State-Owned Companies Law marks first year amid criticism

Regulation touted as a means of combating corruption has been incapable of raising social and environmental protection

On Friday, June 30, Law 13,303, known as the State-Owned Companies Law, turned one year old. Signing the bill into law was one of the first acts of the then interim president Michel Temer after the impeachment of former president Dilma Rousseff.

The regulation was touted as a way of stopping corruption in state-owned companies, but for human rights organizations it represents a missed opportunity to protect the environment and human rights.

According to data released yesterday, June 29, by the Planning Ministry at a ceremony held in the Planalto Palace (the presidential residence) to celebrate the first year of the law, Brazil has 151 state-owned companies that employ 523,000 people and together have a net worth of R$500 billion.

Law 13,303 established governance and transparency mechanisms for state-owned companies, such as rules for the disclosure of information, risk management practices, codes of conduct, oversight by the State and by society, and minimum requirements for the appointment of management. The bill drafted by Senator Tasso Jereissatti did not, however, incorporate any of the changes proposed by civil society organizations to guarantee the protection of social and environmental rights.

• Click here to consult the full text of the law.

The amendments presented by Senator João Capiberibe and rejected by Congress included, for example, a requirement for companies to prepare and release annual reports on the policies and practices adopted to ensure respect for human rights and social and environmental responsibility.

They also called for the adoption of best practices and international standards of human rights protection, as well as for specific policies and assessments of their human rights impacts. The amendments also required the blacklisting of suppliers found using contemporary slave labor and the publication of contractual terms for any interested citizen.

• Click here to see the amendments proposed by Senator João Capiberibe

The absence of these mechanisms conflicts with the UN Guiding Principles on Business and Human Rights. These rules are voluntary and were created in 2011 by the UN Working Group on Business and Human Rights.

According to the Guiding Principles, both private and state-owned companies are responsible for respecting human rights and, to comply with this obligation, they should have policies in place that establish operational procedures and internal controls that can identify, measure, mitigate and remedy all the human rights impacts resulting from their activities.

“The rejection of the proposed amendments supported by civil society ended up creating an empty law from a social and environmental and human rights standpoint,” said Caio Borges, coordinator of the Business and Human Rights program at Conectas. “One year after it was signed, even members of the government acknowledge the limitations of the law. It is regrettable that we wasted this opportunity to engage state-owned companies in the urgent and inevitable debate on social and environmental responsibility,” he added.

Planning Minister Dyogo Oliveira said last Thursday, June 29, that the government will create an indicator of governance and good practices for state-owned companies. This indicator, he said, will assess the companies on three levels: management, control and auditing; councils, committees and auditing; and transparency of information. The minister did not give a forecast of when this would be done.

• Click here for the UN Guiding Principles on Business and Human Rights.