Social Responsibility as Determinant of an Image of Steelmaking Company: The Case of Arcelormittal Brazil

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1 Social Responsibility as Determinant of an Image of Steelmaking Company: The Case of Arcelormittal Brazil Letícia Rocha de Araújo, Luciano Polisseni Duque, João Roberto Marques Lobo and Cid de Oliva Botelho Junior This paper discusses the importance of actions that organizations develop to be crafted his image and reputation, especially in relation to the positive view of stakeholders. One of these actions is the pursuit of social responsibility, often used as part of the pillars of sustainability, sometimes as promoting social action. As a case study we used the ArcelorMittal company, located in the city of Juiz de Fora, an important economic brazilian hub in state of Minas Gerais. The company instituted an award linked to the thematic environment where participate students of the school community and children of employees. The methodology included a qualitative research with the stakeholders of the company, collecting their testimonials about the image of this organization. As a result, it was identified a positive image, being seen not only as a company that occupies a physical space and generates profits, but generates social counterparts to the community. Field of Research: Sustainable Development 1. Introduction The wealth produced during all the centuries of human life were generated from production processes based on social and environmental exploitation, ie consumption at higher speed than the renewability of natural resources and without concern for human rights. The consequences are the exhaustion of these resources. It is verified still the concentration of wealth in the hands of a minority, while a considerable portion of the world population does not benefit (GRAJEN, 2004). And it is from these all questions and the new placement of business figure in society, that arises a concept of great importance today: Corporate Social Responsibility (CSR). The campaign around CSR emerged in the mid-1980s, something relatively new in Brazilian culture, coming in search of a new image for a business, more aware of social issues (GARCIA, 2004). Emerges, so, a mentality based on the idea that the State can not fulfill its role the provider of the necessary conditions to achieve supply the basic needs of human life a time when society and private Letícia Rocha de Araújo. Department of Marketing, Phormar Formaturas e Eventos, Brasil. leticiarochaa@gmail.com Luciano Polisseni Duque. Department of Education and Technology, Instituto Federal do Sudeste de Minas Gerais Campus Juiz de Fora, Brasil. luciano.polisseni@ifsudestemg.edu.br João Roberto Marques Lobo. Serviço Brasileiro de Apoio às Micro e Pequenas Empresas. SEBRAE MG: Regional Leste MG, Brasil. joao.roberto@sebraemg.com.br Cid de Oliva Botelho Junior. DCEEX, Universidade Federal Rural do Rio de Janeiro, UFRRJ, Brasil. cid@ufrrj.br 1

2 organizations are mobilizing to find solutions that mitigate social inequalities, slowly transferring this responsibility to the business sector. This paper aims to reflects about the social responsibility and how it can be beneficial to the corporate image, using as case study the company ArcelorMittal situated in Juiz de Fora, Minas Gerais, Brazil. 2. Literature Review 2.1 Corporate Social Responsibility Corporate Social Responsibility is the planned and methodical practice of projects, strategies, actions and establishing channels between an organization and its internal and external customers. Contributes to the social, cultural and scientific development, the respect to the human being and environmental preservation (BUENO, 2003). Be socially responsible is decide to practice some actions that help the region in which the company operates, according to the type of activity in which it operates (NETO; FROES, 2001). An example this would be when the company seeks suppliers who do not exploit child labor or even who care for the environment, from where remove the raw material to be used in industrial production. When it uses these resources, the organization incurs a "debt" with humanity and it is up to "pay" the debt with solutions to social problems. Thus, the socially responsible company is one that makes available to "listen" to its public, sectors and stakeholders and incorporate in planning activities, seeking to comply not only the demands of owners and shareholders, but also employees, suppliers, society, consumers and the environment, called stakeholders (YANAZE, 2007). The stakeholder theory was proposed by Freeman (1984) and indicates that the groups included in the same environment and linked to the organization may be affected positively or negatively by it, the same way that the organization can be facilitated or hindered by these groups. So there is a broadening of the spectrum of action of companies, which are now responsible not only for the generation of profits for shareholders, but rather by expectations of a larger group. Thus, values or intangibles of an organization as processes, skills, relationships, information, brands, among others, are considered more "valuable" than large physical structures and the most modern industrial equipment. The role of managers, however, from the point of view of the classical theories of management, was to produce assets and services efficiently, so that generate profit. Actions of social context were not seen as collaborators of economic development (FRIEDMAN, 1970). However, for modern theories currently used in organizations, the enterprises are seen as important influences on members of society and therefore are responsible for maintaining and generating the collective welfare (DEEGAN, RANKIN and TOBIN, 2002). That's because they are linked to critical social issues such as job generation, environmental pollution, among others. "As the 2

3 company has power over society, this society can and should blame the company for social conditions affected by the use of that power" (JOYNER and PAYNE, 2002). 2.2 The Social Responsibility Linked to the Corporate Image The Social Responsibility is increasingly present within organizations who care about their identity, image and reputation with their stakeholders. Still, the social responsibility programs of a broadcast company, indirectly, their values, ethical principles and codes of conduct (KISIL, 2006). A company is not just an image, but different images, depending on the different readings that their stakeholders do about it. By taking an ethical and transparent posture to all those stakeholders with whom it interacts, the organization is directly or indirectly helping to shape its image positively. According to a research conducted by the Instituto Akatu (2011) in partnership with Instituto Ethos, "Corporate social responsibility Perception of Brazilian consumers Survey 2010, 77% of respondents reported interest in how organizations seek to be socially responsible. Still, 51% of the general public attributed a role for organizations that goes beyond the economic, agreeing to stipulate this function as a set of ethical standards, established by law in addition to, and helping to build a better society for all. The Institutes mentioned are references, in Brazil, on the theme Social Responsibility. Failure to follow the obligations to the stakeholders can make the company lose its base of social responsibility. "The first indicator is the loss of credibility. Its image is harmed and its reputation, threatened "(NETO; FROES, 2001, p.94). Arise, then, internal problems, such as organizational climate, and external, such as charges, boycotts, loss of customers and shareholders. Corporate social responsibility is focused on two different types of publics: internal and external. Internal public part employees and their dependents, and suppliers or partners. Already in the external public, is the community which the company operates. In actions for this public, the company seeks the social return, the image and reputation strengthened (NETO; FROES, 2001). In this context, an analysis of the efficiency of social responsibility was conducted with the public in an organization, through a case study of Environment ArcelorMittal Award, focused on the city of Juiz de Fora and region - Minas Gerais. 2.3 Arcelormittal and the Environment Arcelormittal Award Juiz de Fora s ArcelorMittal plant is a steel manufacture which produces long rolled steel, using pig iron and steel crap as its basic raw materials. Steel, such as: rebar, bars, wire rod, wires, nail among others are produced by the company and used as construction and industrial inputs. The company is located in Juiz de Fora County at Minas Gerais State s Zona da Mata. It produces one million tons of steel a year, holds employees and many 3

4 Quality Certifications. Nowadays the company belongs to Arcelor Brazil Group, launched in 2005, that is controlled by ArcelorMittal Group (2006). The group works in 61 countries, has about 320 thousand employees, and leads some of the main steel markets in the world, including automotive, construction and home appliances markets. It presents a communication strategy aiming to get closer to the community, developing social projects regarding education, health, culture and environment. One of these projects which is also the object of the current article the Environment ArcelorMittal Award, is applied the group, not just in Juiz de Fora, but also in some other regions where the company works in. Through the prize, ArcelorMittal keeps straight contact with communities around its plants, besides keeping contact with employees families as well as with public and private schools. It takes place in 38 counties around the country and rewards three different categories: School s students, Employees kids and School Projects the last one was included in The first category regards basic education children who compete with drawings whereas high school students must compete writing a composition. The School projects category rewards educational institutions that present the best socio-environmental project developed by their students. The project starts in the beginning of the school year, when schools get a specific didactic material, a set of three booklets. One of them must be specifically used by teachers and, the others, by the students according to their school grade. All coordinators and teachers involved in the project are trained by a team of expertise attending workshops who aim to show them how to work with the given material. Figure 1: 2012 Environment ArcelorMittal Awards booklet cover (Basic School Students) Ideas to sustain the world / How to build a sustainable world together? / (1 st to 5 th grade) Source: Juiz de Fora s ArcelorMittal press office 4

5 Figure 2: 2012 Environment ArcelorMittal Awards booklet cover (High School Students) Ideas to sustain the world / How to build a sustainable world together? / (6th t to 9 th grade) Source: Juiz de Fora s ArcelorMittal press office Figure 3: 2012 Environment ArcelorMittal Award s teachers book cover Ideas to sustain the world / How to build a sustainable world together? / (Teachers book) Source: Juiz de Fora s ArcelorMittal press office 5

6 According to data from Juiz de Fora s ArcelorMittal press office, the total amount of teachers in town involved with the project in 2011 was 812 and, in 2012, 723. Since its creation, 449 schools have already attached the project to their subject matrix and 529 put the Environment ArcelorMittal Awards Day in their class schedule people were granted by the program in 2011 and, in 2012, they were a total of Methodology Thus, in order to analyze ArcelorMittal s image and reputation due to its stakeholders opinion, the Environment ArcelorMittal Awards was chosen as a parameter. Besides holding regions beyond Juiz de Fora, the current research focused on the work done in town. So, firstly, the last two years of project were picked, thereby we have studied the years of 2011 and The research was concentrated in those two years, aiming to find results as close as possible to the company s current situation. After getting to know what the award was about, the fieldwork had started and local opinion makers were interviewed. Therefore, leaders from the main communication companies in Juiz de Fora, such as Tribuna de Minas Journal, Alterosa TV, Panorama TV and others, were interviewed, in order to check how they see the company and its local socially responsible actions. Another step, regarding the research, focused in interviewing teachers, coordinators or school principals who took part and had students rewarded in the years that were chosen to be analyzed. Such interviews aimed to find out their opinion, that means, what their opinion about the company is. Some children who participated and won prizes, as well as their parents, were also argued in order to find their views regarding the prize and the company. At last, pro environmental NGO s from Juiz de Fora, the local metalworker s union and Minas Gerais State Industry Federation were heard. 4. Findings/Analysis We can realize how the positive image of the company was built in the minds of those who are the Environment ArcelorMittal Awards target audience, based on reports based on the interviews. As follows: I see it as a reference to Juiz de Fora, an important company to the city in terms of job creation direct and indirect ones and financial incomes, besides its important social participation (Campos Matta, Regina MGTV 1 st edition Chief Editor Panorama TV) The company became a reference and its actions generated multipliers, besides creating a much wider social assistance culture in Juiz de Fora, involving, above all, companies (Magella, Paulo César Tribuna de Minas Journal General Editor [a printed newspaper sold in Juiz de Fora area and in its surroundings]) The ArcelorMittal Awards is very important to student s awareness and environmental education, mainly because future is on children s hands nowadays. Juiz de Fora is going to be rewarded by having a company, such 6

7 as ArcelorMittal, taking part in investments regarding children and teenagers environmental education, promoting a contest as the ArcelorMittal Awards. (de Paula Lopes, Rosania Aparecida Formal Teacher at the Prof. Helena Antipof School in Juiz de Fora. Former winner for the category School Students 2011) Certainly, the prize meets the company s proposal which concerns to call the local community s attention to its role, facing the difficulties that the planet has been through. We have heard about many actions taken by this company in order to help our community and to make something else to develop a better world for us all. (Salomão, Míriam Former Coordinator at Allan Kardec School, in Juiz de Fora [until de end of 2011]. Winner of the category: School s Student and the School Projects 2012). It is the best example that just through education a new horizon will guide humanity s path. The awareness of a democratic and humanistic management, concerning collectivity. (Melo, José São José de Santos Dumont County School s Principal [MG]. Winner of the category: Employee Kids 2012). It is a great company and I admire it a lot because of the Project. It is a way to encourage. I got to know the company and I liked a lot the projects they have there. (Guilherme, Marcilene Aparecida do Carmo Najane Aparecida Guilherme s mother [12 years old] Winner of the category School s student 2011). I guess that it plays a very important role. Besides being a steel producer, it feels love and great tenderness for the environment. (Ferreira Caruso, Gustavo [12 years old] Winner of the category Employee s kids 2012) I guess that the works it develops are quite interesting. They value sustainability and generate an interaction among community, family and company. It also works the employee s social side. (Fonseca Afonso, Juliana Maria Thaís Afonso s mother [12 years old] Winner of the category Employee s kids 2012). Its environmental education projects reduced its impact and the reforestation project with native trees along with eucalyptus trees simply drifted. It does not belong to a company which is 100% socially and environmentally responsible. (Guerra de Oliveira Jr, Theodoro President of the Juiz de Fora Environmental Assossiation [AMAJF]). Certainly, it happens in most of the companies. Actually, they use such name to advertise its products. But if you look closer, we can see that things are not happening. (Rezende Pedrosa, Anderson Brasil Verde Group s Financial Director) I believe that the main item, as I have said before, would be inserting the social responsibility concept in education, more and more encouraging education institutions participation as a way to promote new paths towards a more fair and balanced society. (Rodrigues de Medeiros, Paulo Technical Director of the Animal & Natureza NGO) I guess that it is profitable for the company s institutional public image. In order to make society thinks about the issue yes, but the most important outcome relates to the institutional image. (Majela Werneck, Geraldo Metal workers Union s President, in Juiz de Fora) I see it as an important reference to other companies. (Rocha Queiroz, Cláudia Sales representative at Minas Gerais State Industries Federation Zona da Mata Regional [FIEMG]). After listening to local opinion makers, it is possible to realize that the company image they have developed dues to a corporation which generates economical movement, once it hires a great amount of workers. Still, it is the image of a company involved with social projects and with the local community s well-fare. 7

8 Other people take the risk to say that it is a reference in Juiz de Fora, a corporation which absorbs man power, generating direct and indirect jobs, besides systematically trying to develop new employees. It is also seen as an ethic and transparent corporation, which respects its tax s obligations. Finally, and more important to the current study, it is a company that brings a counterpoint to the community which is already too affected by the company s main activity steel manufacturing. All interviewees agreed that ArcelorMittal is a socially responsible company. Thus, it is possible to see, among its stakeholders, the consolidated image of a socially responsible. It is very important to the company, once such ideas echo in an enormous and efficient way in the public opinion. Regarding the opinion of teachers, coordinators and school principals who have already participated in the prize project, it is possible to understand that the company s image is very good, once they figured all the investments that the company has been doing in environmental education, seen it as something important for school communities. In general terms, the interviewees opinion shows that the prize rises as a stimulus to children, no matter if it goes to students or to the school. Moreover, it leads to a conception change, due to environment and the place where they live in. So, the attitude change becomes clear in such children. Interviewees say that they also realize, in general terms, that ArcellorMittal is a serious company and that it respects living beings whom they has contact with. Another opinion that deserves being highlighted: the corporation not just occupies physical areas and generates profit, but also generates social counterpoints to the community. ArcelorMittal is seen as an income generator in cities that take part in the project and, because of that, it helps improving local population s quality of life. Regarding children who participated in the project during the analyzed years of 2011 and 2012, as well as their families, opinions are quite similar to those from the school managers: the company worries with the environment and with the community, as well as generates jobs and incomes. An important opinion to be highlighted is that, besides the fact that ArcelorMittal in a steel manufacture, it is concerned with the environment. Another answer, seen in almost all interviews, is that the corporation does not think just in profit, but also in social matters linked to it. On the other hand, there are those who think that such counterpoint is the company s obligation, once it pollutes the environment in which it is inserted. Parents highlight, in their answers, that the prize helps to valorize children and teach them about the environment, besides disseminating environmental respect, once it also demands parent s responsible attitudes. According to them, the company valorizes sustainability and is concerned about its employee s social side. Therefore, by listening to school representatives, participant children and their parents, it is possible to figure that ArcelorMittal built through its social projects, especially through the Environment ArcelorMittal Awards an image and a positive reputation among its stakeholders, who are important disseminators of the company s profile in the community, generating, among other factors, support to the 8

9 company s attitudes, once they see it as a partner and not an user of the resources in the region, instead of just worry about profit. On the other hand when listening to some perceptions from NGO s that fight for environment issues and also by listening to the metal workers union the opinion changes when the subject regards to social responsibility and social cause s marketing. For such organized institutions that naturally hold a more critic viewpoint over this particular issue, the actions are not socially responsible but they are based on social marketing, once the biggest profit, according to them, goes to the company s image itself. 5. Conclusion After a fast conceptual study done on social responsibility and communication in the company s current scenario, it is possible to assess the case presented in the present article. The main proposal dues to check how much an action can bring back in terms of positive return to the image and reputation of the corporation which is in the mainframe to Juiz de Fora s ArcelorMittal plant. Thus, based on some collected reports, it is stated that the Environment ArcelorMittal Award can be considered by the society s viewpoint on an environmental education as an efficient action in term of social responsibility, once it really reaches its targets: educate children, and the community in which they live, about the importance of preserving the environment, besides forming disseminators of good practices. On the other hand, by the viewpoint of bringing advantages to the company s image, the project can be considered an action aiming to promote visibility to the corporation, broadcasting a positive image among the stakeholders. It was reinforced by the opinion makers, the school managers, the children and their parents, and, somehow, by the activist leaders reports (even with their critical viewpoint, regarding the corporation and the assessed actions). According to the company, projects such as the one discussed by the current article, allow the creation of a counterpoint to society, even when considered a small one. Although the projects face damages caused to the environment because of the company s main activities. And, yet, it allows the company to improve its image in a way to keep its status as a responsible one when talking about socioenvironmental issues, getting support and admiration from its target customers. Finally, it is concluded that socially responsible actions influence the visibility of the corporation, so communication must be improved and coherent to its values and principles. References Bahia, BJ 1995, Introdução à Comunicação Empresarial. Rio de Janeiro: Mauad. Berlo, DK, 2003, O Processo da Comunicação: Introdução à Teoria e à Pesquisa. São Paulo: Martins Fontes, th ed. Bueno, W da C 2003, Comunicação Empresarial: teoria e pesquisa. São Paulo: Manole. 9

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