A Political transformation is taking place in Latin America. Ideological jousting and changing doctrines have capitalized on unresolved social problems, including gender discrimination, child labor and unfair labor practices, and environmental damage, as well as improper corporate governance. In Venezuela, Argentina, Ecuador, Nicaragua, Bolivia, Brazil and elsewhere, meeting these challenges has become the core of government plans. That is changing the relationship between the state and the private sector, often resulting in increased auditing, regulation and intervention. For these reasons, and especially in light of the global recession, it's not surprising that KPMG's November 2009 "Out of Adversity" report notes that 61 percent of organizations in Latin America say they are making substantial changes to their short-term business strategies, and 59 percent are radically rethinking their long-term plans.
In order for a country to evolve politically, social struggles must be treated not from an ideological standpoint, but rather through a perspective in which revision of the social management of public and private corporations is a priority. There is a kind of "social warming" taking place in Latin America that is affecting the sustainability and reputation of many companies. By "social warming" I mean people's attitudes toward the many issues listed above: There is a new awareness among Latin Americans who are determined to act in defense of their rights.
These changes in attitudes are taking place at an accelerated pace as well, due to the increased speed at which news and information are communicated, in part through social media. In fact, consumer demands are changing much faster than most companies can react, creating a deep breach between a company's interest and society's expectations. This breach is even greater among multinational companies, because most try to respond to a specific group with global programs of social responsibility that are not adapted to a particular location. All of these factors accentuate a lack of confidence in private enterprises. According to Latinobarometro 2009 (an annual public opinion survey of 19,000 people in 18 countries), only 42 percent of people have some or a lot of confidence in private enterprises, ranking them eighth among 15 institutions, demanding that corporate leaders revise their models of management and create a shared perspective toward corporate social responsibility.
The United Nations Global Compact and the Global Reporting Initiative have generated a framework for companies that are committed to aligning their operations and strategies with important indicators and universally accepted principles for sustainable and responsible businesses, including workplace standards, environmental responsibility and anti-corruption measures. Those that fail to meet these standards, or to communicate their progress toward meeting them, are taken off the Global Compact's list of participants; in fact, 859 companies worldwide were removed from the initiative in February because they failed to report on their progress.
For example, fair trade initiatives have become more than just a brand to promote more equitable trading conditions. Rather, fair trade is a way to connect concerned consumers and attentive producers in order to combat poverty and guarantee sustainable livelihoods. Though fair trade products are more expensive, many consumers see additional value in supporting labor rights of banana producers in Peru, protecting the environment for beekeepers in Chile and empowering coffee co-operatives in Costa Rica, among other issues. Consumers used to be interested in a product; now they are also concerned about the way it gets to the shelf.
New demands on CSR
Latin American consumers are demanding an evolution from corporate social responsibility to socially responsible corporations, asking business leaders to understand CSR not as a way of "compensating" for a company's impact but to create truly responsible business processes. …