Brazil: Preparing for a better future

José Carlos Martins President of the Brazilian Chamber of the Construction Industry (Câmara Brasileira da Indústria da Construção – CBIC), tells us about Brazil’s construction industry and efforts to prepare for a better future. CBIC joined the IES Coalition this year.

Broadly describe what CBIC does in land, property construction, infrastructure and related professions. How does the organisation work across these sectors? The purpose of the Brazilian Chamber of the Construction Industry (Câmara Brasileira da Indústria da Construção – CBIC) is to represent  the construction industry and the real-estate sector in Brazil and abroad. Based in the capital, Brasilia, CBIC is composed of 76 employer unions and associations in the construction industry from all 26 Brazilian states and the Federal District.

CBIC serves as the sector’s political representative and promotes integration of the construction supply chain nationwide, with a view to contributing to the country’s economic and social development.

Administered by a Board of Directors who are elected CBIC members, the entity operates five technical committees, two of which are dedicated to end activities: Public Works, Privatizations, and Concessions (Obras Públicas, Privatizações e Concessões – COP) and Real-Estate Industry (Indústria Imobiliária – CII).

 An additional three committees are engaged in intermediate activities:

  • Policy and Labor Relations (Política e Relações Trabalhistas – CPRT),
  • Materials, Equipment, Services, Technology, Quality, and Productivity (Materiais, Equipamentos, Serviços, Tecnologia, Qualidade e Produtividade – COMAT),
  • Environment (Meio Ambiente – CMA)

Why is IES an important initiative for a market like Brazil? IES is important as its objective is to establish universal ethics principles to consolidate a value structure capable of strengthening the position of organizations in the market.

In the Brazilian case specifically, the challenge is to transform the existing culture of corruption that drives the relationships between the market and public institutions. This includes a host of serious breaches with far-reaching implications for many of the leading companies in the sector.

The application of IES serves potentially to leverage a broader process of “change management.”

In Brazil, there is a discernible shift toward enhancing transparency. Specific legislation has been enacted to combat corruption with the imposition of penalties and sanctions on a number of market operators found to have committed violations and engaged in unlawful business transactions.

At the same time, wider society has attached ever greater value to ethics. Initiatives such as the IES provide effective tools for accelerating change.

Can you describe some of the ethical challenges and issues affecting land, real estate, construction, infrastructure and related professions in Brazil? The key problem is a culture that encourages and values an extensive range of corrupt practices, principally in negotiations involving large-scale government infrastructure projects and industry giants. Other instances include fraudulent bid and procurement procedures, exorbitant kickbacks, illicit individual advantages, illegal campaign contributions and financing, public management practices based on misappropriation or embezzlement of taxpayer money, etc.

The speed and scale of events is such that the country now finds itself in the midst of a process that could result in the removal of Brazilian president Dilma Rousseff from office.

What is the value in asserting the role of ethics in professional practice in Brazil? Brazil is at a critical juncture. The country is saddled with a political and economic crisis that has adversely affected society and undermined  continued growth.

There is a growing consensus that a steadfast commitment to the principle of ethics represents the first and crucial step to re-chart the country’s course toward a better future.

This necessary course correction poses a particular challenge to the construction sector given that many of the industry’s giants are central targets of the Brazilian Federal Police Department’s far-reaching investigations into corruption and money laundering. To date a number of their executive have been either indicted or convicted of wrongdoing.

Nonetheless, the changes underway constitute the only feasible avenue for moving forward.

As you see it, what are the major costs to businesses of not acting ethically? The primary cost is the long-term impact on the market. Specifically, widespread unethical conduct which renders organizations unsustainable by reducing their capacity to raise funds and ensure financial stability. This decreases their competitiveness, and irreparably harms reputations, while severely impacting the society.

What are the major barriers affecting the implementation of ethics in Brazil? The single most important obstacle is cultural. Although the country is currently experiencing a process of tangible change, as described above, many of Brazil’s ’s leading figures continue to question whether survival is possible without the adoption of unethical practices, given Brazil’s long and bleak history on this front.

 A crucial aspect of this involves the under utilization of tools capable of helping organizations incorporate ethical management of their processes and relationships. Generally, there is an absence of codes of conduct, inadequate anti-corruption risk analysis for business transactions, lack of appropriate and secure reporting mechanisms, insufficient investment in ethics training.  In addition to an embryonic body of laws which are not yet fully understood, much less fulfilled, by society as a whole.

What initiatives is CBIC putting in place to tackle ethics-relted issues in the construction industry? The situation  described above spurred CBIC to implement the Ethics and Compliance in Construction project in May 2015.

The initiative was divided into three distinct stages: Advocacy, Engagement, and Materiality, with a view to raising greater awareness of ethics and compliance. We also want to strengthen these concepts within the business culture of organizations engaged in civil construction and across the broader industry supply chain.

As a first step, CBIC developed a formal position on the issue, subsequently moving to join the principal global ethics and anti-corruption initiatives. CBIC signed the United Nations Global Compact and shortly after became a member of the IES Coalition.

 The project was launched at the national level through publication of a document (Blueprint) setting out  comprehensive information for its members. This was followed by development of a list of key activities, including:

  • Training and awareness-raising for institutional entities and companies in the construction industry in general;
  • Updating of CBIC’s code of ethics and conduct through incorporation of IES results;
  • Development of a specific ethics and compliance guide for the sector, with the objective of providing guidance to all companies on corruption risk analysis of business transactions and implementation of ethics and compliance management programs;
  • Bench-marking in all CBIC member entities to assess the engagement levels of organizations in this area and to identify good practices implemented in different regions;
  • Design and facilitation of capacity-building workshops in ethics management.

The project is currently being implemented as per the established schedule, including the application of all required adjustments to ensure wider dissemination of ethics management processes in the sector.