Conflicts of interest arise when an individual faces decisions where their personal interests clash with institutional interests.
In interactions between the private sector and the public administration, these conflicts can be especially problematic, leading to unethical and, in many cases, illegal practices.
In the context of practices aligned with Environmental, Social, and Corporate Governance (ESG) aspects, the “G” represents corporate governance, which refers to the set of rules, practices, and processes that guide the management of a company.
Thus, the “G” in ESG represents the need for a well-defined and transparent structure that allows for the anticipation of potential conflicts of interest and ensures that all parties involved are aware of and follow the established guidelines.
In this scenario, when an employee violates a rule or law, not for personal benefit but for the benefit of the company, acting non-compliantly for the company to benefit, is it a conflict of interest? It appears so.
This would happen when an employee or manager, in the pursuit of better results for the company, decides to act in a way that is not in compliance with ethical and legal standards. Examples include offering a bribe to avoid a fine, attempting to corrupt a public official to obtain a license, or omitting information about an accident that should be reported to the authorities.
When a company interacts with the public administration, corporate governance becomes even more crucial. This is because interactions with the public sector involve a series of norms and regulations that must be strictly followed to avoid illegal acts. In this sense, it is essential that companies have clear and well-established rules to guide their employees on how to proceed in such situations and that they conduct continuous training for all employees, and especially for senior leadership.
In these cases, the individual places the company’s interests above the interests of the community and the law, compromising the organization’s ethics and social responsibility.
Companies that adopt ESG principles must be especially attentive to these risks. ESG governance requires transparency, ethics, and responsibility in corporate operations, which includes ensuring that interactions with public entities are conducted ethically and free from pressures or hidden interests.
Corporate governance needs robust policies that should set forth clear mechanisms that promote ethics and integrity, as well as provide practical guidance for employees and executives.
Strong governance stands out for implementing oversight and inspection mechanisms, promoting transparency and accountability in their interactions with the public sector. This includes policies, training sessions, contract clauses, independent audits, and whistleblowing mechanisms to ensure that irregularities are investigated impartially and efficiently.
Certainly, the challenges faced by entrepreneurs in Brazil are numerous. Compliance, together with the ESG agenda, becomes a fundamental tool to prevent conflicts of interest, ensure integrity in interactions with public administration, protect reputation, and ensure the longevity of organizations. If you need support, count on someone to assist you in your journey.