Ethical Performance
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sleeping continent needs kick-start to get CSR going

October 2005

Inactivity is the norm in South America when it comes to corporate responsibility, says Oliver Balch


When you talk about corporate social responsibility in Europe, people think you're being oxymoronic. In South America, they just think you're moronic. The problem of kick-starting CSR in the region's 35 countries owes much to historical and cultural factors. With protected markets and state-led economies the norm until recently, public expectations of private business are limited to the traditional pursuits of profit-making and job creation. Tax contributions, regrettably, don't make it on to the list.

Structural barriers also pose a problem for CSR (abbreviated as 'RSE' in Spanish). The usual drivers - business climate (variable at best), civil society participation (nascent), public policies (often counteractive), environmental management (largely ignored), corporate governance (lacking transparency), media criticism (silent) and consumer pressure (absent) - all conspire to paint a grim picture for development of a responsible corporate culture.

That said, notable efforts are being made to promote awareness in the region. The Empresa network (www.empresa.org) is frequently cited by ethics advocates as a ray of hope. Of the national groups it represents, the star pupil is Brazil's Instituto Ethos (www.ethos.org.br), thanks mostly to the levels of business support it enjoys. From a pan-regional perspective, the Inter-American Development Bank also now runs a corporate responsibility programme, and last month held its third inter-American conference on CSR.

Yet information on the degree to which businesses are embracing the CSR challenge is hard to interpret. Recent figures for the Global Compact's membership show 441 South American companies, which represents just over a fifth of the total worldwide. Anecdotally, Brazil is reckoned to be the regional leader (it's also home to Natura, a South American version of The Body Shop), followed by Chile, Argentina and Mexico. The relative development of their economies and high levels of foreign investment certainly make them a better bet for CSR.

In terms of CSR practice, however, philanthropy remains very much the order of the day. 'Although there are some interesting signs of increasing interest, there is still much to do in promoting real implementation and in disseminating the social and economic benefits of CSR practices', a recent report by the Inter-American Development Bank concludes.

What to do then? Improve government capacity, enhance the investment climate and link CSR to specific country needs, the bank responds. Argentinian CSR specialist and journalist Florencia Lafuente advocates a stronger recipe: 'We need an Enron experience', she says, 'although I fear it would have to be much, much worse!'

Oliver Balch is a journalist based in Argentina who specializes in corporate responsibility


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