Monday, July 28, 2014
Eni and CSR: Giant or Dwarf?
Companies need to honor, with dignity and character, its "Social Role", especially, those companies in which they have a nation's government as the "Owners of the Business".
Brazil and Italy have this kind of company: Petrobras and Eni are the largest companies in operation in their countries and both have the State as the main shareholder. Therefor, the government occupies most of the chairs in the Board, including the Chairman. With this, the government determines the directions that the company has to follow and the way the executives should lead businesses, in compliance with the responsability of the "Corporate Governance".
Companies like Petrobras and Eni have, indirectly, the Brazilian citizens and the Italian citizens as the main owners of these companies! However, unlike Eni, Petrobras fulfills its "Social Role" under the baton of the government's "Strong Hand".
In Brazil, with the goal to keep the inflation on the rigid control, keeping the companies and the purchasing power of the Brazilian worker, the government "forces" Petrobras to sell fuel below the cost of production, imposing to this Giant, stratospheric financial losses year after year, and devaluations of shares and a steep drop in Petrobras' "market value", ie, the Brazilian government prioritizes the population at the expense of shareholders and the market.
In Italy, it looks like it's happening the exact opposite! This is what indicates a "General Strike" 29/7/2014) called by Italian unions based on the intention of reducing Eni's investments in Italy with closing refineries and consequently the dismissal of thousands of workers. This decision of Eni will affect a lot of cities' economy leaving only the "environmental liability"of decades of degradation and pollution that is affecting the population as a disease.
If the Italian government doesn't reguire that its largest company fulfill its "Social Role", Eni will continue to be a "Giant" but it will be a "DWARF" when it comes to “Corporate Social Responsibility” and “Business Ethics”.