Business brief: Towards renewal in our business culture
Brazil is steadily investing in the creation of rules and regulations to converge to governance standards already consolidated in developed countries. Complying with these international standards is indispensable if Brazilian companies intend to operate on a global scale.
Companies that fail to invest in an organisational change that meets compliance practices will remain outside the business scenario and lose their market competitiveness in an increasingly globalised world.
The interest dedicated to compliance in Brazil has been growing since the passing of the Anti-Corruption Law in 2013, and the State-owned Companies Law in 2016. The former proposes prosecution for individuals guilty of acts against the government and provides attenuating circumstances for those who have implemented consistent programmes of compliance. The latter stipulates that companies owned by the federal government, states, municipalities and the federal district must not only implement structures and practices related to risk-management and internal controls, but also draft and publicise codes of conduct and integrity.
These concerted efforts are creating a healthier business atmosphere, with companies that are more transparent and apply tighter control mechanisms in conformity with laws and regulations. It used to be more common to talk about corporate compliance in banks and companies operating in highly regulated sectors. Today, this is a transversal topic in companies from all economic sectors. Compliance is no longer seen as a mere public relations diversion to show conformity and good conduct; it is a very well-knit structure with a set of guidelines and processes that drive the company’s operations.
Engaging in compliance practices allows more brand protection and reputation, business sustainability, financial protection, efficiency improvements, increased credibility, access to more financial resources and executives’ protection. Although it takes time for these benefits to take form, the investment in such practices is worthwhile. In many cases, it is even just a matter of adjusting the company’s culture towards a new model of governance. Nevertheless, fine-tuning the cultural identity of the organisation demands time, persistence and corporate will.
For compliance to function properly, a minimum structure is necessary, equipped with a clear budget, a team and technical resources. The goal is not only to map out risks, but also to have the capacity to gather and analyse information, detect problems, look into reports, and hold training and communication workshops. Furthermore, it is essential that compliance occupies a strategic position within the organisational structure, fully supported by top management and in accordance with the company’s short- and long-term goals.
Estaiada Bridge and Sao Paulo business district, Brazil
Concerns related to the implementation of such practices are generally about costs and the fear of added bureaucracy, but these tend to disappear overtime as the compliance process becomes more efficient. Additionally, regulatory agencies have a greater capacity for supervision than in the past, thanks partly to technology, while the international exchange of information makes it difficult to engage in less transparent activities.
Corporate news spreads faster than ever before. Companies and their executives are more exposed to social scrutiny, be it individual or collective. The speed of information exchange via the internet, the flow of people and capital, and the demands of society make survival in the long term a question of behaving ethically.
Attentive to the scope, challenges and opportunities of compliance, FGV Projetos has developed its own practice and has applied its expertise in helping several companies implement compliance projects. Firms are increasingly aware that this new context calls for more attention to legal aspects, leaving no room for deviations of conduct without jeopardising the image, reputation and sustainability of the company.
Compliance is here to stay!
Cesar Cunha Campos
© OECD Yearbook 2017