Environmental Regulation Must Prevent and Combat Corruption and Fraud

Image: Vinícius Mendonça/Ibama

Brazil still lacks a structural policy or regulatory framework addressing the relationship between climate and environmental protection and corruption.

As if the complexity of damages to the quality and integrity of nature and the climate were not enough, environmental and climate protection is increasingly challenged by the aggravation of structural issues such as acts of corruption and fraud, which directly condition the realization of sustainable development.

This connection is well recognized. Since 2003, the United Nations Convention against Corruption, incorporated into Brazilian law through Federal Decree No. 5.687 of 2006, has expressly established in Article 62, item “1,” that States Parties should adopt “measures consistent with the proper application of this Convention, to the extent possible and in accordance with international cooperation, taking into account the adverse effects of corruption on society in general and, in particular, on sustainable development.”

Studies published in 2006 and 2011 by Transparency International had already identified the correlation between the spread of corruption and issues related to the environment and sustainable development, including their impact on efforts to combat climate change. These findings highlighted the need for environmental policies and regulations to include measures directly addressing this social, economic, political, and legal dilemma.

The Paris Agreement of 2015 itself anticipated this context when, in Article 2, paragraph 1(c), it set forth the goal of “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”

Similarly, the 2030 Global Agenda for Sustainable Development incorporates this theme through Sustainable Development Goal (SDG) 16, “Peace, Justice and Strong Institutions,” with its targets 16.5 and 16.6 respectively "calling for the substantial reduction of corruption and bribery in all its forms", and "the development of effective, accountable, and transparent institutions at all levels".

In this regard, the United Nations Environment Programme (UNEP) warned in 2019 that although most countries have environmental agencies and legislation, implementation remains insufficient, due in part to corruption and the absence of governance and compliance policies in environmental regulation.

Transparency International, for its part, provides the global Climate Governance Integrity Programme Atlas, a worldwide mapping of major cases involving corruption and fraud linked to environmental and climate governance, intended to encourage analysis of integrity, transparency, and accountability measures in environmental and climate regulation.

Despite these international reports and “soft law” frameworks, little to no progress has been made in environmental and climate regulation specifically aimed at preventing risks and combating corruption and fraud in this sector, particularly in the Brazilian context.

In Brazil, there are only scattered legal provisions, such as administrative environmental infractions for omissions or falsified environmental reports, or crimes against environmental public administration, both of limited effectiveness.

The country lacks a structural and specific regulatory policy dedicated to this matter.

At the federal, state, and municipal levels, the rationale for such regulation is clear: conflicts of interest, abuses of power, deviation of purpose, corruption, malfeasance, and administrative misconduct in environmental governance. These are frequently observed in public acts and procedures involving environmental authorizations and licenses for large-scale works, projects, or economic activities with significant socio-environmental impacts.

Even Senate Bill No. 2.159/2021—linked to the proposed General Environmental Licensing Law—contains no explicit provisions on measures or mechanisms for preventing and combating corruption and fraud in environmental licensing, despite the evident risks these practices pose to the public interest, environmental protection, climate policy, and sustainable national development in the context of major projects.

For Transparency International Brazil, environmental corruption is defined as the abuse of entrusted power for private gain that results in environmental degradation, weakened environmental governance, or socio-environmental injustice. This is a pressing dilemma at a time when much is being discussed about corporate ESG (Environmental, Social and Governance) responsibility both in Brazil and internationally. According to TI Brazil, the following measures are necessary:

1. Deepening open data policies for monitoring environmental infractions and crimes;

2. Developing and implementing whistleblower channels with adequate protections;

3. Establishing governance frameworks for lobbying in environmental matters;

4. Advancing the regulation of environmental crimes and money laundering; and

5. Structuring transparency in political party financing, given its susceptibility to corruption and undue influence in environmental policy.

An alternative would be to require, as part of environmental licensing for large-scale projects with significant socio-environmental impacts, the adoption of anti-corruption and anti-fraud measures, such as integrity and compliance programs, thereby aligning continuous environmental management oversight with the prevention of risks and the fight against corruption and fraud, within both environmental agencies and the licensed enterprises themselves.

Timely progress has been made with the inclusion of 2024 initiatives in the National Strategy to Combat Corruption and Money Laundering (ENCCLA), which involves oversight bodies and public entities across all levels of government. These include:

• Improving traceability of the cattle and timber supply chains to prevent corruption and money laundering associated with deforestation;

• Developing National Integrity Guidelines for preventing and combating corruption and fraud in projects with environmental impact; and

• Assessing integrity risks in environmental licensing as a means of preventing and addressing fraud and corruption.

In short, corruption not only pollutes and degrades the environment and the climate but also makes nature its silent victim, increasingly demanding that environmental regulation adopt a new and more effective approach to this issue. Without such progress, the country risks further distancing itself from the goal of sustainable development in the context of post-pandemic recovery and the ongoing climate emergency.

--

[Automatically translated]

Originally published on LinkedIn

Author: Bruno Teixeira Peixoto