I- INTRODUCTION
The Brazilian business market is an area that is constantly evolving, and in recent years, driven by various international movements and agreements in favor of the environment and social issues, culminating in the emergence of the concept of sustainable development, the market has been improving by including issues related to socio-environmental policies in companies, such as the creation of Corporate Governance, sustainable investments, the BM&FBovespa Sustainability Index and corporate social responsibility.
The first social movements that raised awareness of the need to pay attention to the issue of sustainable development brought new attitudes to the market, leading it to consider changes in the way corporate business is managed and its strategies.
In 1987, the World Commission on Environment and Development (WCED) published an economic development plan, known as the Brundtland report, with sustainable development as one of its guiding principles and conceptualizing it as “development that satisfies present needs without compromising future generations.”[1] The challenge for companies is to implement sustainability.
The challenge of implementing sustainability for companies is an issue that is being overcome, both by the forms of sustainable finance on the market and by companies that already have a concrete social responsibility, in the growing awareness that it is important to pay attention to environmental degradation, by all individuals, public and private entities and organizations, in order to avoid it and find ways to prevent it.
II – SUSTAINABILITY POLICIES AND COMPANIES
In the business market it is already possible to see pressure from investors and stakeholders on the subject of sustainability. Faced with this scenario, companies are seeing the need for increased debate, approaches and changes based on sustainable policies in the management of their actions and businesses, and in their market strategies.
In the financial market, with the publication of National Monetary Council (CMN) Resolution 4.327[2] of April 25, 2014, there is already a standard dealing with socio-environmental policies, which sets out certain rules to be followed by financial institutions, both within the preventive plan, with risk management, and outside of it, with the management of liabilities that must be analyzed and measured. This instrument was the starting point for the creation of a standard prescribing social responsibility in the financial sector.
With the diffusion of thoughts in favor of social responsibility, inaugurated with the United Nations Global Compact[3], officially launched on July 26, 2000 at the UN office in New York, business society worldwide saw the need to create benchmarks, i.e. indicators, which could be a point of reference for socially and environmentally responsible investments.
The ongoing search for companies to be involved in sustainable development policies has shown the importance of creating indices that measure the degree of sustainability presented to the capital markets, indices that provide investors with information on both business ethics and the incorporation of the triple bottom line[4] into their business activities.
The first country to incorporate sustainable indices into its capital market was the United States of America, where the Dow Jones group, in partnership with Sustainable Asset Management (SAM), a financial asset manager specializing in companies with good responsible practices, created the Dow Jones Sustainability Index (DJSI) in 1999 in New York[5].
The DJSI index identifies and monitors, through methodologies, the largest companies with investments in sustainable development, selecting them through an analysis of their social, financial and environmental areas, in order to create listings only with companies that work according to specific guidelines. This listing began to be used by investors looking for socially responsible companies, and the market welcomed these companies and began to value them.
Inspired by international models, in December 2005 BM&FBOVESPA launched the so-called Corporate Sustainability Index (ISE), the fourth index in the world and the first in Latin America, designed to track the performance of stocks committed to sustainability in the market.
The ISE was the first sustainability index to hold a public hearing to consult interested parties, introducing discussions about the creation and implementation of acts aimed at corporate social responsibility.
This and other practices led to the creation of benchmarks to signal to the Brazilian capital market the degree of involvement of companies listed on the stock exchange with social and environmental problems.
Currently, having good corporate governance practices is an important factor for a company to be attractive to investors, they are more transparent about their business and the market appreciates them, leading to an increase in their value. Concern for socio-environmental policies, such as social inclusion, labor rights, environmental protection and social issues in general, has become paramount in the competitive business world.
In this scenario, many companies have already incorporated social and environmental policies into their management.
The Brazilian Institute of Corporate Governance, the IBGC, has as its principles governance, transparency, fairness, accountability and corporate responsibility, with the purpose of being “a reference in Corporate Governance, contributing to the sustainable performance of organizations and influencing the agents of our society towards greater transparency, justice and responsibility”, in other words, it preaches values in favor of sustainability to organizations, incorporating social and environmental issues into their field of business and their operations.[6] The IBGC’s mission is to promote the social and environmental protection of the environment.
One of the practices expected of a company seeking Corporate Governance is to improve the management of its business linked to a performance geared towards sustainable development.
The exercise of sustainable policies is already a trend in the market, with many companies already adopting social, environmental and corporate governance values in the management of their business in a simple and clear way, by developing initiatives that add value to the company, along with advancing the improvement and quality of all those involved.
Business organizations that are environmentally socially responsible improve their relationship with their stakeholders[7], demonstrate a greater ethical commitment to their shareholders and, above all, help to reduce the impact that man has on the planet, all of which are influencing many companies to implement programs based on sustainable development.
Expanding the range of sustainability to companies in the market is an evolution that transcends the fact that the company only thinks about profit at any cost, but rather the recognition of the need for sustainable growth linked to the social function based on the constitutional duty to maintain an ecologically balanced environment as a primary right to life for all, welcoming the defense and protection of the environment for present and future generations.
III – CONCLUSION
In the current scenario, there is a movement towards incorporating sustainable activities into the capital market. Corporate Governance has been the gateway to these ideals, which has led many companies to adapt socio-environmental issues in their management.
Companies that are now part of the Novo Mercado have shown that it is possible to manage the company economically and financially while maintaining an ethical and sustainable commitment, generating positive impacts on stakeholders and society.
The current situation has led to discussions around the creation of business principles that make companies act to include sustainable policies in their business strategies and conduct. The practice of sustainability will grow with competent management and responsible administrators, who not only weigh up the interests of the different stakeholders, but also pay attention to the possible environmental impacts that may arise from business activities.
Marcos Martins Advogados is prepared and puts its up-to-date Corporate Law Advisory team at your disposal to deal with issues relating to Sustainable Policies and Corporate Governance, and is ready to answer questions, presenting creative and safe solutions for its clients and interested parties.
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HENRIQUES, Adrian; RICHARDSON, Julie. The Triple Bottom Line: Does it all add up? London: Earthscan, 2013.
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[1] INTERNATIONAL INSTITUTE FOR SUSTAINABLE DEVELOPMENT. What is Sustainable Development? 2002. Available at: https://www.iisd.org/sd/#one. Accessed on: 12 Nov. 2016.
[2] CENTRAL BANK OF BRAZIL. Resolution No. 4.327, of April 25, 2014. Provides for the guidelines that must be observed in the establishment and implementation of the Social and Environmental Responsibility Policy by financial institutions and other institutions authorized to operate by the Central Bank of Brazil. Available at: http://www.bcb.gov.br/pre/normativos/busca/downloadNormativo.asp?arquivo=/Lists/Normativos/Attachments/48734/Res_4327_v1_O.pdf. Accessed on: 07 Jan. 2017.
[3] GLOBAL COMPACT. History. 2013. Available at: http://www.pactoglobal.org.br/artigo/63/Historico. Accessed on: January 15, 2017.
[4] The Triple Bottom Line, the tripod of sustainability, equates to an organization’s gains assessed in social, environmental and economic terms (HENRIQUES; RICHARDSON, 2013, p. 156).
[5] MARCONDES, Adalberto Wodianer, BACARJI, Celso Dobes. ISE: Sustainability in the capital market. São Paulo: Report Ed., 2010. Available at: http://www.bmfbovespa.com.br/Indices/download/Livro-ISE.pdf. Accessed on: November 25, 2016.
[6] BRAZILIAN INSTITUTE OF CORPORATE GOVERNANCE. Code of best corporate governance practices. 5 ed. São Paulo, 2015. Available at: http://www.ibgc.org.br/userfiles/2014/files/codigoMP_5edicao_baixa[1].pdf. Accessed on: January 11, 2016.
[7] Stakeholders, as Monzoni points out, are the “individuals who participate in business activities and who have an interest in the company’s financial return: shareholders, employees and others who have an interest in the company delivering good results”. (MARCONDES; BACARJI, 2010, p. 11)
