 149,5 in MM2002, with no data being available for 2003. 42 Again, a MM2002 figure is taken, as the company does not appear in the 2003 edition. 40
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If sales figures logged in previous item seem to have undergone a significant decline, the opposite seems to be true for the number of employees taken on by Brazil’s largest corporations. The source for this discrepancy may be that multinationals are increasingly outsourcing production for other national markets to Brazil, which is no longer producing to meet domestic demand alone. Corporations may also expect Brazil’s market to grow significantly in the future; whatever ‘blips’ the country experiences as it emerges out of market liberalisation. McDonald’s in MM1999 held first place with 33,010. Between MM2000 and MM2003 Pão de Açúcar increased its rolls from about 40,000 to 50,000; 52,000 and finally about 58,000 in the last reported figures. Even companies at the bottom of the list have seen increases, raising the bar for getting onto the list higher and higher. In MM1999 Fiat ranked 15th with 11,476 employees; in MM2000 it was SP Alpargatas occupied this slot with 11,961; in MM2002 and MM2003 Vale do Rio Doce had 13,620, rising to 14,289 employees. One company which features in my survey without making it in either list is Aracruz, a Brazilian-owned company forming part of WBCSD. The company was promoted into the survey cohort following the collapse in headcount of Ticket, partly to satisfy the researcher’s curiosity and partly on account of the fame of its CSR activities, which are better-known abroad than in Brazil itself. According to MM2000 Aracruz had 1,435 employees and generated sales of 584,6 US$ millions, while in MM2003 it employed 1,442 workers and sold goods of a value of 665,4 US$ millions.
4.3 Data Analysis The questionnaire was structured in such a way to allow analysis of three major themes: the background of CSR professionals, the nature of corporate social actions and CSR professionals’ perceptions of social problems in Brazil. The questionnaire design was intended to supplement the data of the IPEA survey, which suggested that some 88% of large corporations were developing some sort of social action, without making clear what was actually being done, by which corporations and for whose benefit.
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Notes on the ‘Questionnaire and Data Collection Method ‘ are available in the Appendix I of this thesis. The questionnaire is given in English, although the questions were put in Portuguese for my interviews with corporate representatives. The use of a semi-structured questionnaire helped later with categorical analysis43 (Mason, 2002) of respondents’ answers. A previous version of the questionnaire was used as a pilot when interviewing CSR professionals from two large companies in the Northeast of the country.
Although the questionnaire elaborated for these semi-structured interviews had three parts, professionals’ identification by means of educational background and number of years’ service for their present company are not reported in the body of this thesis. Summarised results appear in the first paragraph of chapter 6, with more detailed information in the appendix II.
The data analysis isolates features of questionnaire response on such themes as corporate perceptions of Brazil’s major social problems, representatives’ expectations of companies’ contribution to solving or alleviating social problems, CSR professionals’ justifications for corporate contribution, and the types of corporate action they envision, which include defining target groups, formulating major social projects and developing projects’ operational and governance structures. Within the categories analysed, the pages of the transcribed interviews in Portuguese were marked in pen as marginal remarks. This follows the guidelines of Miles and Huberman (1994: 67): “One way of retaining mindfulness in coding is the marginal remark. (...) As coding proceeds, if you being alert about what you are doing, ideas and reactions to the meaning of what you seeing will well up steadily”.
The transcription of the interviews was a notably time-consuming procedure. The 22 interviews ranged in length from an average 40-50 minutes to an hour and a half, the longest. It was much more enjoyable to read through the printed interview transcripts than to transcribe them. Collectively, the process of data collection, 43
The author refers to ‘cross-sectional and categorical indexing’ where “the researcher applies a uniform set of indexing categories systematically and consistently to their data. (…) These are likely to function in the same way as a headings and subheadings in the chapters of a book, giving a descriptive sense of what each section of text is about, and may be useful as a way of directing the reader’s eye through an individual text.” (Mason, 2002: 150-151)
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listening to the tapes, typing the interviews in full, checking them against sources, marginal marking of the printed material, and cross-referencing the transcribed interviews with notes written during data collection took six full months before analysis could even get underway.
The documents have on average twenty pages each, with printed documents being organised in alphabetical order as corporate representative responses are stored under company name. Sections of the text addressing particular categorical themes are then fitted into these categories. The results are presented in the format of tables showing numbers of answers to defined categories, followed by partial transcriptions. At this stage the transcriptions have been translated into English. I strongly believe that the passages I work with and allude to are representative of these professionals’ discourses.
4.4 Conclusion and Summary This chapter has explained the methodology used in collecting primary data, which was qualitative in kind relying on semi-structured interviews in the ethnomethodological manner. This choice of methodology was justified by its more in-depth treatment of nuance and full verbal responses. It is important to note in this context that my primary data was of a different kind to those of the primarily quantitative-survey studies (IPEA, 2002; Reis, 1999; Lamounier and Souza, 2002). The group of large companies taking part in this study was chosen from the Brazilian business magazine, Exame Maiores e Melhores 1999; after fieldwork we have data from 22 corporations. The CSR professionals’ perceptions of social issues and the actions undertaken by these corporations mentioned in section 4.2.1 were then submitted to cross-sectional analysis as described in the following chapters 5 and 6.
The results are presented as specific findings pertaining to the cohort of twenty-two multinationals and may not be generalised over a broader range of Brazilian industry. Companies were chosen firstly because they were considered most likely to have working CSR projects, and secondly because their CSR projects were supposed most critical in ameliorating poverty and reducing inequality in Brazil. 89
It was expected that chosen companies’ CSR programs and structures would show Brazilian business in the best possible light as it sought to partner government in reducing citizens’ hardship. It was assumed at the same time that if the biggest Brazilian corporations were found to be unable to undertake effective CSR projects, then it was unlikely that smaller Brazilian companies could do the job any better. This assumption is necessarily hypothetical, and as such remains vulnerable to criticism, although any specific rebuttal of the claim about larger and smaller companies’ CSR efforts in Brazil must be left to a subsequent, empirical study.
As the next chapters show, results do not reveal companies uniformly deploying state-of-art CSR designs to drive improvements in their stakeholders’ circumstances. This dispiriting finding suggests CSR in Brazil has a long way to go if it is to begin to fulfil even its most frequently stated aims.
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5 CSR Professionals’ Perceptions of Social Issues In Chapters 3 and 4 I argued that CSR professionals’ perceptions of social issues represent a significant input into companies’ social investment allocations. This chapter presents empirical data elicited from CSR managers in the course of semi-structured interviews.
I am concerned to bring out certain recurring or defining features of CSR professionals’ perceptions of Brazil’s social problems as revealed through responses to questionnaire enquiries. The main points emerging as characteristic of professionals’ perceptions are: 1. Education, social inequality, inequalities in income distribution, health and corruption represent the major social problems in Brazil; 2. Corporations have a role to play in helping to solve or alleviate social problems; 3. Corporations should collaborate to solve social problems through funding specific projects, according to some respondents. Corporations should rather put their own house in order first, safeguarding employees’ rights and preventing corruption and bribery, say others. A third group of respondents want corporations to make their social contributions through better-organized collective actions. 4. Corporations are motivated to take part in CSR activities either for the sake of 1) business opportunities or a perceived competitive advantage in, for example, expanding consumer markets or 2) a perceived threat to business survival as the consumer market shrinks in terms of numbers of clients and consumer purchase power. Sometimes these two aspects combine to encourage corporations to participate in CSR.
The part of the questionnaire dealing with CSR professionals’ perceptions of social issues was the last of three, and the section seeking the freest or least prespecified response. Responses to the second part of the questionnaire, covering particular corporate actions, are presented in the next chapter.
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Before getting on to CSR professionals’ perceptions, I want briefly to present their background in terms of education, professional experience, and number of years of service for the current company at the time of interview in 2002. Identifying CSR professionals will take up no more than a page before first chapter sub-section starts to treat respondent perceptions. More detailed information on employees’ background is available in the Appendix II. Questions for the third part of the questionnaire, on perceptions, were presented in an open format and covered four issues. Firstly, the respondent was asked to express his or her personal view of the major social problem facing Brazil (section 5.1). As an open question, a variety of answers were expected, although it was supposed that respondents would invoke some conception of poverty and social inequality, making reference to the large percentage of Brazilian population facing deprivation and possibly the huge gap between the haves and have-nots. The second question posed to each CSR professional was if he or she believed that corporations could help to solve or alleviate social problems. Thirdly, professionals were asked what form this corporate contribution would take; and fourthly, questioned as to the rationale, self-interested, philanthropic or a mixture, for corporate involvement. This sequence of three questions is presented in section 5.2. All of these questions were put in an open format, allowing the respondent free scope, for example, in defining their idea of Brazil’s major social problems and the role of corporations with regard to social issues. Fieldwork research also offered some data answering questions not explicitly phrased in the questionnaire. In particular, on some occasions respondents offered their implicit model of a benchmark or exemplary manner of discharging corporate social responsibility to which they felt their company should aspire.
Two other issues are also presented in this chapter: corporate professionals’ awareness of the existence of business networks addressing CSR and company membership in such networks, foundations or institutes (section 5.3). These results are presented here and not in the next chapter because ‘networking’ may be understood as a personal and professional skill of corporate representatives, as much as an attribute of corporate behaviour or social programming. It also makes no sense to feature these results in a section detailing company policies as representatives are likely to announce policies specifically in response to that 92
questionnaire enquiry. It is unlikely, in other words, that companies will be participating in industry CSR bodies or programs without so saying.
This chapter concludes with a short summary presentation of CSR professionals’ perceptions. The main point here is that corporate professionals tend to overemphasise poverty as income deprivation alone, meaning that they tend to omit any consideration of stakeholders’ rights and opportunities in their dominant discourse of corporate responsibility and stakeholder entitlements.
CSR Professionals in 22 large corporations in Brazil In terms of gender, I interviewed eleven male and eleven female CSR professionals, which shows equity with respect to CSR job positions in one respect at least. All professionals have been through higher education. 10 out of 22 studied in some field where communication was a major skill, such as Journalism and Public Relations; seven of them come from Law and Engineering; four studied some of the social sciences as Social Services, Sociology and Business Administration; while the remaining CSR professional followed a course of Physical Education. Communication is then the dominant field of education background amongst these professionals, responsible almost for half of the group or more precisely 45% of the interviewees. Looking at the number of years the interviewees have worked for the company, supposing a line of at least ten years of experience, the group divides in half: 11 have worked for less than 10 years, and another 11 for at least this number of years going up to a maximum of 25 years. Three professionals had their first job in the company where they are still working today. Another 11 had previous experience in other corporations also in the private sector. Three out of 22 come from academia; two from the public sector; and the remaining three did not mention their previous work experience. Such a well-qualified CSR workforce raises the question of the forms of professional or business association joined by jobholders. Specifically, were CSR employees’ professionally following only the leading national business association, the not-for-profit Instituto Ethos44, or did CSR networking extend to other national 44
http://www.ethos.org.br/
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organisations such as Ibase45, GIFE46 and the least well-known FIDES47? Did it stretch to international organisations at the WBCSD or the Conference Board? These questions are answered later in this chapter.
5.1 Defining Major Social Problems in Brazil The question concerning the single, most urgent social problem was raised with the intention of discovering how representatives viewed Brazilian society, and by implication which schemes of investment and improvement they were most likely to favour. The most expected answers were poverty and inequality, with the income gap, unequal wealth distribution, unemployment, illiteracy and others equally regarded as possible features; it was not known beforehand, for example, what proportion of respondents would wish the reduction of inequality per se, and which merely desire a higher standard of living and better access to resources for the deprived. Interviewees answered the question in different ways, with one representative refusing to nominate any particular problem as uniquely the most pressing. This representative claimed the whole situation was too complicated to allow any one answer. She argued that she used to think that lack of education was the major contributor to Brazilian social problems, but had changed her mind after seeing a number of university graduates being unable to find jobs. The potential answer of unemployment was never mentioned explicitly by any corporate respondent. Direct answers, however, were given by 20 of 22 people interviewed. Nine of them specified education, sometimes relating shortfalls in basic literacy to other aspects of the state system such as corruption, or to distributional imbalances which may be grouped under the headings of social inequality, problems of wealth distribution, health and hunger. Perhaps surprisingly, it was not even once suggested that poverty as a category might itself represent Brazil’s major social problem. After education, the other two most common answers referred to social inequality or unequal wealth distribution in some form or other. The selection of education as the major single social problem can be illustrated by the following quotation: “Well, I would say restricted access to education 45
The websites are: http://www.ibase.org.br/ and http://www.balancosocial.org.br for the CSR report. http://www.gife.org.br/ 47 http://www.fides.org.br/ 46
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is still the major problem in our society nowadays (…) particularly the process of [basic education]. Data from 2000 shows that today [in Brazil] there are more illiterate people than the total Argentine population.”48. Another respondent states comparably: “Look, I think [the major problem in Brazil] is education, I believe it has to be education, everybody can agree… because everything [relates to] education. Security? Has to do with education. Health? Has to do with education. [E]ducation [is] the basis for everything.”49 For one of the respondents who comes from the countryside, the shock of living in a large city like Sao Paulo shaped his view of social inequality as Brazil’s major social problem: “I think in a large city social inequality has a very large impact, mainly right now, when one of the causes though not the one people always refer to, is the wave of violence which . . . we are both importing and exporting. I’d say this all the more because of the [social projects] I’ve been working with directly, with communities, in the slums in Rio de Janeiro, with institutions on the outskirts of São Paulo. People say there are two Brazilian HDIs [measures of development], one like Zambia’s and another like Europe’s. This giant social gap is really dramatic and so is the impact it has on everyone. In the countryside differences are not so great; we do have the same problems [and] inequalities are also there, but they do not carry the same impact as in a large city, a megalopolis, as the proportion of people differs. Here you just have to lift. . . ”50
… the curtain, as this respondent does to reveal the sprawling favela outside his São Paulo office window. Another answer likewise directs attention to social inequality as the major problem: 48
Translated from the original: “Bom, eu diria que a, a, o maior flagelo da nossa, nossa sociedade brasileira hoje ainda é a restrição ao acesso aa Educação. Eu diria que atuar nessa área, especialmente no processo de alfabetização é um grande problema. Os dados de 2000 agora demonstram que nos ainda temos mais do que uma Argentina de analfabetos no Brasil.” 49 Translated from the original: “Olha, eu acho que é Educação, acho que um dos principais, a gente, todo mundo pode falar... porque acho que tudo vai cair na Educação, a segurança? Vai cair na Educação?, a saúde? Vai cair na Educação. Porque acho que tudo é base da Educação.” 50
Translated from the original: “Eu acho que numa cidade grande você tem um impacto muito forte do, das desigualdades sociais, principalmente nesse momento em que isso é uma das causas não é a causa principal como muitos dizem que toda essa onda de violência que existe e que já estão até exportando e importando, que eu sei também, e ainda mais com esses projetos que eu estou lidando diretamente, com a comunidade, com a favela do Rio de Janeiro, com essas entidades que vivem todas na periferia de São Paulo. Então é realmente o impacto que existe, como é, como é que falam?, falaram que o IDH do Brasil era dois, a Zâmbia, (...), como aqueles paises da Europa, (...). Então essa diferença social é muito gritante e que acaba dando esse impacto para a gente. E no interior a vida é um pouco mais branda, tem os mesmos problemas, as desigualdades existem também mas não é tão impactante quanto numa grande cidade, numa grande metrópole, a proporção é diferente, você está mais a vistas... é só levantar aqui...”
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“Look, I think despite the gravity of the [social] situation, the gap between the two extremes of social inequality, things are still taking a turn for the better. We are a very small company, we can do very little for the country, I think we could do much more. But we must learn how and I believe this is something we have started with, doing things and learning. Other companies are more advanced than we are with this issue of corporate social responsibility”51.
These illustrations may be taken as both expressive and indicative of some of the single-item answers given. The following table 5.1 presents respondents’ answers, beginning with ‘single’ answers which attested the existence of one main social problem in Brazil, then other responses that linked a major problem like Education to another factor such as Hunger. Thirteen answers defined ‘the major social problem’ as alternatively education (4, 18.5%), social inequality (4, 18.5%), income distribution (1, 4.5%), hunger (1, 4.5%), corruption (1, 4.5%), racial discrimination (1, 4.5%) and the lack of governmental commitment to alleviating social distress (1, 4.5%). These answers made up 13 out of 22 responses, or 59.5%.
51
Translated from the original: “Olha, eu acho que apesar da gravidade da situação ainda, da distancia entre as duas pontas das desigualdades sociais, acho que esta evoluindo muito para melhor. Nos somos uma empresa muito pequena, nos fazemos muito pouco ainda pelo Pais, acho que nos podíamos fazer muito mais. Mas nos precisamos aprender a fazer e acho que é isso o que nos estamos fazendo um pouco, aprendendo, fazendo e aprendendo. Então outras empresas estão muito mais avançadas do que nos nessa questão da Responsabilidade Social.”
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Table 5.1 – Brazil’s main social problems, according to CSR professionals Answers mentioning ONE MAIN PROBLEM Education Social Inequality Corruption Hunger Income Distribution Lack of Governmental Commitment Racial Discrimination Answers mentioning TWO or MORE main social problems Education and Corruption Education, Health and Hunger Education and Health Education, Health and Income distribution Social inequality and income distribution Social inequality, income distribution and lack of political will Urban violence, Income distribution and Corruption No explicit answers TOTAL
Quantity and (%) 4 (18.5%) 4 (18.5%) 1 (4.5%) 1 (4.5%) 1 (4.5%) 1 (4.5%) 1 (4.5%) 1 (4.5%) 1 (4.5%) 1 (4.5%) 1 (4.5%) 1 (4.5%) 1 (4.5%) 1 (4.5%) 2 (9%) 22 (100%)
Source: Author.
Other answers combined two or more fields in the following ways: (1) education and corruption, (2) education, health and hunger; (3) education and health, (4) education, health and income distribution, (5) social inequality and income distribution, (6) social inequality, income distribution and lack of political will, and (7) urban violence, income distribution and corruption. The two respondents who did not give explicit answers as recounted above bulk out the final total as representing 9% of the group. Education not only represents the highest-scoring single answer, but frequently features in conjunction with other topics such as health and hunger. For one representative: “To give a personal and professional [view], I think this question [of the major social problem in Brazil] is very complex. I believe it is impossible solve these social problems in Brazil, even for the government. The way to do is the one we are trying here in [our company], getting together a whole collective movement of people, in the sense of tackling all the basic to put in place a basis to sort out all the problems. It is like when, for example, [our company] took up education, like other larger companies; you will have read the statistics, you will have seen that many corporations decided to [invest in] education, there’s a consensus among
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corporate bodies you couldn’t imagine. But there are also other issues as the [lack] of health [insurance], the issue of hunger, which are also serious problems.”
52
These double answers can be analysed according to the frequency of each item cited, which allows the total of factors mentioned to be higher than the number of respondents. Table 5.2 presents these figures, counting every citation of a problem as if it were a single answer to the question.
Table 5.2 – Brazil’s main social problems - one or multiple answers
Answers mentioning ONE or MULTIPLE social problems, include:
Education Social Inequality Income Distribution Health Corruption Hunger Lack of political will/governmental commitment Urban violence Racial Discrimination Total of items mentioned
Quantity 8 6 5 3 3 2 2 1 1 31
Source: Author.
The most cited answers remain Education, Social Inequality and Income Distribution with eight, six and five answers, respectively. These results suggest that a broad consensus exists amongst CSR professionals pointing to social inequality as the major problem and, correlatively, indicating education as its long-term solution. One of the respondents indeed expressly states: “social inequality in the case of Latin America can be solved through education”. Another professional concurred, saying that “social inequality can be solved through education as the major mechanism and the use of technology as a social accelerator”. These answers may leave one in 52
From the original: “É, como profissional, pessoal, é, eu acho que essa é uma questão muito complexa, eu acho que você não vai resolver esses problemas sociais do Brasil, nem o governo que vai, é eu acho que a forma a ser feita é esta que a gente está tentando fazer aqui na Texaco,é você, vai ter que haver uma verdadeira mobilização, de todos, no sentido de atacar aquelas questões básicas para que você crie um alicerce para realmente resolver os problemas. E, quando a Texaco, por exemplo, no caso, adotou a Educação e outras grandes empresas, você deve ter acompanhado as estatísticas, deve ter visto que grande parte das empresas escolheu Educação, realmente ha um certo consenso no meio empresarial que não dá para você imaginar não. Mas existem outras questões como a Saúde, a questão da Fome, que é um problema serio.”
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doubt as to whether the lack of universal education is seen as a problem, or rather the provision of education perceived as a solution. Under the second scenario, the given shape of an educational program, especially whether it is run under state auspices or not, becomes a live question. The next chapter demonstrates the very different schooling formats which companies have created or underwritten in attempting to secure their declared priorities when defining CSR goals. Out of the thirty aggregate references to a major problem, other repeatedly cited items include healthcare (3), and corruption (another 3). Hunger, and the shortfall of governmental or political will, both appear twice. Urban violence and racial discrimination are both designated Brazil’s major problem on one occasion each. None of these factors can be said to be properly distinct from poverty and social inequality. Unemployment and poverty itself were issues not mentioned, though it was hinted at in the answer attesting “I used to believe in education. . .53 ” (see the first page of the present subsection - 5.2.1). There may also be some surprise that racial discrimination, despite being invoked only once, came up at all as a questionnaire response, since the country is at pains to promote an image of itself as a harmonious multicultural society free of conflict and discrimination (Chaui, 2000). The most recent governmental policy, however, of prescribing quotas for university access for black students and those of mixed race implies such a degree of unequal access that it can only be solved by affirmative action. All of these answers are highly related to inequality as a social problem, despite poverty not being mentioned by respondents. Unemployment was another possible answer either glossed over or left implicit in representatives’ responses, apart from the same reference to unemployed graduates. Again, urban violence, mentioned only once as a major social problem, is more obviously yet a consequence of poverty felt acutely across the range of society (Reis, 1999). Out of curiosity, a scan of the interview transcriptions was made searching for the words ‘poverty’ and ‘poor’. ‘Poverty’ appears in the answers of two of out 22 – respondents—the word is mentioned four times, three times by one of the respondents and only once by another. ‘Poor’ crops up more often, being used 16 53
From the original: “I used to believe in Education; all my life I believed that education would solve all the problems, but nowadays I do not believe that education will be of much help”, translated from the Portuguese: “eu já acreditei que Educação, eu a vida inteira acreditei que Educação resolveria tudo, hoje eu não acredito que Educação resolva grande coisa.”
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times. In general, ‘poor’ and ‘poverty’ are mentioned by five out of 22 CSR professionals throughout the length of their interview on the topic of CSR in Brazil. Two statements mentioning poverty or the poor may be logged here. One professional said: “When attending a conference I was told that in the US for every 40 rich people, there are three people living in poverty; in Argentina it is about 40:7 and in Brazil it is 40:33. […]”, another adding: “… the World Bank says that [in Brazil] 20% of the richest people own 90% of the wealth, including access to telephones and internet, while 20% of the poorest people own only 1% of the wealth.”
The reasons for this reticence, or possibly conceptual blindness, are not immediately clear. Professionals may have been forewarned to ‘poverty’ as a buzzword by previous surveys, in the sense that the acknowledgment of such a serious problem would necessarily lead to the question of what a given corporation intended to do in tackling it. Alternatively, as a word, poverty may be too general, or serve as an umbrella for too wide a variety of phenomena, to form any significant part of respondents’ cognitive vocabulary. This would illustrate a major line of discrepancy between the thinking of professionals on CSR and that of academic, NGO or parastate researchers (Reis, 2000b; Lamounier and Souza, 2002), to whom poverty makes available a central bundle of parameters and measures. But although poverty is not in the discourse of CSR professionals, social inequality is, and together with education and income distribution these items make almost 2/3 of the total amount of answers given (exactly, 19 out of 31, 61,3%). Two comments may be initially adduced to these references. First, the fact that the CSR professionals discuss poverty with obvious reference to certain statistical definitions suggests that those of their peers who kept silence on the matter did so more out of strategic reasons than because of ignorance. Second, the fondness of the professionals for quantitative measures of deprivation makes one wonder whether the condition of the poor in Brazil registers as anything other than a dispiriting statistical underperformance. Another question demands to be put. Do those CSR professionals who see education, social inequality and income distribution as the major Brazilian social problems grant a dominant or determining role to income deprivation? If so, this perception might influence the choice of projects professionals select as the recipients of corporate funds, as presented in the next chapter. 100
5.2 Potential Corporate Contributions: rationale and methods
The question concerning Brazil’s major social problem was immediately followed by an enquiry asking respondents whether they believed corporations in general had any social function. The three open questions asked in this context were: (1) Do you believe that corporations could help to solve/alleviate social problems?; (2) How can corporations so contribute?; and (3) Why should they contribute? In measuring responses, on the first question, if the CSR professional believed that corporations could help to solve or mitigate social problems, the answer was marked down as unequivocal, or 100% YES. While some form of ‘yes’ was the expected answer, the question still was worth asking, partly as a prelude to the follow-ups. These enquiries, as to rationale and methods, elicited more varied answers. Respondents’ answers to the issue concerning corporations’ social contribution reveal a range of presuppositions and perspectives on the matter of corporate social action. The aggregation of answers into analysable categories was not immediately obvious, with finally three general categories of response being formulated. These took the form of: 1) corporations should undertake, support or fund specific projects aiming to benefit people other than their employees, more generally investing in actions not related to their core business; 2) business could join with others or with public-private schemes in seeking to avoid the poor organization or the reduplication of effort owing to the preponderant influence or financial strength of government or of a given corporation. The CSR managers responding along these lines tended to have some experience of work on social projects; 3) corporations should begin by changing their behaviour towards their employees and stamping out corruption and bribery. Of these three categories, the first and the third particularly divide amongst core and non-core business in a way that will be explored more fully in the next chapter, where corporate resolutions will be discussed in the context of the structures of CSR governance advanced by Husted (2002). Besides the three aggregated categories selected, two other answers are now stated in exactly the same terms as they were formulated. These are: 4) corporations can aspire to best or benchmarking practice, pressuring government to act on behalf of the poor; and 5) it is hard to know what corporations can do. As explained above, a group of seven professionals did not get the opportunity to give a direct answer to the question of the form of corporate involvement. Perhaps surprisingly, three professionals argued for the need for a more coherent approach to deprivation through making a case for a more inclusive and better organized relief effort. One survey answer stated: 101
“I think that corporations still need to know how they can collaborate because they take fright when they are told that a single project needs millions [of Reais] and get concerned about the sustainability of starting a project and not being able to carry it forwards. On the other hand, when there are social projects, for instance the FIRJAN projects, which are planned in such a way that their costs are shared amongst a number of corporations it makes the amount paid by each participating corporation very small compared to the total”.
This idea of cost-sharing is supported by another respondent who says: “I think that there is a need for a ‘mixture’, a synergistic work instead of each corporation running its own [project] with the [sole] aim of gaining more power”. The themes found in responses of this type related to the danger of too much power in the hands of any single corporate party. They also articulated the concern that companies could compete within the field of CSR, promoting their core business brands without necessarily effecting any good to society. It is not the cost of social projects alone which dissuades corporations from initiating ameliorative efforts. In one case, a respondent described the whole situation faced by big corporations as ‘confusing’, with this lack of clear knowledge of the causes or remedies of social ills frustrating attempts to relieve them from an early stage. Summarizing the 15 answers directly given to the question out of the 22 respondents, and supposing that every corporate representative to have given some form of positive answer, responses may be broken down as follows (Table 5.3): corporations should contribute to the outside world = 5 (23%); they should change from within = 3 (13%); they should organize more collaboratively = 3 (13%); they should subscribe to foundations or institutes = 2 (10%); they should lead the way in best practice = 1 (4.5%); it is impossible to know what they should do = 1 (4.5%).
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Table 5.3 – How corporations can contribute to solving social problems, according to CSR professionals
Collaborations addressing the outside world - Investing in projects related to education, the environment, community development, opening new job positions, transferring knowledge Improving CSR projects - better or more collective organisation Internal CSR action focusing on employees and extirpating corruption and bribery Taking part in Foundations and Institutes Exemplary programs and pressure on government “It is very confusing” No direct answer Total
5
3 3 2 1 1 7 22
Source: Author.
Interviewees were next asked why companies should attend to society’s needs. The answers to the ‘why’ question represent a seam of particularly rich material, in that respondents had very different reactions, with some rehearsing practised answers and others improvising them on the spot.
One of the respondents said: “I believe that private companies must give back to the community; actually, I changed that verb from wanting or willing to must: private companies must give back to the community, to society. (…) I am saying the same as everybody else, you know?, I am very sure this is about helping people in need, helping others. I believe that we as human beings, must help others. I 54
don’t know, I am not a religious person (…). This is something we must do. ”
The following answer might be thought surprising coming from a group of CSR professionals who did not mention poverty directly: 54
Translated from the original: “Eu acho que a iniciativa privada tem que devolver aa comunidade, e aí eu acho que agora, eu mudo o verbo, não quer, tem, que a iniciativa privada tem, a iniciativa privada tem, que devolver aa comunidade, tem que devolver aa sociedade (...) Aí eu acho que vou ficando no mesmo chavão, sabe? estando muito convicto, é ajudar o próximo, acho que é ajudar o próximo. Eu acho que a gente tem, nos seres humanos, nos temos obrigação de ajudar o próximo. Não sei, não tenho nenhuma convicção religiosa, não tenho nenhum outro tipo de proselitismo, não, mas acho que é ajudar ao próximo. Acho que é por aí.”
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“I think that, because of the failure of the previous [economic] model when government alone assumed responsibility for solving everything, it became necessary to have the involvement of business, at least large corporations, in order to find solutions for poverty. There can be no other way. I believe we must all act together and that’s worrying in one sense, [but on the other hand] it motivates people to develop some [scheme of social] action; I mean, everyone must do their bit, so that things can get better in the future, in the near future, (…) Here we are going with the current [of what is defined by international headquarters].”55
Adapting the typology of answers formulated by De Swaan, Manor et al (2000) to the corporate context in Brazil, possible categories of response to this question relate to elite perceptions of poverty and poverty-related problems. De Swaan, Manor et al’s categories may be translated into this context as the following set of reasons motivating corporate social action: 1. social problems in Brazil are perceived as a
threat to business continuity or survival; 2. social problems offer potential opportunities to businesses to expand their consumer market as the population becomes more able to spend money. A related form of this argument understands CSR as delivering some form of competitive advantage, possibly in consumer perception. The results of Environics’s and Ethos’s surveys would seem to bear out that exercising CSR duties or not can have positive or negative effects on corporate image; 3. social problems in Brazil present a case with no remedy, at least not by corporations; and 4. other answers from the three above. If for the first two categories, social problems are perceived as a threat or an opportunity for business and thus a driver for corporate social actions addressing those problems; the third category presenting the problem as with no remedy, is actually more likely to rationalise a history of failed action or inertia. For the first option, social problems as a threat: “the future consumer, who is nowadays today’s consumer, is in fact a social problem. So, if [the company] doesn’t help their future consumer, doesn’t solve their social problems, who will become the
55
Translated from the original: “Eu acho que muito, por ter certeza que o modelo anterior onde só o governo é responsável por resolver todas as questões se provou que não está dando certo. Então, quer dizer, é necessário o envolvimento das corporações, pelo menos das grandes corporações, em buscar soluções para a pobreza, não tem jeito. Acho que isso é uma coisa que é realmente consensual e que perturba um pouco, perturba no bom sentido, impulsiona as pessoas a estarem fazendo alguma ação, isso é, e é aquela coisa que se cada um fizer um pouco, a coisa pode ser que num futuro, próximo, a coisa fique um pouco melhor, o panorama fica um pouco melhor... (...) Aqui é, nos estamos seguindo o que está vindo, a postura que está vindo do exterior,”
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company’s future consumer?56”. For another respondent, “they [the companies] will either add social value to their products, in such a way in which these products will have a positive impact in the communities where they are located, or they will cease to exist…57” The perspective of future business as an opportunity may be illustrated by a well-informed respondent: “the actual consumer is far more knowledgeable of this kind of thing [CSR] and it plays its role when they make their choices. There are various surveys from Instituto Ethos that you might know (…) nowadays more and more consumers make their decisions taking into account companies’ behaviour.58” ‘Compound’ answers, diagnosing some mixture of opportunity and threat, were given, and are grouped separately. In adapting De Swaan, Manor et al’s taxonomy, no place is given to altruism as motivation for action, under the premise that this justification could be applied much more easily to individuals than to listed and unlisted corporations. Thus the final, ‘other responses’ category does not include the assertion of philanthropic motives. In response to the open ‘why’ question, the most frequently given answer relates to business opportunity as illustrated by the following quotation: “when corporate values are not strong [i.e. ethical] enough for a CSR program to be developed, finance can step in”. Considering that nine respondents (41%) commented on issues of business opportunity under such headings as consumer perceptions, competitive advantage, long-term returns and the business case for CSR, it would appear that the prospect of growth is a more effective goal to action than the fear of penalty. The second answer most often given, by five out of 22 interviewees (23%), justifies corporate actions in terms of the threat to business survival or continuity posed by the current situation in Brazil. These answers referred to the possibility of 56
Translated from the original: “O consumidor do futuro, é o consumidor que hoje, efetivamente, tem um problema social, Então, se hoje ela não ajudar a resolver o problema desse consumidor futuro, quem vai ser o consumidor futuro dela?” 57 Translated from the original: “Ou elas agregam valor social nos seus produtos, fazendo com que esses produtos impactem positivamente nas comunidades onde elas estão presente, ou elas vão deixar de existir, por uma falta de percepção do empregado, da comunidade”. 58 Translated from the original: “Então o consumidor hoje em dia, está muito mais atenta a esse tipo de coisa e vai pesar muito na hora da escolha. Tem uma serie de pesquisas do Instituto Ethos que você deve conhecer, feitas aqui no Brasil e depois comparando-as com outros dados internacionais, ... de que hoje em dia cada vez mais as pessoas fazem essa escolha levando em consideração essa atuação da empresa na hora de escolher os produtos”.
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business failure due to the non-emergence of a national consumer market proportionate to companies’ spending and effort. CSR professionals of corporations operating in Brazil also fear another form of failure, in the sense that their products would not be accepted as legitimate in a globalized market given the severity of Brazil’s social problems. The very same features cited as business opportunities were also represented in respondents’ testimonies as threats, with one interviewee stating, “if we do not do something, there will be no consumers and we will not survive as a business”. In two cases (9%) both threat and opportunity were cited to justify corporate involvement in social problem solving. In summary, 16 answers (73%) stress either threat or opportunity, or a combination as dominating CSR professionals’ perceptions.
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Table 5.4 – Why Corporations should contribute to solve social problems
Business opportunity – Competitive advantage, consumer perception, business enlargement, consumer market expansion There is a threat to business survival – If we do not run CSR projects we are likely to have no future consumers, we will fail as a business Both a threat and an opportunity for business No remedy – the problem is very complicated, ´a big confusion´. Where can business start? Others - answers not related to any of those three above It is important for Brazil’s perspective for the future (1) We are following guidelines from headquarters (1) Corporations need to give back to society (1) No answer/not questioned directly Total
9
5
2 1 3
2 22
Source: Author.
To treat the six remaining cases, in one instance social problems in Brazil are represented as being too complicated (4.5%) to allow potential actors even to know where to start. This reflects a view of social problems as intractable to corporate remedial action. Businesses espousing such a line tend to be inert, failing to choose between practical priorities, or ceding the field completely to third parties such as NGOs. Two other respondents did not have this question addressed to them (9%). The three not fitting into the assigned categories, being represented by one respondent each, may be stated as follow: 1) corporate CSR should be motivated by a concern for Brazil’s future image on the international stage; 2) CSR represents a global trend which our international head office has ordered us to get involved in; and 3) corporations should give something back to society, as it is the community that creates business’s success.
Plans for continuing social investments, including expansion and amelioration are referred to by a large majority of interviewees. Without being directly questioned, four respondents cited what are in their eyes exemplary practices of CSR. The Grupo Orsa and Natura schemes drew plaudits for their decision-making processes and pre-defined budget, with each of these companies being mentioned more than once. 107
Some other company schemes, such as those of O Boticário, Xerox, Caterpillar, McDonald’s, Grupo Belgo-Mineira and Companhia Parahybuna de Metais were mentioned once.
Next, I want to look at business associations addressing CSR issues in Brazil and internationally known to CSR professionals.
5.3 CSR Networking and Policies So far, the data presented has covered professionals’ perceptions of social problems and their views of the motivations behind corporate social actions. From these high-skilled and, in Brazilian terms, elite members of society, we now turn to the business associations through which thinking on relief gains traction in corporate circles. For this sub-question, a list of professional organizations was offered and the respondent asked to acknowledge whether they were actively participating in or at least had heard of each CSR organisation or not. The sequence presented comprised the Instituto Ethos, GIFE, FIDES, Ibase, Comunidade Solidária, the WBCSD, the Conference Board with an open space being left for Other(s). Apart from Comunidade Solidária, the options for answers given all represent business associations or representative bodies serving in the role of mediators between corporations and public authorities (Cappellin, Giuliani, et al., 2002). Business associations are important by virtue of their social investments and for the impact of their actions on corporate employees, consumers and the whole of society. Ibase is the acronym for the Brazilian Institute of Social and Economic Analysis, a body encouraging companies to publish a social audit. This is the oldest institution in Brazil to concern itself primarily with issues of citizenship, democracy and social justice. GIFE - the Group of Institutes, Foundations and Enterprises - designates an association of grant-makers founded in 1995 contributing to the promotion of sustainable development in Brazil. FIDES stands for the Fundação Instituto de Desenvolvimento Empresarial e Social or the Foundation Institute for Corporate and Social Development. The CSR leader amongst businesses of any size operating in Brazil must be accounted the Instituto Ethos. Associated to CSR from the inception of questions of 108
corporate accountability in Brazil, the Instituto Ethos´s leadership in the field is so marked that that its president, Oded Grajew, was appointed a special adviser of Brazilian President Luis Inácio Lula da Silva, figuring prominently as one of the most ardent supporters of the Zero Hunger campaign59. Table 5.5 shows respondents’ acquaintance with the named CSR institutions. All without exception knew of Instituto Ethos ; only two respondents had never heard of Ibase; four were ignorant of GIFE. The national CSR process of networking is very strong, even drawing in a large number of foreign companies. Also included in the list was the national-wide NGO Comunidade Solidária, which attracts corporate sponsorship in aiming to eradicate illiteracy in remote areas of the country barely accessible to government. The Comunidade Solidária effort was known to all CSR respondents; at least 11 survey-participating companies are sponsors. Without necessarily being categorisable as a CSR organisation, this NGO is familiar to the large majority of Brazilian citizens on account of its achievements and unequalled global scope as an educational program. FIDES, known to only six of the CSR professionals interviewed, is seen to have the same degree of currency as the international WBCSD. Six respondents out of 22 professed familiarity with all four business associations dealing with CSR in Brazil. Out of these six, three also know of the international WBCSD, whose Brazilian office is known as CEBDS60. Internationally, CSR professionals are not so well connected although six corporations would seem concerned to network on a global level. Table 5.5 – CSR organisations known by the interviewees CSR Org.
Ethos
GIFE
FIDES Ibase
C.Sol.
WBCSD C.Board Others
At least known
22
18
6
22
6
20
3
17
Source: author
17 respondents took up the survey design’s opportunity to cite other bodies, throwing up in the course of interviews seven other institutions which corporations were actively participating in (liasing with, acting in partnership or funding). The Abrinq Foundation, working nationally for the rights of children and teenagers, was 59 60
From the web: http://www.radiobras.gov.br/ published in 10/01/2003. http://www.cebds.com/
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cited by six interviewees, followed by a regional federation of industries – FIRJAN which has recently engaged into the coordination of major CSR projects together with large companies in Rio de Janeiro state, which drew five mentions. Within the ‘open space’ an international organization was cited by respondents four times, namely the former World Wildlife Forum now dubbed WWF. Ação Comunitária do Brasil, a 40year old philanthropic organisation working to combat social exclusion, was cited three times by our interviewees. Mentioned twice we had the Global Compact and Junior Achievement, both international bodies.
Table 5.6 – Other CSR organisations added to the list by the interviewees Others CSR Abrinq organisations # Times 6 mentioned
FIRJAN WWF
ACB
UN
J.Ach
G.Comp
5
3
3
2
2
4
Source: author
Open space answers demonstrate the existence of CSR networking in at least the 22 corporations beyond the scope of the expected Instituto Ethos . Corporations and CSR professionals individually may be thought to have a variety of interests and aspirations in liasing with these bodies. One non-negligible, and not necessarily socially worthless, interest would seem to be professionals’ concern to build up the professional profile and standing of CSR officer as a job designation.
Can representatives’ networking have any influence over companies’ conceptualisation of CSR policies? This question may be tentatively answered in an oversimplified format, by asking, do participating corporations have a CSR policy or not? When asked directly, 15 corporations out of 22 claim to have a defined CSR policy and seven do not. Responses threw up the qualitative problem of how to categorise answers positively (companies have CSR policies) and negatively (companies do not). In some cases, the attribution of answer values was straightforward. For example, in the case of the respondent statement: “in fact, as far as I know, we don’t have a declared
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policy, but this is a discussion we are starting within the company”61, the ‘no’ box was checked. Another negative response was represented by the words: “Look, I think we, today, eh, there is not a formal policy, many times [we have seen] some sort of demand [for some corporate social contribution] so we weigh things up from moment to moment and make a decision to do something, by the moment [depending on] specific needs”62. Seven corporations act in this way, in the absence of a defined CSR policy. Among the group of companies with CSR policies, some negative answers were given to the corporate-level question; these were counted as a ‘yes’ given the degree of consistency and formalization of policy necessary in survey terms to constitute a ‘yes’ result. Some very straightforward answers were given to the question: “Certainly, certainly. We are aware of social issues and have a policy about them. [Our performance] is getting better all the time. You can have a look at this report, I do not know if you got it—it already represents a fuller social audit. Before that we were doing [an overview]. Now we are doing a more complete [report], which is informative, with some data from Ibase on the back and main indicators.”
63
A comparable response was: “We do [have a CSR policy], (…) more than that, we have what I think is more important, a policy for social investments which sits inside our own business principles”64 The following instance may be appended to illustrate a ‘no’ answer taken as a ‘yes’: “No, I would not say we’ve got a policy, as we haven’t got to that stage. On the other hand, if you read this policy on [system of] quality, you might understand what I am saying.”65 Another characteristic response deserving inclusion is this exchange 61
Translated from the original: “Na verdade, uma política declarada, que eu saiba não tem, mas é uma discussão que estamos trazendo para dentro da companhia.” 62 Translated from the original: “Olha, acho que a gente, hoje, é, não existe uma política formal, muitas vezes surge uma solicitação e a gente avalia e acaba tomando uma decisão, assim, pela necessidade do momento.” 63 Translated from the original: “Com certeza, com certeza. Há uma consciência e uma política. Agora, cada vez mais, nos estamos nos aperfeiçoando. Se você pegar esta publicação, não sei se você recebeu. Se é a mesma Já é um balanço mais completo, nos antes vínhamos fazendo uma coisa mais superficial. Agora já estamos fazendo uma coisa mais completa, mais informativa, com alguns dados do Ibase aqui atrás e principais indicadores.” 64 Translated from the original: “A gente tem, não exatamente a política, mas um pouco mais, a gente o que eu acho que eh um pouco mais importante do que isso, a gente tem a política para a, a, os investimentos sociais mas dentro dos nossos princípios empresariais.” 65 Translated from the original: “Eu não diria para você que existe uma política assim, do jeito como, ainda não está nesse nível. Mas por exemplo, se você ler, lesse essa política da qualidade como está, você vai entender o que eu estou falando.”
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between the interviewee and myself: “You could say we just have one defined mission, including the policy of the social department.” “Maybe [i.e. that might count as a company policy], what is this mission?” She answered by handing a statement to me and we read it together. A stated policy existed, but was it being acted upon through a specific social contributions department or official? It was not clear. These are only some of the diverse and revealing reactions that face-to-face interviews allow us qualitatively to capture.
5.4 Summarizing CSR Professionals’ Perceptions of Social Issues Identifying the main social problems in Brazil seemed in most cases an easy task for CSR professionals. Education, social inequality and income distribution came readily to mind as the most important social problems affecting Brazilian society. All of these problems are related to poverty, although poverty itself as a category is not volunteered as a major problem, at least not when the question is put in open format. The questionnaire finding is thus very different to the claim made by recent surveys in Brazil that poverty reduction or elimination is at the top of elites’ priorities (Reis, 2000a and Lamounier and Souza, 2002). CSR managers group their potential contributions to social distress under three main headings: 1) social projects addressing specific issues such as education, the environment, community development, new job positions and knowledge transfer; 2) improving CSR actions governance, through organizing broader, more collective projects not dominated by any one brand or brand name. This would enable companies to share costs and responsibility, and tap the management competence of third parties. In one such example of collaboration, FIRJAN, the Federation of Industries in Rio de Janeiro state, brings together a number of corporations operating not only in Rio de Janeiro but also in Sao Paulo. 3) a third approach takes internal corporate reform as its starting-point, meaning that corporations must regularize management-employee relations and root out corruption and bribery. The motivations for corporate involvement were even more clearly expressed than possible lines of action. The descriptive categories elaborated in this analysis are based on those set out by De Swaan, Manor et al (2000) in analysing elites’ 112
perceptions of poverty. Two alternatives options are used by most of the 22 respondents in explaining their company’s motivations for CSR participation, namely the threats of inaction and the opportunities for action. These answers represent 16 out of 22 responses (73%). When corporate social actions are seen as a business opportunity, they are understood as opening up a competitive advantage for the company in question, either by growing the Brazilian consumer market or boosting brand value. Correlatively, CSR is seen as motivated by threat in the typical statement, “if we do not contribute there will be no market, we will not survive, there will be no path for business continuity”. This attitude may be further illustrated by a quotation offered by the WBCSD (then the BCSD): “Poverty is bad for human beings; it is also bad for business. (…) Thus business is concerned with about mass poverty not because business can or should be effective charities, but because business can assist development by being more effective business” (Schmidheiny, 1992: 159). The Instituto Ethos and Ibase are the best-known CSR networks among these CSR professionals. Many other associations addressing CSR were cited by respondents, some in their capacity as corporate partners either through funding or in some executive CSR function. 15 out of 22 corporations (68%) were found to have defined CSR policies. In the next chapter, the actual social actions undertaken by these large corporations are studied. I analyse in most detail the choices companies face in determining a governance structure in defining and carrying out their corporate social actions.
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6. CSR Actions in 22 Large Corporations This section characterises the CSR actions undertaken by 22 large corporations in Brazil in the light of the previously measured value-judgments of their CSR professionals. Empirical data detailing these employees’ educational and professional training is available in Appendix II. These results demonstrate that the cadre of CSR executives are drawn from a pool of experienced managers - half of the group have been working for ten years or more in the present company (11. 50%). They also show that these professionals work under a variety of official job designations, ranging from CSR manager itself down a long list of related titles, in some cases referring to communication issues or to external company relationships, whether to industry, the community or government (8, 36%). Professionals’ university education in 10 cases out of 22 (46%) pertains to some aspect of communication.
This chapter specifically examines actions developed by corporations in addressing social problems, focusing on companies’ decision-making processes in terms of management hierarchy, the organisation of social efforts, and mode of governance structure. An analysis of CSR professionals’ place in the corporate hierarchy is helpful in determining the importance given to CSR in the formal structure of the corporation. The implication here is the nearer a CSR professional’s place to the top of the pecking order in a company, the more likely the company can be expected to take its social responsibilities seriously or strategically.
On the question of the nature of companies’ social actions themselves, the three-part questionnaire devoted its second section to an elicitation of projects’ design. In other words, this information was obtained before professionals’ perceptions, the theme explored in the previous chapter, were sought. The present chapter is structured as a treatment of six sections, all dealing with CSR actions: 1. companies’ drivers or motivations for CSR, 2. the target groups companies aim to benefit, 3. companies’ decision-making processes and their engagement of the corporate hierarchy, 4. the formal organisation of efforts, and 5. companies’ major social projects themselves. This last section is twofold as it presents both companies’ choices regarding CSR governance structures (6.5.1) and an evaluation of corporate
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social actions using an adaptation of Sen’s definition of human Instrumental Freedoms (IFs) (6.5.2).
The method developed for assessing corporate social actions, presented in 6.5.2, represents a distinctive contribution of the present work to the field of CSR. Once contextualised for the Brazilian case, this work on CSR in effect compares professionals’ perceptions of social problems, and their estimation of which social actions count as urgent, to an implicit set of norms derived from the translation of universal measures of deprivation. The potential value of the work of Sen (1999) to CSR lies in his definition of five Instrumental Freedoms (IFs), which must be considered in any empirical context when seeking to assess the efficacy of ameliorative programs dealing with poverty as deprivation. These instrumental freedoms are typically given as: political freedoms (1), economic facilities (2), social opportunities (3), transparency guarantees (4) and protective security (5). These five items in Sen’s terms supplement and reinforce one another, while individually representing criteria for the positive enhancement of people’s capabilities. In adapting Sen’s IFs to the evaluation of specific corporate actions, this work assumes as its baseline for measurement the potential of corporate actions to enlarge and enhance people’s opportunities considered in their broadest aspect.
6.1 Corporate Priorities for CSR Companies define their CSR priorities, formally or otherwise, through an implicit or explicit hierarchy of desired outcomes and, sometimes, the place of goals in this order is dependent on how achievable they are considered to be. In order to elicit some sense of these company prioritisations, respondents were invited to state the targets of their company’s actions. Respondents’ answers could come in the format of the groups of people designated as potential beneficiaries, for example ‘children’, and the large themes or drivers motivating corporate action, for example ‘education’.
Responses showed education to be by far the most frequently mentioned inspiration for companies’ CSR provision, with 20 out of 22 spokespeople citing this 116
area. Other answers were volunteered, as one would expect for an open-format question allowing a plurality of drivers of CSR action to be cited. In fact, professionals also mentioned employability in 8 out of 22 cases, health seven times, income generation in four cases, and culture in three. Six other drivers figured, mentioned once each: (1) sport, (2) housing, (3) recycling, (4) security, (5) crime, (6) and charitable donation.
Table 6.1 – Major drivers for CSR actions (multiple answers) Education Employability Health Income Culture Environment Others Generation 20 8 7 4 3 3 6 Source: Author.
Thus education appears as the most targeted shortfall for the large corporations operating in Brazil. If in the previous chapter deficiencies in the national educational system were identified as at least one of the major social problems affecting Brazil by eight out of 22 professionals (36%), in defining companies’ CSR priorities almost every company directs some of its efforts to providing education (20 out of 22, 90%).
6.2 Groups of People Targeted by CSR Actions The questionnaire also sought to elicit the target groups envisioned by companies’ social actions. When questioned directly, interviewees tended to come up with a list of categories of persons answering this description, including: employees, employees considered together with their families, the local community, and society as a whole, as well as other answers. Results suggest that this cohort of 22 companies focus their projects on local communities as well as on a certain conceptualisation of society as a whole. The increasing breadth - from employees to society in general - and vagueness of definition of the recipient categories in CSR suggested by companies may be unintended, since it is difficult to imagine how specific actions may be designed measurably to benefit the well-being of ‘society as a whole’. On the other hand, it is possible that actions designed by corporations to boost the skills and productivity specifically of their workforce, have a significant 117
trickle-down effect on those workforces’ communities. The data itself reveals that 14 out of 22 corporations address their CSR actions to local communities, with the remainder envisaging some larger entity or perspective in social action (see Table 6.2). In one case, the interviewee chose to define company action as targeting employees in social investments (health, housing and security), thereby extending a benefit to employees’ wider social environment: “We understand that these two [social] programs, Housing and Education, though they are aimed at our employees, extend in turn to the wider community. In the case of Education our program embraced students who were not part of our company, but part of the community and decided to join in. As for Housing, that program was addressed exclusively to our employees, but society as a whole felt the benefits of it as house prices declined and housing stock grew.” Table 6.2 – defining groups receiving attention of CSR actions Employees (only)
Employees and families (only)
Local community
Society in general
None
None
14
8
Sourc e: Autho r.
This data is highly relevant in the context of this thesis, which argues for the significance of corporate participation in securing a greater measure of social equity and of relief from poverty for the Brazilian population at large. It shows that, intended or not, the CSR actions of these 22 corporations ‘go beyond corporate walls’, positively impacting upon groups of people with only a tangential connection to groups targeted by corporation’ self-interest. Corporate projects may reach such groups directly, as representatives choose to enrol in local programs, or indirectly, through the benefit administered to representatives’ family or other close associates.
Projects specific to companies and particular relief efforts propose different objectives, ranging from providing housing and support for children undergoing cancer treatment to offering job training for young criminal offenders. Some of these specific features will be looked in the next section, 6.3.
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6.3 Decision-Making Processes and Company Hierarchies Interviews also sought to determine the nature of those corporate processes by which CSR objectives were formulated and ultimately implemented. This question pertains especially to the seniority within companies of the CSR professionals insofar as they may be supposed to frame policy, and to the nature of the involvement, if any, of local communities and target groups. The relatively new position of CSR professionals in Brazil means that, as job titles suggest, companies may assign varying degrees of power to the placeholders of such an office. Placeholders may be higher or lower up the corporate ladder, and may enjoy freer or more constrained degrees of access to senior corporate executives.
Questionnaire enquiries were set in such a way as to attempt to determine the rationality or otherwise of corporations’ choice of social project. Project selection would appear irrational or unconsidered in the absence, for example, of a proper and inclusive decision-making process, or an evaluation in terms of costs and benefits of alternative projects which the company might fund. It is possible for companies to secure social goals for their target communities by a variety of means and through a variety of structures. Nevertheless, certain plans and structures may be thought to represent more cost-efficient means of achieving benefits than others, even if they demand from companies that they sacrifice some of the public relations externalities of their CSR programs, for example, by contributing to the efforts of NGOs. My analysis here of internal structures should be of interest to charitable bodies such as NGOs in giving them a better sense of the company-specific mechanisms determining funding allocations. Some specific questions addressing these issues were formulated (see figure 6.1).
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Figure 6.1 – Specific Questions in Cases of Social Actions Addressing Local Communities - To be answered only in case of local communities How were projects decided as suitable for this/these particular community(ies) (and why?) Who is in charge of implementation? What kinds of results are expected and how are they evaluated? Source: Author.
The data demonstrates that CSR professionals occupy top or senior middle management positions within corporations, almost always enjoying direct contact with companies’ CEO, President or General Manager of Brazilian operations, in other words the highest corporate executive in the country.
Table 6.3 – Management Positions of CSR Professionals Director
CSR 5 Professionals Hierarchical Positions
Manager Coordinator Foundation Others –
8
2
President (1), Director (1) or General Coordinator (1)
analysts (2), internal consultant (1) and ‘Corporate issues’ (1)
3
4
Source: Author.
This conclusion suggests that companies seemed to be taking their social responsibilities very seriously; however, the quality of decision-making around CSR projects does not always match the presumed expertise of such senior executives.
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6.4 Organisational Structure of CSR Efforts A wide measure of variation exists between the twenty-two companies surveyed on the question of the number of professionals they employ on CSR projects, their mode of organizing these employees within the company, the budgets assigned to projects and the explicit targets, if any, they are expected to meet. The next stage of this research examines these issues prior to understanding the ways in which these 22 large corporations in Brazil organize their CSR departments. Of the corporations, 13 out of 22 claim that they allocate a specific budget for CSR actions, against nine that do not; and 17 declare the existence of targets to be met, against five that use no such parameters. The question naturally arises of how a company can set a defined target without making the provision of an allocated budget to cover or achieve it. Analysing the data in pairs, there are six companies without a defined budget that still set themselves targets, and two others that fund CSR but do not specify targets. Eleven companies have both set-aside targets and budgets, and three lack both. Table 6.4 illustrates this data:
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Table 6.4 – Number of corporations with pre-defined/allocated CSR Targets and/or Budgets.
CSR Targets \ Budgets YES
YES
NO
11 6 companies have defined companies have defined specific CSR targets specific CSR targets but AND budgets not an allocated budget 2 3 companies have not companies have defined CSR targets but NEITHER targets nor there are budgets budgets for CSR allocated
NO
Source: Author.
The number of corporate employees working in the context of CSR projects may range from the complete absence of a designated staff to the presence of a whole team of more than 30 people newly put in place to oversee social projects. “We have the managers who are responsible for the administration and development of project, to coordinate the projects. The rest of the team, around 30 people are what we call ‘operational’, the ones who will make this projects happen. Their function is to disseminate these projects, these actions, to the stores [i.e. the retail outlets] and their roles are organised in the form of a cascade. So, from here [we define] the structure, communicate [our message to] the store; from the store it reaches the level of the business unit, which then administers the action because it is in place to do so: it must be close to the community at which actions are aimed”.
66
In some cases such teams may be organised in the explicit form of a not-forprofit organization, foundation or institute. Ten out of 22 corporations have either no direct contracted employee, apart from the interviewee, to serve as a broad coordinator for CSR efforts, or merely two employees or a group of corporate volunteers serving in this capacity (46%). Seven corporations have a group of between four and ten professionals working directly on CSR (32%), and five other corporations have a group of more than ten, whose 66
From the original: “Nos temos os gerentes responsáveis em administrar e em desenvolver projetos, coordenar projetos. O restante da equipe, por volta de 30 pessoas, são o que nos chamamos de operacionais, que vão fazer acontecer esses projetos. O papel deles é disseminar esses projetos, essas ações, para as lojas e vai descendo num esquema de cascata. Então aqui se estrutura, se passa a comunicação para a loja, e a loja é que vai, é que é a unidade da empresa, de negocio, é que vai administrar a ação, é que vai desenvolver a ação, porque é a visão: tem que estar próximo da comunidade que você vai atender.”
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numbers may go up to the whole personnel of an institute or foundation (22%), as illustrated in Table 6.5.
Table 6.5 – Number of corporate employees working with CSR issues Number of Corporate Employees working directly with CSR, apart from the interviewee None, one or two employees or no employees but corporate volunteers involved with CSR. Four to ten professionals within the corporation working with CSR activities More than ten employees or Foundation/Institute developing CSR.
Companies (Total = 22) 10 7 5
Source: Author.
In some instances, staff on the payroll of companies may work on CSR under the auspices of a non-for-profit organization or other body with a corporate identity distinct from that of the main employer. Multinationals may sponsor such an organization, giving it their own name, and establishing it with a greater or lesser degree of autonomy as a notionally or operationally separate institution. While the focus of this research is on corporations, not the public sector, it is important to characterise companies’ efforts in this direction. Of the group of 22 corporations, ten have their own foundation or institute. In obtaining and collating survey data, however, I directed myself to company contacts and officers in seeking to establish corporate perceptions of business responsibilities. In three cases, I was insistently pointed towards corporations’ not-for-profit arm, leading to my gathering data from this person. As a matter of clarification, seven of those corporations with a charitable foundation or institute, also keep within house at least one professional charged with CSR. More often than not, professionals working for the foundations or institutes remain formally connected with the company, taking up double functions.
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6.5 Corporate Actions: major projects This research examines three major or characteristic social projects for each company so as to facilitate a comparison between project designs and quality. Some companies were running more than three projects, and projects were alternatively local and national, and of different sizes. Among these 22 corporations, only four failed to name at least three major social projects when asked during the interview. Two of these companies described themselves as at an early stage in developing CSR projects, expecting to implement projects once they had devised a CSR management and governance structure. Two other companies have very broad projects involving a large number of people, mostly employees, although the benefits of their CSR actions extend to the community and are felt by society in general. Restricting the CSR projects under review to three implies no comment on the generosity of companies’ provision or otherwise, but merely enables a sharper focus on projects’ comparative relevance, impact, size or number of beneficiaries as these measures correlate with the preferences, values and perceptions of company CSR professionals. A list of corporate projects is available in the Appendix III - CSR Actions and Levels of Centrality/Specificity; it states the total of 61 social actions analysed.
6.5.1 Choices of CSR Governance The choices of CSR governance structure available to companies were first modelled in 1999. Here I am concerned with inputting empirical data to the suggested model. Companies can alternately develop CSR projects in-house, outsource them or formulate a hybrid structure with private or public sector partners. The governance and organizational structure of CSR efforts is a topic of growing interest among academics and professionals. In this study, the 22 corporations offer data on 61 projects, 45 of which are outsourced. In analysing projects I follow Husted’s categorization (2002) of in-house, outsourced or hybrid modes, although to some extent the model in full does not fit the dataset, which offers too few cases for each of 124
the hybrid and in-house options. A greater share of attention is then given to the characteristics of outsourced CSR actions. Another reason why we might be tempted to delimit the analysis of projects to those that are outsourced is that the present work broadly endorses context-based approaches to social remediation, which encourage companies to prioritise actions favouring deprived people who are not necessarily corporate stakeholders (employees or customers). While there are other possible approaches to defining and evaluating CSR actions in Brazil, the contextual focus pursued in this work has the merit of addressing the issue of the needs of poor communities most directly.
Table 6.6 presents a figure of Husted’s choices for CSR governance structure.
Table 6.6 – Choices of CSR Governance by Husted
In-House
Hybrid
Outsourced
Centrality
High
Medium
Low
Specificity
High
Medium
Low
Source: adapted from Husted, 2002.
Besides in-house, hybrid and outsourced, the metric uses two other parameters in describing CSR projects: centrality - which refers to the closeness of relationship to companies’ core business - and specificity - which refers to the ease or difficulty with which project activities could be replicated by other parties (with a comparatively individual and hard-to-repeat project counting as highly specific). High categories of variables are defined in opposition to low, so that a highly central and specific activity is both integral to core business operations and comparatively unique. ‘Medium’ designates a subject category between high and low, for example relating to tangential or subsidiary business activities to the core profit-generating function. One example of a medium project might be incentivising local microbusinesses to develop their own products to be then bought by the corporation. Like high specificity projects, medium-specificity activities must be characterised by some barrier to their replication. Projects may be specific by virtue of businesses’ unique competence (or aspects thereof), by their location, on account of the data they use,
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or through other non-replicable features. The existence of major restrictions regarding the replicability of projects places them in the high-specificity category.
Table 6.7 summarises the number of cases giving its levels of centrality and specificity, and stating the choices of CSR governance adopted by the corporation as either outsourced, hybrid or in-house. More detailed data is available in the Appendix III. Content analysis was also applied when attempting to assign each social project to a category of low, medium and high variables. Showing the entirety of cases, Table 6.7 illustrates the tendency of corporations in some categories to adopt certain choices of CSR governance.
Table 6.7 – Summary of choices of CSR governance
Low Specificity
subtotal Medium Specificity
subtotal High Specificity
Low Centrality
Medium Centrality High Centrality
32 Outsourced
1 Outsourced
Outsourced = 0
8 Hybrid
2 Hybrid
1 Hybrid
5 In-House
1 In-House
3 In-House
= 45 =
=4=
=4=
2 Outsourced
Outsourced = 0
Hybrid = 0
1 Hybrid
2 In-House
In-House = 0
=4=
=1=
1 Outsourced
None
None
None
2 Hybrid In-House = 0
subtotal
=3= Source: Author.
Total = 61 corporate social projects
The table’s horizontal rows present the ‘centrality’ of CSR projects to the core, profit-generating functions of the business, and its vertical columns the ‘specificity’ of proposals in the sense of how easily they could be copied by competitors. Low, medium and high degrees of centrality and specificity will, in given cases, dictate alternative modes of organizing CSR project delivery: (1) in-house development and 126
management of projects; (2) outsourcing or purchase from a third party; and (3) a hybrid format in which various functions of development, implementation and monitoring may be compositely in-house or outsourced.
Low Centrality and Specificity: outsourced CSR more likely Results show that some 50% of all social projects undertaken by the cohort of big corporations fit into this category of a low relationship to the core business–low centrality–and a low degree of particularity to proprietary company skills and data– low specificity. Projects out of this type tend to correspond to the ‘outsourcing’ choice of governance structure, which matches 32 out of those 45 cases fitting into the low/low category. In the other cases, eight were managed in a hybrid form and five others were developed in-house.
Low/Low: Outsourcing - According to Husted (2002), CSR projects of low centrality and low specificity are likely to be outsourced, a hypothesis verified by the present data. CSR involvement with crèches and childcare, vaccination, clothing campaigns and general philanthropy, including contributions to large social projects like Comunidade Solidária and Instituto Ayrton Senna, all fall under this heading. It is not necessarily the case, however, that all low/low projects will be outsourced, because of the interference of other factors not analysed in this work. It is possible to see the influence of such factors in cases where low centrality and low specificity efforts are undertaken in-house or in a hybrid form.
Low/Low: In-House - The five cases of in-house company development of low-low category projects are all highly particular. Although the activities are comparatively unrelated to companies’ core business and susceptible of easy replication, in each case the companies concerned have specific reasons for retaining control over program activities. In one case, the company has developed projects aimed at elderly people involving gym sessions, tai-chi-chuan, yoga and choral singing. In another, an award-winning project has concerned itself with nutrition education in poor local 127
communities. The remaining three cases, all developed by the same company, which has adopted a general policy of in-house CSR, offer sport and musical facilities to employees, employees’ families and the local community.
Low/Low: Hybrid - Eight social projects are managed in a hybrid form somewhere in between in-house management and outsourcing. These projects usually represent projects outsourced to a third party but closely monitored by companies, who retain some say in contractors’ operational execution. Five of these eight projects belong to two companies who have made a policy decision not to run social projects directly. They justify this choice by saying that projects do not fall within the corporation’s main competence, therefore subcontracting while managing them at close quarters remains the most effective way of achieving projects’ aims. In two other cases projects are managed through a corporate foundation. Another case works in the opposite way to the first five projects; here, a company which usually runs projects inhouse funds a partnership with a NGO for reasons of solidarity and more effective messaging. Basing our analysis on Husted’s model, Brazilian company data reinforces the hypothesis linking low centrality and specificity to practices of outsourcing. The cases of in-house and hybrid forms can unproblematically be viewed as special instances, as their number is not even half that of the outsourced cases (outsourcing = 32, hybrid = 8 and in-house = 5).
Medium Centrality and Low Specificity: no apparent pattern The data threw up four instances of such projects—that is, easily replicated undertakings with some, but not an utterly integral, relationship to core company activities.
Outsourcing - Of these cases, only one was outsourced, when the Brazilian office of Daimler-Chrysler developed an internationally recognized project with a local community in Marajo called Projeto Poema.
In-House - Nestle’s Projeto Nutrir, by contrast, is managed in-house.
Hybrid - One hybrid case is run by McDonald’s (the acclaimed McDia Feliz) and another by Unilever in Brazil, whose social projects give visibility to its brands. 128
Low Centrality and Medium Specificity: No hybrid choice? Another four cases out of the total of 61 represent projects of low centrality and medium specificity, presenting some barriers to replication while relatively disconnected from core corporate interests.
Outsourcing - AES Eletropaulo runs the projects Circus and Horta. In-House - Casas Sendas Marrequinho and Perdigao’s Projeto Atende is internally managed.
Medium Centrality and Medium Specificity: Only one case – hybrid A single case of both centrality and specificity medium is seen in Telefonica’s EducaRede.
Unsurprisingly, no cases fitted into the other combinations of parameter variables, either high centrality and high specificity, or any combination of medium and high variables. This confirms the nature of CSR actions as comparable to philanthropy for business in being aimed at people outside of its core commercial functions (or, in other words, confirms the identity of business as fundamentally profitgenerating). Actions aimed at empowering poor but marginal communities are thus unlikely to form any part of companies’ central strategy. Unlike some not-for-profit organizations, namely NGOs, corporations as a form or organization are geared to profit-making, so that social actions rarely become so central to businesses that they attain the characterization of high specificity and high centrality. Were a corporation to identify such a project (with high barriers to entry and marked value to the business), it would probably set up a new product or service. It should be again clarified at this point that this research focuses contextually on the impact of projects on external communities, meaning that corporate actions targeting the health or hunger of their workforce, for example, are not necessarily conceived under the heading of social action.
Forty-five projects out of the total of 61, as volunteered by the 22 corporations forming the subject of this research, fit into the low specificity and low centrality category. Out of those 45, 32 are outsourced, while five are developed in-house and eight under a hybrid
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format. As Husted would suggest, the overwhelming correlation is of low variables with outsourcing.
6.5.2 Assessing Corporate Social Actions: CSR and Sen’s Instrumental Freedoms The discussion in this subsection will underscore the need to evaluate corporate social actions through an appropriate methodology. The metrics applied to the discourse of corporate social officers, during my semi-structured interviews, gauged how well developed companies’ social policies and actions were, and how systematically companies were monitoring policies’ impact. Respondents’ answers thus provided the basis for a preliminary categorization of the corporate social actions of multinationals in Brazil. Beyond this, this section outlines the terms of a less descriptive and more evaluative categorization of corporate action inspired by the Sen´s capabilities approach. This set of metrics judges actions according to how well they satisfy five criteria for human well-being projected as fundamental or definitionally human forms of entitlement. In evaluating corporate actions, the impact of measures on external communities in particular is considered. The questions put to representatives in the face-to-face interviews were: how do you see the company that you are working for dealing with social problems? How seriously does your company take CSR? In assessing responses, a scale was designed setting out respondents’ grounded data in an array. The answers given to these questions were added by other parts of the interviews covering similar issues.
The first question, of the stage of development of company CSR policies, yielded responses in four possible categories:
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1. a Very early stage – characterised by the onset of planning while as yet projects remain embryonic. CSR policies and schedules are unwritten but people are assembling to put initial ideas in place. 2. an Early stage – the corporation has been dealing with social actions for some time, through not under a rubric of CSR nor through a dedicated team of CSR professionals. While the company’s CSR strategy as a whole remains in a process of formation, at least one professional is designated to attend to CSR demands from internal (employee) and external (press and community) participants. 3. a Fairly Developed stage – Whether CSR has been defined or not in terms of a separate business function and unit - under such headings as a department or coordinating office - the company has a clear social strategy, prioritising some social investments against others through partnerships, outsourcing or developments in-house. 4. an Advanced stage – An official job position has been designated to look after CSR issues, and advanced formal decisions have been taken for instance, through the funding of companies’ own Institute or Foundation, or the strategic choice not to do so. Social projects receive corporate support and funding on the basis of clear criteria, with the results presented to the corporate board, the media and the public through printed of web-available materials. The rationale for systems and governance designs, relating to specific themes/regions/targets, is likewise explicit and transparent. Table 6.8 shows how corporations fit into designated stages of CSR, according from data obtained from interviewees and the categorization above described.
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Table 6.8 – Corporations and Stages of CSR Structuring
Stages
Very Early
Corporations 4
Early 4
Fairly Developed 11
Advanced 3
Source: Author.
These four stages refer to the processes through which CSR is undertaken, and are not necessarily positively correlated to the idea of effectiveness. In this context, effectiveness relates to the company’s own measurement of how well their policies have secured prescribed social goals. Data for this parameter is in some cases available through internal reporting. An inter-company comparison, meanwhile, of the relative effectiveness of different companies’ policies may also be set out in table form. A critical measure of how seriously companies may be said to take CSR is the thoroughness of their internal audit of their social policies. A scale is drawn up for this criterion, ranging from the absence of any assessment at all, and some internal assessment in the absence of written documentation, to full reports and detailed and publicised assessment of projects.
The three categories for the assessment of CSR projects adopted by companies are then: no assessment at all (1), observation only, with no written reports (2), some form of internal assessment (3), and a more detailed social report (4). For this last alternative, only one company in the group had a formal report of social actions. However, two others claimed to be about to publish a CSR report soon, and another four have defined some forms of assessment. From these six companies, what separates their contributions from the rest of the group is mainly their awareness of the difficulty of appropriately measuring social actions. Representatives asserted: “We have been searching for forms of assessments more and more. The search for social impact, the impact you have across a society is very difficult and hard to measure as there
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are other factors acting on the community. To what extent has a given outcome been the 67
result of your activities? ” “We monitor the [social] projects and we try to assess their results. [Measurement] is still at an early stage; we have been talking a lot about finding some way of assessing projects’ results (…). This shows how seriously we take our social investments, which aren’t like: Here, take the money and run! There are methods, procedures, (…)68
This exchange, on the subject of a social report about to be published, is also indicative: “Is there a report which presents a summary of [corporate social actions]? No, in fact we’re about to put out our first social report from Brazil this year, just by coincidence, through our [CSR Dept.]. We do not call it a social audit but a social report, as it is called in the [corporate] market, coming out next year.”
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Table 6.9 shows the forms of assessment taken by corporations when evaluating the results from their own social projects.
Table 6.9 – Corporate Forms of CSR Assessment Form of Assessment Number of Corporations
None
Observation
6
5
Internal Social Report Assessment 10 1 (4 internal stakeholders only and 6 informal measurements)
Source: Author.
10 out of 22 corporations analysed have developed some forms of internal assessment. The six noted above seek to measure results while another four carry
67
From the original: “Cada vez mais a gente está buscando formas de avaliar resultados e a questão do impacto social, do impacto que você tem numa sociedade ainda é muito de você avaliar ainda é muito complicado de você avaliar porque você tem outros agentes que interferem na própria comunidade, até que ponto foi o seu trabalho, até que ponto foi o trabalho...?.”
68
From the original: “E a agente monitora os projetos e procura fazer uma avaliação dos resultados desses projetos. Ainda é um proecesso incipiente, nos estamos discutindo muito essa questão de avaliação de resultados dos projetos (...) essa seriedade do investimento social, é mostrada através desse processo que não é assim: Olha, toma la o dinheiro e tchau! Tem métodos, tem procedimentos....” 69 From the original: “Haveria um relatório que sumarizasse isso? Não, porque nós vamos na realidade editar nosso primeiro relatório social do Brasil, este ano por coincidência, porque é um resultado da própria área, não chamamos nem de Balanço Social mas de Relatório Social como é chamado no mercado, ou ele vai veicular em Novembro ou em Janeiro do próximo ano.”
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out internal assessments of public opinion through opinion surveys and an evaluation of the organisational climate of social efforts. One of the interviewees explained the added-value of a high internal public level of satisfaction, as measured by surveys: “the satisfaction-level surveys are applied internally; for example, when we developed a voluntary programme we started to notice changes in the interactions between people, as people came to feel more committed to the company and [through that process] committed more to the quality of the company’s business. People’s expectations of corporate growth went up, as people felt more proud of working for a company which looked after the social aspects of business and not just cold results like production and profits.”70
Five companies obtained social project results by observation: “we always pay visits, whenever we feel the need”71, in the words of one representative, “we [assess social projects] by going to the site in question, following [what is happening]”72. While five companies assess their results through observing the changes without producing written documentation of indicators, six companies of the 22 forego any kind of assessment at all. In the absence of corporate assessment of their social actions for the vast majority of companies investigated, 15 out of 22 (counting 5 + 6 + 4), I want now to present an alternative way of measuring if not the effectiveness, then the potential achievements of companies’ CSR provision. This means of assessment would be sensitive to the feasibility of the social actions these companies might develop irrespective of their target and governance structure.
Companies’ policies must also be characterised in terms of their ostensible goals. A third kind of tick-box assessment in my survey measures the relevance of the objectives of companies’ actions in terms of the yardstick argued for in this work,
70
From the original: “As pesquisas de satisfação são feitas internamente, por exemplo, desenvolvemos um trabalho voluntário e começamos a perceber que mudou a relação interpessoal, as pessoas se sentem mas comprometidas com a companhia e se sentindo mais comprometidas com a companhia, sentem mais comprometimento com a qualidade e com o próprio negocio da empresa, torcendo para que a empresa cresça, ela se sente mais orgulhosa de trabalhar para uma empresa que olha mais para o lado social e não somente os números frios de produção e lucros.” 71 From the original: “a gente vai sempre visitar, quando a gente sente necessidade” 72 From the original: “Indo ao local, acompanhando.”
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namely the enhancement of people’s choices and opportunities. This framework represents an adaptation of Sen’s capabilities approach in defining five instrumental freedoms (IFs): (1) political freedoms; (2) economic facilities; (3) social opportunities; (4) transparency guarantees; and (5) protective security (Sen, 1999: 38). Emerging out of the discipline of development economics, Sen’s work revolutionises considerations of poverty and social inequality by proposing a strong relationship between development and freedom. While traditional social policies look at avoiding deprivation such as hunger and illiteracy, the author proposes five instrumental freedoms as means of enhancing, potentiating or strengthening the freedom to bring about development. Sen states “having the freedom to do the things one has reason to value is (1) significant in itself for the person’s overall freedom, and (2) important in fostering the person’s opportunity to have valuable outcomes” (Sen, 1999: 18). These principles represent the cornerstone of his instrumental freedoms. It is important to signal some divergence between the metrics I employ and Sen’s classical capabilities approach. For Sen, the unit of analysis is the particular individual insofar as his or her capacity for flourishing is stunted or enabled by environment or circumstances. I am more concerned to capture the potential achievements of corporate actions. Following this logic, my metrics do not assess functionings or capabilities73 but the potentiality of each of the five instrumental freedoms as they are conceivably made open to people through corporate social projects. The five freedoms are defined as follows: 1. Political Freedoms – the public or democratic selection of political leaders and of government, free political expression, the enjoyment of civil rights and the opportunity to engage in political dialogue. 2. Economic Facilities – the opportunity to utilize economic resources for the purpose of production, exchange or consumption. 3. Social Opportunities – the provision of social arrangements facilitating individual well-being and the power of future choice, such as education and health care. 73
Robeyns (2000: 5) illuminatingly explains the term ’functionings’ as the “beings and doings” of a person; ‘capabilities’, meanwhile, refers to various sets of functionings realised in action.
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4. Transparency Guarantee – an openness of public decision-making guaranteeing disclosure, allowing society to function on a basic presumption of trust. 5. Protective Security – the provision of a social safety net safeguarding people from abject misery, in such forms as unemployment benefits, famine relief and public employment in times of distress.
Alongside the measures that may be elicited from companies’ own assessments, this section is concerned to develop an alternative basis for assessment for CSR inspired by Sen’s IFs and grounded in empirical evidence. It is possible to look at the corporate social actions that aim at enhancing people’s opportunities through the lens of an adaptation of Sen’s five Instrumental Freedoms: 1. Actions may stimulate formal or informal political representation (PR) among local communities in including community representatives in dialogues over possible social projects and corporate social investments. This is represented in my metric on a scale of 0-2. 0 signifies the absence of two-way dialogue; 1 indicates some form of communication with community leaders; and 2 marks the institutionalisation of exchange between the company and local people. 2. Actions may directly offer funds or resources (DF) to projects organised by local communities. This item is often attached to the previous one, PR, in that money can only be channelled through some form of standing communication. The provision of the means of economic subsistence on the part of companies’ has some overlap with philanthropy, the central distinction being the necessity of some form of self-organisation on communities’ part in applying for grants, possibly through a local NGO or community association. The scale here varies from 0, indicating the absence of direct corporate funding, to 1, where money has been offered, to 2, representing frequent donations or the formalisation of funding protocols.
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3. Actions may boost certain aspects of the education and/or health (EH) as empowering future choices. In the measurement of this criterion, education and/or health receives the highest score of 2, since education is considered as a general provider of opportunities subtending all the other capacities for flourishing. Healthcare within this metric is understood generally, no matter whether preventive or curative. All but two of the interviewees mentioned education as an important component of their corporate strategies, meaning that companies generally divided between 0 and 2 in this measure. 4. Actions may be exercised in a spirit of transparency (T) in the sense that the procedures by which certain projects have been selected for corporate support are comprehensible and open to public scrutiny. In this criterion, 0 registers a situation of companies’ determining which projects to support without advertising their priorities; 1 reflects the possibility of being able to anticipate companies’ choices although decisions are still secret; and 2 endorses the openness to examination of company decisions. 5. Actions may provide safety nets (SN) in cases of social emergency. As this work focuses on external corporate communities, rather than on (for instance) working conditions or the environment, corporate actions here may concern the provision of support for individuals in exceptional difficulties due to famine or other deprivation. Were the focus of this work on immediate or internal company stakeholders, this measure could take into account the degree of thoughtfulness exhibited by companies in (re)training employees in case of their future redundancy. In the present case, the social safety net also bears on questions of the sustainability of corporate business with respect to the communities it impinges upon beyond the corporate workforce. One example of a corporate safety net would be those projects enabling patients to receive medical services away from home. Within this metric, 0 rates the absence of safety-net provision, 1 the existence of an isolated program, and 2, the existence of more than one project in the context of broader corporate strategy.
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Tabular results in these criteria for the companies under assessment are presented below on Table 6.10. This table shows an aggregated measure of the social projects of each of the listed 22 companies according to the five indicators: PR, DF, EH, T, SN. Table 6.10 – Assessment of CSR Potential Contribution to the Five Instrumental Freedoms adapted from Sen (1999)
Instrumental Freedoms for CSR Political Representation (PR) Direct Funds (DF) Education and Health (EH) Transparency (T) Safety Net (SN
None (=0)
Some
High (x2)
Total
7
12
3
18
10
10
2
14
2
None
20
40
11
8
3
14
17
3
2
7
Source: Author.
The numerical scores of the first column are derived by multiplying the answer ‘None by zero’ , the answer‘Some’ by one i.e. the number given reflects the number of the company’s projects, and the answer ‘High’ by two i.e. double weight is given to those projects. The ‘Totals’ column shows the sum of the three rows on the left according to the stated weights. The highest total values then are Education and Health, with 40; followed by Political Representaion, 18; Direct Funds, 14 and Transparency, with the same total. The lowest item scored is Safety Net, with 7.
Political Representation (PR) Analysis of respondents’ discourses found 3 cases granting communities formalised access to corporate decision-makers as they selected corporate social projects.
Contact with corporate representatives does not guarantee the reception of local community viewpoints within companies’ decision-making processes. On the 138
other hand, political representation remains a sufficient if not necessary condition of communities having their voices heard. In this respect, companies may relevantly seek to strengthen the hand of municipal councils in dealing with children and teenagers under the general heading of civil society. Companies wanted to invest in public benefits even when there was a resistance to the funding of public or civil society through private means. In the words of one corporate representative: “We have been doing this through annual competitions, when the councils present their proposals for social amelioration under previously defined themes, and we allocate funds between the better-structured projects… We have been funding about six or seven projects every year, depositing funds with local councils…” (T20 - p.10).
In twelve cases, the political representation of interested communities, while sometimes hailed as an important principle, occurs only sporadically.
In one case, the company claims some measure of direct contact with local communities, although there is no mechanism to ensure that local voices carry through the company hierarchy. Another company claims that its network of shops keeps it in contact with local communities, while a third maintains contact through a network of local ground-level branches. This is the case for more than half the corporations analysed as they define their social projects.
Seven out of 22 cases exhibit decisions being taken without direct contact with locals. This scenario can be described by the saying ‘he who pays the piper calls the tune’: corporations exercise their autonomy, and flex their financial muscle, in deciding by themselves where and how to invest socially.
For the seven companies which have opted for this format, social investments are done without visible ways of stimulating political freedoms in the term used by Sen (1999). Projects are supported by corporate funds; they might (or not) reach important impact in the community but it does not happen through process of dialogues.
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The total points obtained by these 22 corporations together in this item, Political Representation, come to 18, a relatively good score, but far behind that for Education and Health (40 points).
Direct Funds (DF)
Given that the granting of direct funds from corporations depends on a preexisting dialogue, fewer cases than for the item Political Representation (PR) must be expected within this criterion. In fact, only two cases score 2 points in this item, making direct funds and resources available to projects from external communities systematically. It is relevant to notice that both projects work through foundations, although not all foundations distribute resources directly. Not only money but other essential equipment or resources may be distributed in this way.
For the purposes of this criterion, access to direct funding excludes corporate activities of subsidising or laying on cultural events such as pop concerts. This issue is considered under the item Transparency, representing the openness of corporate social priorities to public view.
There are 10 cases of communities gaining access to corporate funds. In a further ten cases, community projects were, in the absence of dedicated structures and channels, barred from corporate resources on any repeatable basis. While it might represent a diversion of time and effort from companies’ core business, it may still be worthwhile for companies to seek to benefit their immediate local communities through CSR subvention. With only 2 cases scoring the highest level of points and 10 others scoring 1, in this item these 22 companies score a total of 14 points for Direct Funding.
Health and Education (HE)
In a previous section in this same chapter, Education and Health came top of the stated priorities of corporate representatives in addressing social deficits (along with others such as employability and income generation). Of all the five items among Sen’s instrumental freedoms, this is the one which corporations profess most 140
strongly. Of the 22, a total of 20 companies state Education as a priority for their major social actions. Only in two cases are education and healthcare not mentioned, and in these instances, companies’ social actions remain to be structured. One employee of one of these two companies indeed stated: “I used to believe in education”.
Health and Education scores best among my measurements according to Sen’s criteria with an overall value of 40 points. CSR professionals believe that education per se can bring about social change, and therefore subscribe to educational social projects. My framework suggests, however, that education by itself cannot shift the balance of unequal access to resources in Brazil.
Transparency (T)
Of the 22 companies analysed at least three are known for their openness in soliciting social projects from target communities competing for funds and in advertising the results of such competitions. Two of these three companies use the Internet to make information available about their evaluative criteria for new projects. These three companies are the best performers in this item on account of their responsible dissemination of these rules and other material.
The opposite cases are those where the procedures of social project allocation go on behind closed doors. Here CSR decision and selection criteria are not predefined. Twelve companies currently implement such untransparent processes.
The 8 as yet unclassified cases represent an array of companies without clearly transparent CSR policies but still characterised by a certain predictability of prioritisation. The total sum of the companies for this item, Transparency (T), is 14, similar to that for Direct Funds (DF)
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Safety Net (SN)
There are two cases out of the 22 scoring 2 points each. Both are instances of social projects which have scored 2 points in every previous item, with at least one model-project for each design being replicated in different cities. Other intermediary scores for the safety nets criterion are represented by three cases where some particular benefits are extended through social programs to society at large. Cases scoring 0 are those offering no provision of safety nets. As protecting its population from exceptional or catastrophic misery may be thought the responsibility of government, more so than meeting any of the other four criteria, corporations’ comparatively low score of 7 points here should not be surprising. Attention here must go to cases where companies do offer some form of safety net, in the sense of trying to understand company reasoning in apparently reduplicating state provision. Companies are of course autonomous and rationally self-directed, and there may be instances where their schemes of absolute social insurance form an integral part of their programs as they serve the other four criteria of Sen’s IFs. It will be of course necessary for contextual research to highlight and describe such instances.
CSR and Sen’s Instrumental Freedoms
As an overview of corporate social performance, when evaluated under an adaptation of Sen’s Instrumental Freedoms to CSR, the cohort of 22 corporations perform better within the item Education and Health than within any other designated criterion. This is true for 20 out of the 22 companies surveyed. Within the remaining four items, companies score less impressively, although their efforts with regard to Political Representation still rate better than for the other three. My perspective, adapted from Sen, maintains that the provision of more than education and healthcare will be necessary in projecting a less unequal society. It must be said, however, that the necessarily subjective process whereby these instrumental freedoms are adapted to the corporate world and the available primary data might be rejected as prejudicial by corporate managers. I would reply that what is at stake is 142
not so much as conforming to Sen’s measures of responsibility towards the deprived, as positively enhancing people’s capacity to choose for themselves through analysing possible specific actions open to corporations as they seek to foster a better society.
Those corporate projects that do provide a safety net seek to avoid the deepening of the deprivation of vulnerable stakeholder or community groups. These two cases of corporate involvement scoring the highest points are firstly, an institutional nation-wide project footing the costs of children’s cancer care away from their home states; this project both looks after distressed children and their families, which are scattered as a result of treatment; and secondly, a rehabilitation and social reintegration scheme for teens recently released from incarceration. Participants are offered access to a first job and supported within the same social environment where their crimes were committed.
According to the evaluation paradigm used in this work and explained above, two companies markedly outperform their peers in their CSR provision. These companies’ CSR actions score high in each of the five items. While it is not the aim of this work to produce CSR company rankings, it should be said that these exemplary CSR offer a blueprint illustrating the feasibility of securing Sen’s IFs through corporate social actions.
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7 Discussion of Findings and Conclusion This thesis started out by reviewing the topic of Corporate Social Responsibility (CSR), setting out the grounds on which it based its methodology, of semi-structured interviews with CSR professionals from the largest companies operating in Brazil. Chapters 5 and 6 presented an analysis grounded on empirical data of CSR professionals’ perceptions of social problems and of the major corporate social actions undertaken by major corporations in Brazil. This chapter offers a discussion of findings and traces the links between perceptions and actions as suggested by the research question set out on the first page.
The basis for possibly the most significant link between perceptions and actions is the emphasis placed by CSR professionals on education both in stating Brazil’s major problems and in outlining the possible scope of corporate actions whether addressed to internal or external communities. Education in effect figures as a kind of scapegoat to which all other social problems of poverty and inequality are attributed in the eyes of the elite, a finding confirmed by other survey results (Reis, 2000b; Lamounier and Souza, 2002). However the results obtained in this study demonstrate something new, namely the convergence of a number of corporate remedial actions on the topic of education, which received 8 answers out of 22 (36%). Whilst other social drivers are cited by professionals responsible for corporate actions, education forms some part of corporate social endeavour in 20 out of 22 cases studied (90%). The prevalence of education as a motive for corporate action is surprising given the possible availability of a diversity of drivers for what is in any case the voluntary exercise of corporate autonomy in dealing with social issues. This diversity becomes even more apparent when one considers the range of circumstances faced by the communities for whom companies take responsibility: problems of hunger, sickness, poverty and lack of opportunities as well as simply those arising out of a lack of education. Previous work on corporate social actions showed that education was not among the most-mentioned drivers motivating Brazilian businesses’ contributions. In these surveys, 19% of businesses claimed to be spurred by education. From 76% of the respondents motivated by humanitarian values, 54% devote themselves to 145
various programs of social assistance and 41% offer help with basic nutrition (IPEA, 2001).
7.1 Education: “changing everything so that everything can stay the same” Even when corporate social projects have started to bring about change, fundamental inequalities in the distribution of wealth, power and opportunity have tended to remain in place. This message—of an underlying continuity of inequality, despite corporate social action—represents the main finding to be read from the present data. It is tempting to suppose that companies’ rationale for singling out education as Brazil’s primary social deficit is ultimately self-interested: in the future companies envision a more highly skilled workforce better able to grow company profits in the context of a more harmonious society. The gloomy overall finding, however, should not blind us to the reality of some positive changes now taking place, highlighted in the sections 7.4 and 7.5. Moreover, in analysing the questionnaire results, we should not suppose that the preponderant number of programs targeting education all work or are structured in similar ways. Indeed, corporate educational projects may address a variety of goals—some reducing community illiteracy, some providing practical or technical training to company workforces, and some developing citizenship initiatives among workers and their families. This work has in effect had to compare apples and oranges in terms of characterising and evaluating diverse social projects. In chapter 3, subsection 3.2.2 some survey data were presented. Between 1993 and 1994, 314 elite respondents from four different sectors nominated educational improvement as the most important medium-term national goal (29.8% of corporate elites against 23% of all respondentcategory; Reis, 2000b). The same group of corporate elites gave least weight to the eradication on poverty and reduction of inequality - 9.6%, against an all-category respondents score of 17.6%. In the same survey, 15.9% of responses chose
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education and health as the highest-priority problem74, while the highest aggregate total of 17.5% went to controlling inflation, which was rampant during the time of that survey. Reis explains that priority given to education (15.9%) reflects the belief that opportunities for social mobility arise through school education. This belief also seemed to emerge from Brazil’s national gambit that industrialization would create a new class of social occupation to be filled by future generations of Brazilians. The rising social mobility of these professionals was imagined not to come at the expense of other social classes or more basic industries. In sum, the elites believe in the possibility of a better life for the poor without inflicting any penalties on the non-poor (Reis, 2000b: 147).
My interviews in 2002 with 22 corporate professionals yielded education as the most important social problem in 36% of the answers (8 out of 22). Of companies’ corporate actions, 20 out of the piloted by these 22 respondents invest in some form of educational programme. While respondents’ stress on education is unambiguous, it is less clear whether their responses have been shaped by the priorities of Brazil’s leading business associations. The Instituto Ethos (1999) published a guide on possible actions corporations could take to shore up the school sector, which undeniably has had an impact on national CSR provision; however, it falls beyond the scope of this work to seek to establish the extent of the Instituto’s influence. All the same, Cappellin, Giuliani et al. (2002) have presented evidence suggesting that associations of business networks play a highly significant role mediating between the interests of government and corporations, and that one aspect of this mediation is to shape businesses’ CSR programmes. While for Cappellin, Giuliani et al. (2002), business associations are instrumental in selling business’s agenda to what is now a more democratic administration, it is possible that in the case of CSR, influence works the other way round, meaning that to a large extent Instituto Ethos informs company representatives’ conception of national social priorities. My own study was clear that CSR professionals were well-acquainted with a range of business’s civil society partners. The total number of corporate managers answering positively when asked if they knew of Instituto Ethos was the same as the
74
Survey responses were not further broken down within this parameter among sections of elite groups. 17.5% of all responses thought inflation had to be tamed before any other social improvement was feasible.
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number affirming an acquaintance with Comunidade Solidária, the nationwide NGO which helps out with education in more remote areas of the country. However, familiarity with Comunidade Solidária and its role in Brazilian education does not necessarily translate to business participation in its educational projects. Some corporations prefer to develop their own programmes or to develop educational projects in partnership with other institutions – either NGOs or public schools. Five out of 22 companies develop their own projects in-house, while the remainder adopt actions in partnership, or prefer to transfer resources while allowing third parties to make their own decisions on how best to use them (see Appendix III – Table 8.1). No matter which format of CSR governance companies adopt (Husted, 2002), the companies analysed seemed in general to lack a structured way of assessing CSR results. Not one corporate representative in conversation raised the issue of external performance monitoring. More recently, the principles of the Global Compact and the Millennium Goals, which could possible provide the basis of evaluative norms, have been written into the Instituto Ethos agenda (Ethos, 2002c). Yet it is not easy to make out the influence of these UN-mandated goals in corporations’ actions and schemes for action as these were current at the time of data collection in 2002.
7.2 Poverty and Inequality as Income Deprivation Other drivers of corporate action besides education include workers’ and local communities’ general employability, health, capacity for income generation, culture and living environment. These parameters of community entitlement are perceived by corporate representatives as being blighted by such major social problems as social inequality, inequality in income distribution and health, corruption, hunger, a lack of political will, urban violence and racial discrimination. It is thus possible to make out a dominant or generalised picture of how these CSR professionals see Brazil. The country is poor and unequal, afflicted by deprivation and low income; these problems, however, may be successfully addressed as universal education brings people better economic opportunities, making them more marketable as providers of skilled labour. Many CSR initiatives follow through this line of argument in attempting to make company dependents (employees and community members) more employable. 148
Here I want to quote the words of one respondent, which goes well beyond the above characterisation: “The priority for Latin American development is to [ease] social inequality through investing in education. This is the priority: you start acting in a certain way and inequality will go down, you give people better options so that they join the job market at a higher level, so their level of income in necessarily higher.”
75
Most of these actions are spurred by companies’ goodwill and emerge out of companies’ own diagnosis of community problems. Criticism of voluntary corporate contributions to society needs to be very careful since it risks discouraging corporations from undertaking any action whatsoever. Some authors argue that companies’ abstention from social intervention would bring about social change faster as companies’ responsibility devolved to government and to legitimate social movements. This analysis rejects that view. The mediation of governmental and broadly societal priorities in tackling poverty through corporate action represents a realistic way of uniting interests which at first glance appear irreconcilable: corporate survival and success on the one hand, and poverty and inequality reduction on the other. In this sense, similar constraints apply to CSR external assessment, which must be conducted sensitively or risk driving corporations to suspend their efforts of pursuing social improvement. In accordance with previous survey findings (Reis, 1999), corporate respondents prioritize education; in practice, however, programmes find it difficult to have much of an impact on illiteracy as they are not guided by a design architecture capable of diagnosing problems and measuring the effects of their own input. One possible measure, for example, might be provided by a record of the starting and subsequent monthly salaries of the attendees of company educational programs, yet no such records are routinely kept, nor do educational programs typically pursue any kind of follow-up with their students. This makes it very difficult to conclude that any particular educational program is reaching its goal76. 75
From the original: “Porque o, a prioridade pro América Latina se desenvolver e melhorar a desigualdade social é investimento na Educação. Então é a questão de prioridade, você começa atuando aí e você vai minimizar, você vai capacitar melhor as pessoas de forma que elas possam ingressar melhor no campo de trabalho e forçosamente você vai estar melhorando a fonte de renda dela.” 76
Recent data, moreover, reveals that the unemployment rate in Brazil is lower amongst those who spent no more than four years in formal education than for those who studied for longer periods (Chahad and Pichetti, 2002).
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The currently popular argument, that lack of education is responsible for the country’s high rate of unemployment, has the effect on imposing often intolerable burdens on individuals. The advocates of education counsel the illiterate unemployed poor to pursue primary education. If elementary school-graduates are still unemployed, they are shown the way to secondary school, and then on to university. In turn, unemployed graduates take up graduate studies. The advice has the weakness of relying on the agency of isolated individuals to overcome structural problems; when individuals are unable to do so, they are liable only to succumb of feelings of hopelessness and alienation.
7.3 Corporations’ Social Contribution Every interviewee insisted that corporations can help in solving social problems, although contributions come in varied forms. The forms of corporate social contribution vary in terms of governance structure, stated priorities and the identity of deprived groups to whom actions are addressed. Another factor complicating the characterisation of business’s social contribution is the lack of some records of external and even internal CSR assessment, which raise the possibility of a divergence between programs’ stated aims and actual effects.
This lack of record-keeping for CSR is disquieting. Companies rarely fail to audit - to report on and evaluate - core business activities. The paucity of records can make it difficult to judge the sincerity of CSR professionals in outlining their plans; equally, companies may promise a course of action which they then implement but fail to measure transparently. None of this suggests that companies’ central profitgenerating function is in itself any impediment to their suitability to undertake social relief through CSR (Agle, Mitchell and Sonnenfeld, 1999). Rather, it underscores the desirability of companies taking their CSR efforts as seriously as they take delivering commercially for owners.
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7.4 An Alternative Assessment: CSR and Sen’s Instrumental Freedoms In defining poverty as a lack of opportunities and deprivation, Sen’s work on poverty and inequality represents a potential turning point in studies of this subject. This study derives an admittedly oversimplified basis for the evaluation of corporate social actions from Sen’s ‘Instrumental Freedoms’ (1999). By translating Sen’s vision of five central fields in which humans can be nurtured or repressed into parameters for corporate social actions, this and subsequent sections elaborate five criteria for assessing actions: 1) their facilitation of political representation (PR) through companies encouraging local communities to speak out their needs and to have their voices heard; 2) their promotion of economic wellbeing through a direct offer of funds or resources (DF) to local associations and/or NGOs; 3) their provision of education and/or health (EH) as factors empowering communities’ future choices; 4) their promotion of transparency (T) in making corporate decision procedures open to public knowledge; and finally 5) the provision of safety nets (SN) offering social insurance in the event of such crises as famine or any degree of deeper deprivation.
Results presented in section 6.5.2, chapter 6, demonstrate two of the companies under review providing for each of these five instrumental freedoms in one form or another through their social actions. The evaluative model for corporate action presented here respects corporations’ autonomy in proposing actions relevant to their analysis of local community needs. Nevertheless, with this degree of contextual sensitivity built into the model, the framework sets out to assess actions’ levels of efficiency given that, by consensus, poverty and inequality top the agenda for CSR in Brazil. When 20 out of 22 companies have projects addressing issues of education and/or health (EH), we can say that many constraints on this area of potential human flourishing have been lifted through the exercise of CSR in Brazil. However, the impediments on the other four of the five other major areas of entitlement would appear to have gone unaddressed. If these areas are to be effectively targeted, some sort of framework for corporate assessment, internal and external, is essential for those cases in which meeting defined goals forms part of corporate social strategy. 151
It becomes very tempting to state that no corporation has been aiming at a visible effective way of supporting social embetterment through the visibility of a local community which could show a significant HDI rise. Despite the fact that the above statement might be true, corporations have given some effort to social improvement and I take the risk of singling out two particular cases. Before the next section some words must be said on the limitation of this Instrumental Freedoms approach to CSR. Mainly to be said is that this is the assessment suggested and applied to one single aspect of CSR intending to social projects addressing people beyond corporate walls. There is much more about CSR than what is here being looked at which could include corporate main business, supply chain, employee benefits and many others, but it is out the scope of this thesis77.
7.5 The Two Best Social Performers: McDonald’s and Telefónica The list of companies studied for this work is given in chapter 4. More detailed information specifying corporate social performance on a case-by-case basis is appended to certain codes designating individual companies (and company CSR performances). This encryption safeguards the confidentiality of corporate data as well as preventing any invidious comparison between better and worse corporate performers. Now it is time to disclose the best performers in terms of the assessment applied, taking into account the limitations of the present work when looking at actions directed to people outside corporate walls and the proposed adaptation of Sen´s IF to CSR. More details of this assessment is shown in chapter 6 – CSR actions, particularly section 6.5.2
Scoring the highest points given within each item – PR, DF, EH, T and SN – the non-corporate arms of the companies McDonald’s and Telefónica have been developing the most thoughtful, comprehensive and effective social actions according to my assessment. More fine-grained analysis now reveals how the corporate social 77
For a holistic approach the work of Elkington (1999) is an important reference.
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practices of these companies cover the five items of enabling human capabilities when I look at their social projects addressing individuals located beyond the corporate walls.
7.5.1 McDonald’s The largest American fast-food chain, McDonald’s, has integrated each of its outlets in Brazil into a publicity and recruiting network for volunteers to participate in a program of nursing home care for children and teenagers undergoing treatment for cancer. Having gathered data to which even the Ministry of Health has sought access, the Brazilian arm of the Ronald McDonald House Charity (Instituto Ronald McDonald) has provided support to about 80 institutions around the country. “[we have gathered] data that even the Ministry of Health haven’t got which we make available to them, [since] we work in partnership with INCA, the Cancer Research Institute. (…) Sometimes a child from Recife goes for treatment in Belo Horizonte, or a child from Acre goes to Ribeirão Preto for cancer treatment, because they don’t know that there’s an institution close by, or because their family is from another city and they want to be close to the family, or possibly their doctor is doing a medical residence in another hospital some 3,000Km away and recommends that they follow him. But the flow of people causes social problems, because once a child leaves its home in order be treated, she leaves her family behind, and more often than not, when she is back six months or a year . . . later with her mother who was keeping her company, her family has fallen apart; her father has taken up with another woman. Sometimes even her mother would leave [her child’s] treatment half way through to get back home. We are looking for a way to cut down on this movement of people so as to reduce the social problems associated with it78”
78
From the original: “Os dados que até o próprio Ministério da Saúde não tem e que a gente acaba fornecendo, trabalhando em parceria porque a gente trabalha muito junto com o INCA que é o Instituto Nacional do Câncer. Então a gente pega muita informação do INCA, absolutamente necessária, fundamental para o trabalho da gente, como a gente devolve umas informações que são muito importantes também, porque da migração no Brasil? Porque uma criança às vezes de Recife vai se tratar em Belo Horizonte, uma criança do Acre vai se tratar em Ribeirão Preto e vice-versa, as vezes é porque elas não sabem que tem uma instituição na cidade delas, as vezes é porque a família dela é de uma outra cidade e ela prefere ficar junto da família, as vezes é porque o medico que está cuidando dela fez residência ha três mil Km. dali e mandou a criança se tratar no hospital onde ele fez residência. Então você tem um fluxo migratório de crianças que é um problema, que causa um problema social porque quando a criança deixa a casa para fazer o tratamento, deixa pra trás o resto da família, o pai e os outros filhos, então muitas vezes você tem uma serie de problemas de desestruturação da família ali porque a criança fica fora seis meses, um ano, dois anos para fazer o tratamento e a mãe junto. Então às vezes você tem problema de crianças que são abandonadas no meio do caminho, família que se desestrutura, a mãe quando volta em casa encontra o pai casado com outra mulher; então uma serie de problemas que na medida do possível que a gente consiga diminuir esse fluxo migratório a gente consegue diminuir esses problemas sociais também.”
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The company’s campaign McDia Feliz supports a major project called The Home Far From Home, or A Casa Longe de Casa in Portuguese, enabling families to stay together by expediting children’s care and by prioritising the unity of those families whose children are in medical distress.
Achieving high scores for every indicator explained on pages 136 to 138, McDonald’s results might appear surprising when set alongside its corporate behaviour in other aspects of CSR around the world. In response, I would like to stress that the adaptation of Sen’s model proposed here is not intended to be generalised into a description of the totality of a company’s actions, whether in the sphere of CSR or not. Other surveys have arrived at contrasting estimates of McDonald’s and it is clear that the company’s image is controversial even in Brazil. But it is true that in the country, McDonald’s has been accepted as one of the very best corporate employers (Exame, 1999, 2000a, 2001a, 2002a, 2003a; Collier and Wanderley, 2000) and acclaimed as exemplary in terms of its CSR projects (EXAME, 2000b, 2001b, 2002b, 2003b). On the other hand, the nature of McDonald’s business as a fast food chain has come under attack by counter-globalisation groups, so it is only realistic to suppose that the company would seek to disarm criticism by puttig extra effort into its CSR.
7.5.2 Telefónica Telefónica is one of those companies whose CSR structure follows a division between the company proper and a bespoke Foundation established for charitable purposes. Telefónica the company in Brazil underwrites cultural projects, bringing greater visibility to the core business, while the Telefónica Foundation runs projects addressing developmental issues more autonomously. The programme Pro-Direito employs a unique approach in supporting selected projects proposed by local councils for safeguarding the civil and human rights of children and teenagers. The following excerpt from my interview with a Telefonica CSR representative will serve to outline the programme’s methodology.
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“We don’t call it a project so much as a programme involving various projects. Sorry? It strengthens the Councils for the Rights of Children and Teenagers, which should exist at a municipal level, as well as at state and federal levels. They should? Yes, but it does not always work out that way, as councils have to be created by municipal edict, and then governed by the municipality. The council is, as it were, set up to put in place policies on the issues affecting children and teenagers in that area and are composed of people nominated from the public sphere, from local government, and in this case, elected out of the ranks of civil society in a half-to-half share (of public officials and civilians). Organisations working with children and teenagers emerge out of civil society and put themselves up as candidates for election. This [the council] represents an important mechanism of social participation in the running of child and youth-related issues, partly because it is semi-independent of the Town Hall, partly because it works through the Town Hall but can make decisions by itself. The legislation has already been put in place for these councils; in some places, they have got off the ground, while in others they haven’t, for lack of skilled people, lack of understanding, 79
lack of political will and lack of money. ”
Pro-Direito, as was explained to me, faces difficulties in having to convince public authorities to cooperate with relief efforts directed by private funding. “There are a whole heap of difficulties. This is why we decided to develop a programme that would go through these councils, to strengthen them as an arm of public policy, which was an operation in which I brought to bear my previous professional experience in the Abrinq Foundation.
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From the original: “Então, você tem várias coisas concorrendo para formatar um programa, nós chamamos isso não de um projeto mas de um programa que abriga projetos dentro dele. (...) (o lado da fita acaba e continuamos logo após a troca) Desculpe. O reforço aos Conselhos dos Direitos da Criança e do Adolescente e a própria ação sobre a questão da qualidade das crianças e dos adolescentes. Os Conselhos dos Direitos da Criança e do Adolescente são criados, pelo Estatuto da Criança e do Adolescente, pelo ECA, existe um a nível Federal, um em cada Estado e deve existir um em cada Município. Deve? Deve mas não existe em todos porque eles têm que ser criados por Lei Municipal, nem todos os municípios têm. E cada Município, quando cria o seu Conselho, deve também criar o Fundo da Criança e do Adolescente que é gerido por esse Conselho. Esse Conselho tem como, como missão definir a política de atendimento de Crianças e Jovens naquela cidade e ele é composto por pessoas indicadas pelo Poder Publico, pela Prefeitura, no caso, e eleitas pela sociedade civil, meio a meio. Sociedade civil são as organizações que trabalham com crianças e jovens que se candidatam e tal e elegem. Então é um mecanismo importante de participação da sociedade na gestão da causa da criança e do adolescente, porque ele é semi-independente da Prefeitura, semi porque ele é operado através da Prefeitura, a estrutura operacional é da Prefeitura mas o poder de decisão é independente. E desde que o Estatuto foi criado que esses Conselhos, em alguns lugares desenvolveram bem, em outros não, falta, falta capacitação das pessoas, falta entendimento, falta vontade política e falta dinheiro.”
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And there is another issue, which was the reaction I got when the programme was first proposed, companies do not like placing money with a council without knowing what it is going to be done with it. They are afraid that the money will be spent badly, put to the wrong use or not spent at all. On the other hand, the councils, for a long time now, have had a negative reaction to the idea of a company saying, “Look, I will make this amount of money available to fund project x, or creche y, or shelter z, or whatever. Because to the councils, that ‘s just 80
disrespecting their autonomy, and the skills they already have…”
The willingness evinced by this project of Telefonica to devolve money to local communities with no strings attached means that, like the McDonald project described earlier, it fulfils all of the evaluative criteria for CSR derived from our adapted version of Sen’s IFs.
Conclusion This section answers in summary form the research questions posed by preceding chapters, while gesturing towards the contributions and limitations of the current work and suggesting pathways for future analysis.
Questions of poverty and inequality integrally impinge on the businesses of the 22 large corporations investigated in this thesis. CSR professionals occupying high positions in companies’ corporate hierarchy share in the diagnosis that education, social inequality, inequality of income distribution, ill-health and corruption constitute major social problems. On the other hand, in defining priorities for action, these same corporations tend to concentrate their social investments on education, employability, health and income generation. If one sets CSR professionals’ diagnosis of social 80
From the original: “E tem um monte de dificuldades. Por isso que nos resolvemos que nos íamos fazer um programa que passasse através desses Conselhos, para fortalecer esses Conselhos como um mecanismo de política pública que é enfim uma questão que eu trago da minha experiência na Fundação Abrinq. E aí tem uma outra questão que é, as empresas, e eu encontrei essa mesma reação aqui quando eu propus isso inicialmente, as empresas não gostam de pegar o dinheiro e colocar num fundo dirigido por um Conselho, sem saber o que vai ser feito com esse dinheiro. Elas têm a impressão de que, e não é totalmente infundada, de que esse dinheiro pode ser mal aplicado, pode não ser aplicado então não é bom por nosso dinheiro lá, sem saber o que vai ser feito. Por outro lado, os Conselhos, ao longo desses anos, passaram a reagir à idéia de uma empresa que diz: - Olha, eu vou por tanto dinheiro para financiar o projeto tal, a creche tal, o abrigo tal, a escola tal, o que seja. Porque os Conselhos consideravam que isso era uma, isso era desrespeitar a sua autonomia, a sua competência, porque...”
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needs and programmed corporate social actions alongside the picture of Brazil presented by social inequality metrics, one realizes the need for a more satisfactorily inclusive understanding of poverty and inequality. Such an understanding would need to go beyond income deprivation only, to take in other parameters of deprivation along the lines formulated by Sen. The Human Development Index (HDI) and Sen’s capability approach represent alternative, more complex frameworks for the analysis of poverty and poverty reduction. This thesis rests on the assumption that such frameworks offer a better basis for the formulation of CSR schemes and priorities than either corporate representatives’ subjective impressions or traditional measurements of income.81
Most of these 22 corporations can plausibly claim to care about social problems such as education, employability, health, and income generation in their relationship with communities’ debilitating poverty and unequal share of national resources. Yet, in terms of the analysis derived from Sen employed here, only two of the corporations can be said to be acting in a fully socially responsible manner, by devising schemes of action and participation fulfilling each of the five criteria of Sen’s instrumental freedom: Political Representation (PR), Direct Funding (DF), Education and Health (EH), Transparency (T) and the provision of a Safety Net (SN). This work’s adaptation of Sen’s baseline terms is intended to set appropriate but exacting benchmarks for corporate action in effecting improvements to the lives of their ward communities. Items are defined in such a way that it is impossible for companies cynically to tick them off against a checklist through minimal or opportunistic actions. The only way for companies to offer political representation, for example, is to put in the effort of developing communicative interfaces with communities, then acting on representations thereby received.
Many effective instances of corporate social remediation could be offered as benchmarks of responsibility in Sen’s terms. McDonald’s ‘McDia Feliz’ campaign supports a major project run by the Instituto Ronald McDonald which merits the scrutiny of anyone interested in the reduction of poverty and inequality through CSR. 81
A conference paper presented in seminar format explores this approach in more detail. Wanderley (2001) is available electronically at http://www.st-edmunds.cam.ac.uk/vhi/sen/papers/wanderle.pdf (in 18/03/2004). The definition of poverty is furthermore relevant to poverty eradication strategies, as argued by Laderchi, Saith and Sterwart (2003).
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Governed by a hybrid form, according to Husted’s categorization (2002), this social initiative is neither completely in-house nor outsourced but developed in partnership with various local and not-for-profit bodies.
An initiative of Telefónica’s also meets Sen’s five stipulations for instrumental freedom as I have adapted them for CSR. These projects are outsourced in the best sense of the word. The company, again through its not-for-profit arm, solicits proposals from local councils for the welfare of children and teenagers, funding the ‘best of breed’ and publicizing them as models of social provision. The process hinges upon the exercise of political representation (PR), offers direct funding (DF), addresses areas of welfare and citizenship touching on education (EH), and making available to the public the conditions by which monies are awarded in a transparent manner (T). The projects themselves develop a social safety net (SN) for young criminal offenders in order to provide opportunities for their reintegration into society.
The corporate actions described in this thesis are (1) motivated, (2) projected, (3) targeted and (4) communicated by practicing companies in a number of ways. Within the first parameter, they may be seen by CSR professionals as a business or marketing opportunity or as a precondition of business survival. The alternative would seem to be for businesses to conceive their charitable donations as inessential acts of munificence superfluous to core activities (more details of representatives’ stated motivations are given in section 5.2, Chapter 5).
The thesis also framed other questions such as: what are the major social problems in the eyes of these CSR professionals? (5). How and why should corporations help in solving social problems, in their personal views? (6) What is the background of managers in this new job category, in terms of their educational and professional experience? (7). Education is the dominant subject addressed by CSR actions, but does not figure as the dominant answer when the question of the country’s most pressing social problem is put to a representative sample of all Brazilians. One of my respondents raised a welcome and, it may be thought, dissonant voice:
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“I used to believe in education. All my life I believed that education would solve every problem, but now I do not believe that education will be of much help You say education by itself does not seem… No, it doesn’t because you see nowadays that it’s worthless if you can’t work… Yes, but on the other hand, most people say that you can’t work unless you’ve got an education, and if you haven’t finished primary and secondary school you stay at home thinking that this is the problem… I do not know, look, I’m just giving my personal view, ok? So if I can speak for myself. Go on.”82
This respondent proceeded to describe to me cases of well-qualified professionals, with international business experience, as well as graduates in different disciplines, who are out of work without any prospects of success or progression in the near future. It might take the dissemination of the report of similar experiences for Brazilians to change our mind and accept that social inclusion, justice and a more equal (or less unequal) society might represent universal social goods, rather than the dilution of the advantages held by the better-off classes at the moment. Furthermore, would a personal experience of unemployment have any influence on the choices projected by CSR professionals for their next actions?
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From the original: Eu sei, mas eu já acreditei que Educação, eu a vida inteira acreditei que Educação resolveria tudo, hoje eu não acredito que Educação resolva grande coisa. Ta, mas você me diz que a Educação como o que, por si nao parece ser... Nao, porque hoje você acaba vendo que nao adianta Educação se você nao tem onde trabalhar. Sim, mas ao mesmo tempo, o que eh o discurso dominante eh que a gente nao consegue trabalhar porque nao tem Educação, pelo menos para quem nao terminou primeiro grau, segundo grau, vão para casa achando que eh isso... Nao, sei, olha, eh pessoal, neh? Posso falar pessoalmente.. Por favor.”
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Contributions of this Thesis This work on CSR in Brazil has sought to offer a more in-depth picture of major corporations’ CSR projects through interviewing firms’ CSR professionals. It makes both empirical and theoretical contributions, even if it is not feasible to generalise results obtained over any more indicative or complete array of corporate instances. The data allows us to examine corporations’ activities, priorities and perceptions in dealing with CSR in cases where a state-of-the-art practice and response could be expected. On methodological questions, I treated an extensive list of publications in the CSR field as a form of input, effectively contextualising empirical findings and normative prescriptions in the business literature with material from other areas of knowledge. This contextual procedure used measures of social problems in Brazil and the perceptions of elites as a means of mutually illuminating each other. My dialogue between empirical data and theoretical reflection is intended to capture something of the diversity of ways of understanding and acting upon CSR in Brazil. My inclusion of historical background material also sought to suggest the symptomatic bind of poverty and inequality relief efforts (such as those of CSR) in the country, which have to struggle against a unique historical past of discrimination and the denial of civic rights to the poor. At the same time, these inevitable impediments to the reduction of deprivation in Brazil tend to be forgotten as soon as they are invoked in the national elite’s discussion of social imperatives. There are still ways for practising CSR companies to avoid what seems a culture of domination or condescension as in the two highlighted cases which successfully fit the adapted model of Sen’s Instrumental Freedoms to CSR. The identification of such instances represents a theoretical contribution of this thesis, together with the results describing outsourcing CSR activities as the prevalent trend when addressing communities external to large corporations’ core activities. This practice of outsourcing in fact denotes companies’ participation in partnerships which they may fund rather than seek to direct. Evaluation of such partnerships and publicprivate initiatives would need to determine which aspects of IFs in the CSR context they succeed in addressing. When Amartya Sen proposes his Instrumental 160
Freedoms as his criteria for the effectiveness of social effort, he is envisaging the enablement of a far wider range of human activities and forms of flourishing than could be signalled merely by boosting the income of those living under poverty. Supposing that it is only inequality of income on this very crude, and crudely measured, scale which needs rectifying in Brazilian society is to remain complicit in the country’s foundation myth, a cover, in effect, for Brazil’s typically unequal and authoritarian culture. In summary, the principal theoretical contribution of this thesis is to suggest the feasibility of a convergence between empirical data describing CSR projects and normative or diagnostic CSR frameworks, which have more usually been used in the design or projection of model schemes. The CSR frameworks suggested in this research were largely generated through references taken from other fields of knowledge and academic disciplines than management literature – centrally, development economics (Sen, 1999) and political science (Reis, 1999, 2000a, 2000b; DeSwaan, Manor et al, 2000). They also draw on current management models of CSR governance choices (Husted, 2002) in seeking to assess the potentialities of CSR actions in Brazil. The adaptation of Sen’s IFs to CSR highlights the actual possibility of prioritising and fostering the enhancement of people’s choices through CSR programs. This form of choice enhancement – which goes beyond simply providing minimal levels of schooling and healthcare – will be central to any serious effort to reduce deprivation and stimulate individual flourishing. The framework elaborated in this work seeks to explain in detail what meaningful CSR actions can achieve, illustrating both theory and practice through existing projects. Applying Husted’s typology to projects’ modes of governance (2002), it was found that remedial efforts tended to be outsourced from businesses to specific CSR operations. Projects were run according to a devolved or funded management structure, rather than developed in-house by businesses or through hybrid companynon-company formats. In Husted’s terms, the nature of these CSR actions corresponded to the low specificity and low centrality categories in relation to the defining business activities of participating companies. My idea of focusing upon CSR professionals’ perceptions was inspired by Reis’s (1999) account of elite perceptions of poverty and inequality as formative in the defective or misconceived application of remedial projects. Reis’s study is in itself original in investigating the perceptions of those individuals involved with elaborating 161
CSR structures, rather than company policies, actions or formations themselves. This thesis’s primarily qualitative results complement surveys so far undertaken, particularly through offering more detail. All 22 CSR professionals interviewed (100%) believe that corporate contributions can benefit society. Representatives point to the lack of education, to social inequality and to unequal income distribution as the major social problems in Brazil (16 out of 22 mention at least one of these three items, 73%). For representatives, business opportunities or a perceived threat to business survival (or both simultaneously) principally motivate corporate involvement in CSR, according at least for 16 of our sample (73%). Considering CSR in Brazil empirically, as was this thesis’s aim, half of the group of companies surveyed have adopted clear targets and budgets for CSR (11 companies, 50%); 12 companies have a work team of four or more employees dedicated to the issue (54%), and 14 out of 22 corporate CSR structures are at least fairly developed (63%), although only one corporation had completed a full-dress social audit at the time of data collection, with two others on the verge of doing so and about half of the group applying some form of internal CSR assessment. To characterise these CSR actions, 20 out of 22 (90%) corporations address issues of education through their major social projects, and all (100%) envisage the local community or even society in general as the beneficiaries of the positive effect of their programming. Amongst those cases in which CSR is the outcome of planned and structured processes, 11 out of 22 (50% or half of the group of companies) expose their decision processes, at least to some extent, to public scrutiny (3 cases are clearly transparent throughout all stages of planning and implementation).
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Limitations Many other corporate actions enfranchise people according to the IFs metrics in some of the five items, and all deserve recognition for having made a good start exactly the claim advanced by companies for the state of many of their CSR projects - “we have just started”. The embryonic state of CSR provision is Brazil both offers opportunities and imposes limitations on the current study. In the first sense, it allows this work potentially to play some part in shaping corporate representatives’ conception of the criteria which might govern their CSR designs. More negatively, this work’s research suffers from the limited availability of CSR project data, which for the sake of an informative comparison, restricted the number of projects from each company that could be analysed to three. A larger sample might have brought to light other effective instances of action comparable to the McDonald’s and Telefónica projects. Even the restriction of companies studied to a statistical universe of 22 may be thought to crimp the scope of any consideration of CSR in Brazil.
It is possible to enter another caveat concerning the nature of what is measured by the model. The IFs framework for CSR, supplemented by internal data, assesses the potentiality of corporate action, rather than its effectiveness in real terms, which are both necessarily captured by more specific measurements. Neither does the framework take account of quantitative measures, such as the amount of cash sunk into a project or its measurable outcomes in terms of throughput, productivity or financial benefit. Nor does it not discriminate between big and small or local and national schemes. One of the reasons for proposing the current framework concerns the necessarily highly subjective interpretation elicited by incomplete data in the absence of a systematic overview of corporate social action. This situation, however, seemed to invite a primarily qualitative and normative analysis, concerned to characterise corporate actions according to their fulfilment of regulative criteria.
Questionnaire data was collected in 2002 before the campaign for the presidential elections got fully underway. This suggests that companies’ CSR actions and their professionals’ perceptions were not shaped by the political agenda of the 163
victorious candidate, Luis Inácio Lula da Silva, although the same features of the zeitgeist that precipitated his election may also have informed companies’ thinking. Since the start of 2003, Brazil has been plunged into a new social scenario marked by the Zero Hunger campaign and more recently corruption scandals, drawing ever greater national and international attention to problems of inequality and misallocation.
Suggestions for Further Studies This work could be extended (if not reconceived) in the following directions. My premise of a connection between perceptions of poverty and subsequent corporate actions, if accepted, could be further explored through qualitative investigation of the attitudes, priorities and procedures of the business world.
This investigation, rather than proceeding through interviews, could convene CSR forums for professionals get together to share ideas; possibly a small number of companies could pool examples of best practice or establish collective norms and procedures of assessment in implementing and monitoring social actions.
Secondly, research could consider the mushrooming of corporate institutes and charitable foundations in Brazil over the last five years, examining the new wave of social projects, and the new forms of expertises and issues of corporate governance these inevitably raise. A digest of information on these bodies and varied governance structures would be of value to companies newly setting out CSR policies, or even to companies with some CSR experience making the strategic decision of whether or not to create their own not-for-profit arm.
For the near future, a longitudinal work with these companies or others of similar size could be designed to follow the development of companies’ CSR programs, and their achievements in the face of the challenges posed by the supposedly intractable nature of the social realities of Brazil. There can be no doubt that companies are contributing in enduring and increasingly important ways to the remoulding of Brazil, although the shape of the society which their efforts are 164
transforming remains in question. This relation between capitalism itself as the mechanism for social redistribution and the explicit ‘social responsibility’ efforts of capitalist companies is a subject of the utmost interest, deserving sustained attention.
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APPENDIX I.
Questionnaire and Data Collection Method
II.
CSR Professionals – educational background, previous work experience and job titles 1 Number of years in the company 2 Professional history
3 University background 4 Job titles 5 Functional history of job positions
III.
CSR actions and Levels of Centrality/Specificity
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I Questionnaire and Data Collection Method The semi-structured interview undertaken face-to-face with company CSR managers took its cue from a questionnaire with a format of 14 open questions divided into three sections: 1. Identification of the respondent; 2. CSR actions; and 3. the CSR professional’s perception of the major social problems in Brazil.
Identification Name: Position (Job Title): What is the department called?
What is your background – before getting here, what did you usually do? Functional history of the actual position – was there some critical event which made the corporation create it? When did the position start? How is work organized – what is the management structure, how many people work with you, have you got your own targets and budgets?
E-mail: Telephone: Mail Address:
Opening up CSR actions Corporate SR Actions What are the major social projects undertaken by the corporation today? What was the decision-making process behind these projects? i.e. why were they chosen and not others?
To whom are these projects directed (check more than one if needed)? Employees __
Employees’ families ___
Local communities ___
Society as a whole (open) ___ Consumers of company products ___ Society (environmental projects) ___
Suppliers ____
Other ____
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- To be answered only for projects addressing local communities How were projects chosen as suitable for this/these particular community(ies) (and why?) Who are in charge of implementation? What kinds of results are expected and how are they evaluated?
Is there a CSR policy? Why does this corporation take CSR seriously? Does this corporation take part in any CSR association (or have you heard of the following asssociations)? Why? Ethos Institute ___
GIFE ____
FIDES ____
IBASE ____
Comunidade Solidaria ____ WBCSD ____ The Conference Board ____ Other ___________________________________________________
Perceptions of Social Problems Social Issues in Brazil – representatives’ Personal perspective How do you see major Brazilian social problems? Do you believe that corporations could help to solve or alleviate these problems? How can corporations contribute? Why should corporations contribute? Finally, how do you see this corporation dealing with Brazilian social problems?
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The first set of enquiries put to corporate professionals dealing with CSR issues during semi-structured questionnaire interviews were designed to relax the respondent before primary data collection. Before switching on the small taperecorder, I introduced the topic of the research, asked if the interviewee would like to ask any question before we started and requested permission to record the interview. Apart from two cases this was readily granted, with corporate respondents seeming very familiar with having their thoughts put on record. Tape-recording was denied in the single stance of a person who had just started in a new position, who cited company rules; nonetheless, the interview proceeded without back-up. In a second case, the interviewee was not the company’s CSR professional, but had been referred to me by that person; this professional declined to give information to the extent that I decided to stop the interview. These two incidents are not included in the data analysis since (1) its use was vetoed, (2) detailed data was not forthcoming, (3) the professional positioning question was new for the job; and (4) proposed CSR projects for the relevant companies were still at a very early stage of development. Setting these two interviews aside, we are left with 22 out of 24 of the original list. The questionnaire was divided into three parts. The first part aimed at establishing a friendly tone whilst ascertaining the personal identities and career paths of large corporations Brazilian CSR representatives. Asking how long professionals have been with the company gives some indication of how new the position of CSR managers are, whether these are filled internally or externally, and by younger or experienced executives. The first question relating to background was: before working for the present company, what did you used to do? The interviewee would start to talk about her or himself, his or her previous job, company, location, studies, etc.; which led naturally to further enquiries concerning (1) the
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functional history of the job position and its department and (2) the organisation of work in the sense of how many people work with him/her according to what targets and with what budgets. In the course of these preliminary remarks, three further questions were also relatively easy to ask, concerning: (3) their length of time with the present corporation; (4) career history; and (5) university background - as all had attended high education. On one further point before presenting the data, it is worth mentioning that interviews were arranged at relatively short notice by phone a week before personal contact took place. Initial conversations were followed up by e-mail messages. The recommendation of the CAPES Foundation, the funding body of this research, that contact should be established with companies six months prior to the data collection, in practice results in a number of lost emails and telephone calls and failures to get through the relevant CSR professional. Once representatives had been informed in advance, however, of the main lines of interview enquiry and the future uses to which information would be put, it became relatively unproblematic to arrange an interview. Anyway, some interviews took longer – on some cases more than a month – to set up. On two occasions, company structure frustrated prompt contact with CSR managers, on two others, their schedules made interviews almost impossible, and in a final case, the professional in charge was on holiday without a substitute or stopgap. Apart form these five cases, out of 22, the remaining 17 meetings were straightfowardly put in place. As mentioned, we have 22 interviews to be analysed in this thesis. I made initial contact with the companies selected by phone, followed up by an email with a letter attachment. Both e-mail messages were sent in Portuguese.
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The email is translated below. Dear Mr Smith
I got your e-mail address from Ms Mary Thompson this morning, and I am writing to you on her advice. I am a doctoral student in England doing a research project on Corporate Social Responsibility in Brazil. I would like to ask for an appointment with you since interviews with corporate representatives of the largest companies in Brazil are central to my trying to obtain a better understanding of the social actions of [your corporation]. The information I hope to get from you will complement data already available through your company’s website and press material. The interview should take between 30 to 50 minutes, and will touch on three items areas: 1. your professional background and career history as CSR officer; 2. the CSR actions undertaken by [corporation]; and 3. your personal view of social issues in Brazil.
I am also attaching a single side page description of the research project being undertaken. I will also provide any further information you might need. Best regards,
Lilian S. Outtes Wanderley E-mail:
[email protected] tel.: 011 9233-5513
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The attachment runs: São Paulo, 11th March 2002
Mr. Joseph Smith [Job Title] [Corporation] Tel.: 00 55 11 1234-5678 E-mail:
[email protected]
Dear Mr. Joseph Smith
As a PhD student at Cambridge University, England, I am undertaking research on Corporate Social Responsibility (CSR) in Brazil, looking at the perceptions of social need formed by the largest corporations operating in our country and their actions in relieving it. My research aims to examine the reality of corporations’ beliefs and actions with regard to social issues.
The final results of this research will be presented as a doctoral thesis in Management Studies to be concluded in 2003. This work has been developed under the supervision of Dr Jane Collier1 and Dr John Roberts2.
I would very much like to meet you for a personal interview during which I would like to find out more about [Company]’s practices in the CSR field and to listen to your opinions concerning CSR in Brazil, which has only recently become a subject of academic interest and remains understudied.
Thank you very much.
Yours faithfully, Lilian S. Outtes Wanderley3 PhD Candidate Judge Institute of Management Studies University of Cambridge Trumpington Street CB2 1AG Cambridge UK 1
http://www.jims.cam.ac.uk/people/faculty/jcollier.html http://www.jims.cam.ac.uk/research/ccla/ccla_f.html 3 Bolsista CAPES/MEC – Brasília/DF e Professora Assistente no DCA/UFPE. 2
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II CSR Professionals – educational background, previous work experience and job titles
1 Number of years in the company
Of the group of 22 large companies, half of their CSR managers have been working for the corporation in question for at least 10 years. Of the other half, those with fewer than 10 years’ experience in the company, only four out of eleven professionals have been with the company for a period of two years or shorter. Of these ‘newbies’, three used to work indirectly for the present company through a communication or public relations agency and the fourth was hired from a competitor. Of the 50% of longer experience, five had been with the present corporations15 years or more. As illustration X shows, the group of employees looking after CSR actions in these 22 large companies are well-experienced professionals, well versed in the internal corporate processes of their organisation. Five have worked for the company 15 or more years (23%), six between 10 and 15 years (27%), four between five and 10 years (18%), three between two and less than five years (14%) and four only for less than two years (18%). Given that CSR represents a new specialization of function for multinational companies, the data suggests that the corporations studied have been more likely to promote professionals from within than to make external appointments. Jobholders’ length of tenure, moreover, suggests that corporations not only pay lip service to CSR but take it seriously in their actions and appointments. The realization that CSR professionals are managers with a deal of corporate experience under their belt 174
before they take on the job of CSR implementation and compliance raises the further question of their previous work experience and educational history.
2 Professional history
In cases where the jobholder is in their first position, or previously worked for private companies in a non-CSR sector, one may legitimately wonder about the previous experience required for working in CSR. Of the corporations listed, 11 out of 22 CSR professionals had previous experience in the private sector working for one or more companies (50%); three out of 22 had lectured in universities before joining corporations (13.5%); and another three held their first job in the present company (13.5%). These employees’ years of experience when added together came to 52, as two of them had been in the company for at least 20 years; two others had experience in the public sector (9.5%); while the remaining three did not reveal their previous non-company experience during the interview (13.5%). Even though the group as a whole brings to their jobs a strong professional private sector background, some have experience of the public sector – in two cases, 9.5% - or of the classroom, as university lecturers – three out of 22, 13.5%.
3 University background
Considering that every single professional interviewed attended university, the question here aimed to elicit his or her degree subject. The novelty of CSR means that professionals could not have studied issues around CSR formally in the context of their university degree. It was discovered that five
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studied Journalism (23%); four, Engineering (18%); three, Law (14%), two each Business Administration (9%), Communication (9%) and Marketing (9%); and one each Sociology (4.5%), Social Service (4.5%), Public Relations (4.5%) or Physical Education (4.5%). These backgrounds reveal a mix of explicit ‘communication’ disciplines, typically preparing the degree-holder for a career dealing with the press, with pressure groups and with stakeholders in general and managing corporate internal and external communication processes. Journalism, Communication, Marketing and Public Relations all relate to this presentational aspect, and 10 out of the 22 studied in these fields (46%); with more ‘traditional’ training like Engineering and Law counting for seven (32%) and other social sciences like Business Administration, Sociology and Social Service counting for four (18%), leaving Physical Education as the background of the remaining corporate CSR representative (4%).
4 Job titles
Very few job titles might be expected to state jobholders’ position as specifically ‘CSR manager or officer’, though it might be supposed that position names would be informative to some extent on the matter of corporate priorities, with representatives going under such appellations as ‘community’ relations or ‘environmental’ officer. The following list of job titles are based on executives’ business cards, though in some cases jobholders’ titles were different from the title given when we met in person or spoke over the phone. Titles may also reflect the importance which organisations give to communicating corporate actions to the public, to the government, and to other bodies. They also tend to designate the
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nature and rationale of companies’ social involvement – with some playing up the reputational value to the company of being seen to act as a responsible citizen. Job titles thus range from Communication Analyst to Taxes Incentive Coordinator, and from Human Resourcers Manager to Industrial Relations, as well as including terms more congruent our expectations like Sustainable Development Manager, CSR Manager, Social and Environmental Projects Coordinator, Communities Relations and others. In fact, three professionals are dubbed CSR Managers (14%), after which each executive has their own job title. A list follows:
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List of Job Titles given to professionals dealing with CSR issues as printed on their business cards 1. Administrative Director (of the corporate Foundation or Institute) 2. Communication Analyst 3. Communication Manager 4. Community Relations Manager 5. Corporate Communication Director 6. Corporate Issues 7. CSR Manager (three) 8. Executive Director (of the holding company) 9. General Coordinator (of the Foundation or Institute) 10. Human Resources Director 11. Human Resources Manager 12. Tax Incentives Coordinator 13. Industrial Unit Manager 14. Institutional Relations Director 15. Internal Consultant for Social and Cultural Projects 16. President (of the Foundation or Institute) 17. Public and Governmental Relations Assistant 18. Social and Environmental Projects Coordinator 19. Social Communication Director 20. Sustainable Development Manager
Beginning to analyse this highly suggestive body of data, we find four job titles explicitly referring to Communication, plus another four designating Institutional, Industrial or Public and Governmental Relations and Corporate Issues 8 (36%). Three titles distinguish executive positions within corporate Foundations or Institutes, making no mention of specific CSR duties (14%); two cite Human Resources or
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workforce management (9%), two specify functions relating to Social and Environmental Projects (9%), one Sustainable Development (4,5%), one Industrial Relations (4.5%), one the Community (4.5%), and one an Industrial Unit (4.5%). The three CSR Managers from the previous paragraph (14%) complete the total number of 22 (100%). By themselves, the titles suggest the variety of ways of conceptualizing CSR that exist among the major companies operating in Brazil. For some corporations, CSR falls under a rubric of community relations or human resource management, as they seek to ensure workers’ wellbeing and in many cases extend good health to their families and communities. Other corporations would seem to conceive of CSR more in public relations terms, whether or not they implement effective social programmes or not.
5 Functional history of job positions; rationales for CSR action
When looking at the job titles above, it becomes apparent that modes of CSR oversight can be distinct within individual organisations. It is even possible that some specific event might precipitate corporate involvement in CSR or the setting-up of designated officers. Most interviewees, however, denied that their corporation’s commitment to CSR was decisively influenced by any single event. The most usual answer given for the creation of specific CSR offices was that having an individual or team in charge of CSR helps to better coordinate actions, ensuring that projects evolve from philanthropic support to long-term, sustainable undertakings positively impacting on society in accordance with corporate objectives. Out of the 22 representatives interviewed, 10 answers insisted that the professionalization of CSR
179
as a business function aimed to guarantee efficiency and represented a sign of longterm corporate commitment (45.5%). Three respondents suggested that the application of corporate core competences would lead to programmes’ having a more lasting social impact than the mere distribution of charity (14%). In two cases, respondents reported pressure being applied from corporate headquarters in Europe (9%). Seven other different reasons for action were volunteered. In order, these attested to (1) the need to assist employees and local communities (4.5%); (2) the need to respond to employees’ own initiative in proposing a CSR committee (4.5%); (3) the need to respond to previous environmental incidents (4.5%); (4) the evolution of CSR policy independent of specific event drivers (4.5%); (5) the professionalization and rationalization of corporate roles in the course of building up a formerly family-run business (4.5%); (6) the desire of the Foundation to secure the well-being of its employees and their families (4.5%); and (7) the need to respond to AA1000 through a compliance mechanism.
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III CSR actions and Centrality/Specificity Levels The CSR projects analysed in section 6.5.1 of chapter 6, about choices of CSR governance are summarized in the table 8.1, having the codename given to each project in the first column, the levels of centrality and specificity in the middle and the choices of CSR governance adopted by the company in the fourth column. Table 8.1 - CSR actions/projects
CASE Number Codename
Centrality Specificity High
Med
Low
High
Med
Choice of CSR Governance
Low
1a – AES Creche
Low
Low
Outsourced
1b – AES Linha Verd
Low
Medium
Outsourced
1c – AES Circus
Low
Medium
Outsourced
2a – Ara Formar
Low
High
Outsourced
2b – Ara CcMãos
Low
Low
Outsourced
2c – Ara Araçá
Low
Low
Outsourced
3a – Ca da Paz
Low
Low
Outsourced
3b – Ca Vacina
Low
Low
Outsourced
3c – Ca CEFE
Low
Low
Outsourced
4a – Sen Marre
Low
Medium
In-House
4b – Sen MelhorI
Low
Low
In-House
4c – Sen Solidar
Low
Low
Hybrid
5a – DC Poema
Medium
Low
Outsourced
5b – DC Charity
Low
Low
Outsourced
6a – Emb BibVM
Low
High
Hybrid (Found)
6b – Emb Conv
Low
Low
Outsourced
6c – Emb Cid21
Low
Low
Outsourced
7a – Ipi N.Cri
Low
Low
Outsourced
7b - Ipi S.Mart
Low
Low
Outsourced
7c – Ipi ParcV
Low
Low
Outsourced
8a – Fi FipJo
High
Low
Hybrid
8b – Fi VcApi
Low
Low
Hybrid
8c – Fi Olhos
Low
Low
Hybrid
9a – Fo AlSol
Low
Low
Outsourced
9b – Fo Mova
Low
Low
Outsourced
9c – Fo Inform
Low
Low
Outsourced
181
10a – GM Vcriar
Low
Low
Outsourced
10b – GM QRPro
Low
Low
Outsourced
10c – GM AlSol
Low
Low
Outsourced
11a – Mc Feliz
Medium
Low
Hybrid
11b – Mc C.Ron
Low
Low
Hybrid
11c – Mc Vac
Low
Low
Outsourced
12a – Nes Nutrir
Medium
Low
In-House
12b – Nes Folia
Low
Low
In-House
12c – Nes AlSol
Low
Low
Outsourced
13a – PdA Mor
Low
Low
Outsourced
13b – PdA Ocul
Low
Low
Outsourced
13c – PdA Agas
Low
Low
Outsourced
14a – Per Atende
Low
Medium
In-House
15a – Sa EscF
Low
Low
In-House
15b – Sa Mus
Low
Low
In-House
15c – Sa PEsc
Low
Low
In-House
16a – Sh InJ
Low
Low
Hybrid
16b – Sh Saber
Low
Low
Hybrid
16c – Sh Arte
Low
Low
Hybrid
17a – SC Dial
High
Low
In-House
17b – SC AA1000
High
Low
In-House
17c – SC Varejo
High
Low
In-House
18a – Tel ERede
Medium
Medium
Hybrid (F)
18b – Tel ProD
Low
Low
Outsourced
18c – Tel Income
Low
Low
Outsourced
1919 Tx AlfSo
Low
Low
Outsourced
1919b Tx Recyc
Low
Low
Outsourced
19a – Uni Part
Low
Low
Outsourced
19b – Uni Social
Medium
Low
Hybrid
19c – Uni Conv
Low
Low
Outsourced
20a – Vr AtCid
Low
Low
Hybrid
20b – Vr Trans
Low
High
Hybrid
22a – Vw EdT
Low
Low
Outsourced
22b – Vw McD
Low
Low
Outsourced
22c – Vw Aga
Low
Low
Outsourced
a
Total = 22 x 3 – 5 = 61 social projects
182
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