Global Compact International Yearbook 2012

Inside ...
Agenda
CSR in Latin America
Latin America
By Prof. Paul Alexander Haslam
An Evolving
CSR System in
Latin America
A decade ago, corporate social responsibility had only just
emerged on the agendas of businesses operating in Latin
America. Corporate commitments were limited to the largest
firms, usually the multinationals; public awareness and demand
for corporate responsibility was low; governments were
uninvolved; and civil society organizations promoting CSR
were still new and, for the most part, funded from elsewhere.
In the last 10 years, corporate social responsibility has matured.
Firms of many sizes are turning to CSR, public awareness has
grown, and civil society has increased the local ownership of
the concept in a way that connects with the long-standing
ethical expectations of these societies. However, outside interests
remain influential in the promotion of this concept,
namely via multinational corporations headquartered in the
North and their governments, multilateral funding agencies,
private foundations, and, most recently, internationally networked
NGOs.
This article examines the important changes that have occurred
in the evolution and practice of CSR in Latin America
over the last decade. In particular, it takes a second look at
the key relationships behind the development of CSR in the
region – described elsewhere as the “CSR system.”
A decade of CSR
The context for CSR is different in Latin America than in most
developed countries. The countries of the region are considered
to be “developing” – the majority of which fall into the
“upper-middle income” category. Latin America is nonetheless
characterized by high levels of poverty and inequality: The
indigent and non-indigent poor were estimated to comprise
30 percent of the population in 2011. In the aftermath of two
decades of globalization, liberalization, and privatization, companies
have become more prominent in the lives of citizens
in a context where the reach of the state is often limited. CSR
beyond compliance with the law does not mean much when
the law itself is often poorly enforced. For this reason, social
struggle and advocacy in Latin America has been focused on
the extension and defense of citizenship rights vis-à-vis the
state. In other words, although corporations can contribute
more to development in Latin America, we should not forget
that more effective state regulation of business activities is a
precursor to better CSR.
Although it is important to contextualize the limits of CSR in
the region, it is also evident that the last decade has seen an
important expansion of corporate activity in this area. In 2004,
I wrote that the overall picture for CSR in Latin America was
one in which private sector participation, government advocacy
and promotion, and general public awareness was relatively
low. Private sector activity was incipient, and a number of
business-industry NGOs had only recently been established to
promote CSR. Of course, these results varied greatly across the
region. Brazil led the Americas, attaining a level of engagement
with CSR that was similar to more developed countries. The
next best performers were the most industrialized countries
(Argentina, Chile, and Mexico), followed by lower levels of CSR
in the rest of South America, and a virtual absence of activity
in the Caribbean and Central America.
Almost a decade later, the picture has changed. Public and
business opinion surveys, such as those conducted by CSR
network Forum Empresa and by accounting firm KPMG in
2011, gave insights into both the growth of CSR and its limits.
Both surveys reported an increase in sustainability reporting
by companies in the region: Forum Empresa witnessed an
increase in sustainability reporting from 40 to 47 percent
during the 2009–2011 period; while KPMG revealed that the
use of reporting assurance in some countries topped that of
many developed countries (e.g., Brazil 40%, Chile 37%, Mexico
25%). This picture should also be regionally disaggregated.
KPMG, which only included three Latin American countries
in its sample, revealed significant variations in sustainability
reporting (Brazil 88%, Mexico 66%, Chile 27%). The first two
countries, which were also included in their 2008 survey,
had shown increases of 10 and 39 percent, respectively, over
the three years prior. Although CSR uptake by companies in
Latin America has improved, the sub-regional discrepancies
I identified in 2004 still appear to be relevant.
CSR has diffused from multinationals to large domestic firms
that have found CSR to be part of the modern management
package needed to compete in global markets. In small and medium
enterprises as well as micro-enterprises, ethical concerns
tend to be intertwined with the personal values of the owner
– often related to Catholic philanthropic principles – and
to a personal engagement with workers and the community.
Forum Empresa reports that consumers are interested in
purchasing goods from responsible companies. But public
opinion surveys also reveal a lack of confidence in the private
sector – derived in significant part from the belief that there
is poor government oversight of business activities.
In many ways, the institutional framework that encourages
CSR has matured. A decade ago, a large number of business
and industry civil society organizations were created, often
via funding from sources outside the region, such as the Inter-
American Development Bank, the Netherlands Organisation
for International Assistance, and corporate foundations such
as AVINA and W.K. Kellogg. AVINA alone supported some 160
CSR-related organizations between 1999 and 2009. Corporate
membership in these organizations has skyrocketed over the
last 10 years or so: Forum Empresa (region-wide) 385 to 2,643;
Instituto Ethos (Brazil) 11 to 1,340; CEMEFI (Mexico) 28 to
495; Acción RSE (Chile) 14 to 93. These organizations have
now matured as national champions and public voices for
corporate ethics and responsibility.
The evolving CSR system
Although corporate social responsibility is often portrayed as
a voluntary initiative by businesses acting as good corporate
citizens, the reality is that a business acts in the center of a
system of pressures, incentives, and advocacy that involves
many other actors. This is particularly true in Latin America and
the Caribbean, where pressures and incentives often originate
from outside the country in which the firm has its operations.
I call this set of pressures and incentives that surround the firm
the CSR system. It can be understood as a set of inter-linked
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