BNDES - Brazilian Development Bank

Social clause

Since February 2008, BNDES financing contracts have included the so-called Social Clause, which clarifies the fight against discrimination of race or gender, child labor and slave labor in Brazil. To respect social clauses was already a prerequisite for contracting financing in the Bank. However, from then on, the veto to practices of discrimination has been explicitly integrated into BNDES’s contracts. Actions proven to be unlawful may result in the suspension or early maturity of the contract.

The initiative resulted from demands of the civil society and from the dialogue with social movements, which advocated a sharper posture from BNDES regarding repudiation of slave labor, child labor and any form of discrimination, including race and gender. With the Social Clause, BNDES can act with greater speed and accuracy to curb any criminal practices in projects funded by it. In other words, when noting non-compliance with the legislation that deals with fighting against discrimination of race or gender, child labor and slave labor, BNDES can transparently and more rapidly suspend or require early maturity of the financing agreement, requiring immediate payment of the disbursements made.

This shows that the achievement of social rights is crucial in the process of granting financing from BNDES, with the same relevance of the financial and economic demands made to the institution’s clients. Thus, BNDES perfects its legal instruments of action to more effectively meet the Government’s social policies priorities.

In addition to the strictly legal aspects, by clarifying illicit actions in its contracts, the Bank also reinforces the instruments of control of government agencies and organized civil society, which now have a mechanism to oversee and investigate accusations. In this way, BNDES expects to expand the integrated action of all by monitoring possible non-compliances of social rights.