BRAZIL Trends and Developments Contributed by: Thaís Vasconcellos de Sá, Bermudes Advogados
and its potential to grow, even outside Brazil’s borders. Take the necessary steps to prepare internal governance and to engage profession- als that know how to navigate these intricacies all the way. Climate-Related Crisis Litigation Companies operating in Brazil must also be pre- pared for an increase in their risks of an incident – or a crisis – arising from a climate event. Extreme climate events have become more intense and recurrent globally, and in Brazil this is reflected by extreme floodings that can impair a compa- ny’s activities and cause extensive damage. If a natural event (albeit extreme) contributes to the occurrence of an industrial accident related to the company’s risky activities, it can lead to an extremely complex crisis with considerable legal exposure. Brazilian environmental law imposes a strict liability regime on those that exercise “polluting activity” (considered the “direct polluter” ). Under this regime, the liability of a company that exer- cises such activity will be objective (eg, will occur without assessment of fault, gross negligence or malicious intent). If there is a causal link between the activity and the environmental damage, the company will not be able to avoid liability merely on a defence that the natural disaster occurred and contributed to the damage being caused. This potential legal exposure must be handled with significant caution, as an environment-relat- ed crisis can lead to extensive liability. As part of adequate corporate risk and crisis management, companies must adopt the necessary measures to adjust their activities and adequately man- age their risks in an ever-changing climate sce- nario, and must be prepared for more recurrent extreme climate events. Building and nurturing strong relationships and credibility with gov-
ernmental authorities in Brazil will also play a significant role for being in a proper position to address such a crisis, while not being subject to as much pressure – and as many legal measures – from these authorities. Keeping Credibility Afloat and the Importance of a Consistent Approach in Communication Given the multiple and concurrent competences of governmental authorities in Brazil, and the highly litigated context a company will probably face, maintaining credibility will be essential for surviving the first stages of the crisis, and for eventually reaching a settlement agreement that properly addresses its consequences and pro- vides a proper stage for business continuity. With the modernisation of information channels around the globe, companies must also modern- ise their methods of interaction with their stake- holders and the public. During a crisis, being able to properly communicate with authorities and other key stakeholders is paramount. It will also be essential to maintain the company’s reputation with its investors, its consumers, the media and the general public. All these parties are different, and although each communica- tion must be tailored to its targeted audience, it should be consistent on all fronts. A company facing a crisis will be subject to considerable pressure to share information on what happened and what is being done to address the consequences – particularly when they affect third-party rights. This pressure has been ever-growing over the years, particularly with the proliferation of information channels and social media. However, sharing information that is still unverified (and a great deal of unveri- fied information is bound to arise, particularly within the first days of crisis response) can lead to unbearable impacts on the company’s reputa-
40
CHAMBERS.COM
Powered by FlippingBook