3.1.1 An overview

Brazil was considered in 2012, the seventh largest economy in the world and the largest Latin American economy (IMF, 2012; Financial Times 6th of March of 2012).1 In 2016, the political and economic situation changed, Brazil was the ninth largest economy in world, with a GDP of 1,775 trillion in 2015.23Under corruption charges, Brazil’s former President Dilma Rousseff was impeached in August 2016 and the country has been since then in a political crisis and severe recession. Unemployment in Brazil was in December 2012 of 4,6%, it was then a record low unemployment.4 In 2016 Brazil’s unemployment rose to 10,9%, from 9% registered in 2015 and 6,5% at the end of 2014.5 In 2015, Brazil had 207,8 million inhabitants6and, despite dealing with deep social and educational problems, such as growing financial inequality, poverty,7 crime, unemployment and lack of access to opportunities, it was until 2015 one of the most successful fast growing economies in the world. The Brazilian society is changing, there is a growing middle class and the environmental concern is developing. In the 2016 Global 100 Most Sustainable Corporations in the World index, 2 companies were Brazilian, compared to only 1 Chinese company and zero companies in India and South Africa. These results indicate a long path is yet to be run, however, they also show the Brazilian leadership among emerging countries.8

Part of the context in which sustainability reporting is developing in Brazil is not as different as in other countries. I will look at the three basic premises in which the market is built upon: public, Government and companies (corporate sector). Below in figure 5, I show how the public prioritizes their basic needs and expected value creation, both from the Government and from companies.

Figure 5: Priority gap between public vs. Government and public vs. companies, in Brazil.

Brazilian society can be divided by the inequality of wealth.9 However, inequality between high and very low income classes is still high. (World Bank, 2012)10 Social inequality generates different levels of access to products and consequently to different markets. The majority of Brazilians does not have access to high-end products, where biological products for example, are part. What the Brazilian public demands from the Government and what it demands from companies is very different. Since their basic needs are to be satisfied, e.g. health, education and safety, these are the top social priorities for both the public and the Government. On the other hand, their requirements from the companies result in buying the best price-quality product. Concern with sustainability exists only in a relatively small part of the companies, which besides having access to selective markets also show concerns with the environment and society in general.11 This means that the alignment between public’ governmental and corporate interests is still a distant reality. This alignment is much closer in the European society, for example in Sweden and in the Netherlands.

In this context Brazilian companies’ primary objective is to satisfy the public’s needs allied with the maximization of profit; the public wants legitimate information from both the Government and companies; and the Government wants to satisfy both the companies and public. If companies see sustainability as an opportunity to satisfy their clients, maximize their profit and a competitive advantage, they will commit and interiorize it in their internal policies and strategy. The Government wants to align public and companies’ intent without losing support of the public. It has a propensity to respond to the market’s demand. In the end the public wants to be informed and wants legitimate, accurate, and detailed information about the Government’s and companies actions and businesses. These 3 stakeholders need each other to be successful, therefore, it is necessary to balance each other’s responsibilities and demand for results. We should lower our expectations from the Brazilian public.

In Brazil there is a need of educating society, to provide knowledge and tools to require specific action from the Government regarding sustainability. In reality this does not happen. There are interest groups with conflicting interests, which lowers competitiveness. There is no adequate structure, no monitoring and the law must be compatible with the reality. The law creates an obligation and it will facilitate the process but it must be adequate and compatible with the reality. The maximization of profit is (a matter of survival) an incentive to action and change, which allied with voluntary tools for sustainability reporting, the cycle could be closed. The development of legal rules for sustainability reporting must show the added value for both public and companies, the society as a whole.