What happens when the CSR Codes of Brazil’s oil and gas industry meet the international legal framework system on sustainable development law? Are there more similarities than differences between the two? Professor Ligia Maura Costa of FGV-EAESP explores how CSR Codes can be used as a tool towards sustainable development in developing countries.
By CoBS Editor Meghana Kuppinakere Mutt. Related research: Sustainable Development in Emerging Markets & CSR Codes of Conduct: Oil and Gas Industry in Brazil, JOSCM Special issue 4.
In 1968, Garret Hardin, ecologist and philosopher, wrote an essay titled ‘The Tragedy of the Commons’. He argued that if individuals act independently, rationally and focused on pursuing their own individual interests, they would end up going against the common interests of their communities and exhaust the planet’s natural resources.
Truer words couldn’t have been said. All too often, development is driven by needs going against an awareness of the environmental, social and economic limitations we face as a society, without fully considering the wider or future impacts. From large-scale financial crises caused by irresponsible banking, to changes in global climate resulting from heavy dependence on fossil fuels, the world abounds with worrisome examples of damage brought about by turning a blind eye. This vital realization is why the concept of sustainable development has become ubiquitous today — the catchphrase for international organizations, the jargon of development planners, the theme of conferences and academic papers, as well as the slogan of environmental activists.
Power of connection
Sustainable development comprehends humanity’s present needs without compromising the needs of future generations. Having emerged into the global setting during the 1980s, the idea of sustainable development is linked to the notion of global economic growth. Our Common Future, also known as the Brundtland Report, published by the World Commission on Environment and Development (WCED), collects a progressive view of economic development, entailing social justice, income distribution, full employment, safe and healthy working environment, environmental protection, among other issues. At the international level, a number of legal instruments deal with sustainable development, such as the Universal Declaration of Human Rights (UDHR), the Fundamental Conventions and Recommendations of the International Labour Organization (ILO), the United Nations Framework Convention on Climate Change (UNFCCC), among others. It is an undisputed fact that labour and human rights, environment and socio-economic issues have a negative impact on sustainable economic growth especially in emerging markets.
A safety shake-up
In the early 1990s, Codes of Conduct of Social Responsibility (CSR Codes) emerged. CSR Codes represent a change in the companies’ traditional paradigm. CSR Codes’ goal is to provide safety for companies’ global level activities by establishing a minimum standard of sustainable conduct. Through CSR Codes, multinational companies have an important role to play in order to improve quality of life for communities where they are operating in particular and to sustainable development in general, as long as their codes fully comply with the international legal framework on sustainable development.
CSR Codes play a key role in improving the quality of life in places where multinational companies operate. Their compliance with a legal framework is necessary, even if this framework system is still under evolution and does not establish any mandatory enforcement rule. The respect of these premises may allow companies, through their CSR Codes, to improve human and socio-economic welfare at global level.
Using 13 companies from the oil and gas industry, Prof. Costa explored to what extent CSR Codes can be used as a tool towards sustainable development in an emerging country such as Brazil. Given the usual structure that the Codes tend to follow, the investigation was developed around the three most emphasized issues – namely, labour and human rights, environment, and socio-economic issues. Her findings point to the fact that most of the statements present in the CSR Codes of the major oil and gas companies operating in Brazil do indeed comply with the international framework on the emerging sustainable development law*. But the catch is that states and their respective domestic legislation are unable to exert full control on transnational players such as multinational companies. But despite this lack of control, compliance of CSR Codes with the international legal system can be seen as a ‘global commons’ understanding framework to improve sustainable development.
Towards an improved CSR Code?
Even so, a number of questions may be raised to move towards an improved type of CSR Code: 1) How to control enforcement of CSR Codes of the oil and gas industry at the global level? 2) How to monitor the enforcement and compliance of all CSR Codes industries with the international framework on sustainable development law at the global level in an efficient way? 3) Can CSR Codes’ statements be judicially used against companies when compliance of these statements is not fulfilled? 4) Are CSR Codes of the oil and gas industry an effective mechanism for globally integrating responsible practices of all other industry sectors? 5) And finally, are CSR Codes of less complex industries in accordance with the international framework on sustainable development law as well? By working on these questions and getting the mix right for the future, both companies’ CSR Codes and the international bodies that guide them will indeed play their essential role in avoiding the tragedy of the commons to the full.
*Frameworks and Codes typically include the following broad dimensions: Labour and human rights; Environmental issues; Socio-economic issues. For a detailed insight into these dimension, download the UN Global Compact Guide to Corporate Sustainability
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