Pioneers Effecting Systemic Change
Colombia, a very biodiverse country and home to a very hopeful peace process, is also the place where Ecoflora, a life-regenerating company, is advancing the search for blue, a critical color to complete the full natural color spectrum and a very elusive color for artists and for industry over the centuries. A few years ago a group of entrepreneurs working with local communities discovered that the fruit of JAGUA, (Genipa Americana) an edible fruit from the tropical forest of Chocó, is the source for the exclusive “Jagua Blue Vida Color”, a concentrated and stable input for food applications, a perfect substitute for Blue No. 2 – E132 (Indigotine). Jagua is a pioneer tree, and by planting jagua to harvest its fruit, Ecoflora is furthering resilience for local communities while promoting regeneration of the tropical rainforest ecosystem and its services. Jagua, like Yerba Mate, are pioneer species that are helping Guayaki, Ovis 21, Cultiva, Crepes&Waffles, and many other companies around Latin America, to rebuild degraded ecosystems, furthering community resilience and climate adaptation by using market-driven restoration business models.
This is the story of a new understanding of business success emerging in Latin America: for-profit companies that use the power of markets to solve social, environmental, and economic problems as the core purpose of their business. The last 15 years have seen an increasing number of entrepreneurs with a purpose, people who want to act for the solution of the social and environmental problems of their communities and the world. This new understanding of the economy and innovation in business is generating enthusiasm and optimism among entrepreneurs, large market players, civil society leaders, academics, politicians and investors. Public policies promoting entrepreneurship have been met with significant motivation from a generation of entrepreneurs who are not ready to wait for Governments or foundations to take action and who want to make markets work to produce public goods: reduced inequality, regenerated ecosystems, health and nutrition, and not just shareholder value.
Actors in this fascinating trend face, however, several challenges:
- Men and women who are developing business models for public purpose are normally isolated and atomized.
- Consumers and investors do not know which companies to trust, confused by the many claims in the markets.
- When deciding legal frameworks for action, entrepreneurs have to choose between a non-profit or a for-profit legal vehicle, being forced either to privilege profits over purpose, or to sacrifice profits for public value.
- Business schools, financial actors and incubators are generally supportive of scaling financial results but not so much of scaling the creation of public goods.
- A decade of continuous growth and enhanced social investment helped reduce poverty and increased opportunities in Latin America. The slowdown in economic growth since 2014, however, can reverse the gains of the past, especially for young people, women, people with disabilities and others who may be marginalized. Initial estimations put 30 million people, – many of them youth and women who work mostly in precarious employment, in low productivity and informal activities in the service sector-, in risk of sliding back into poverty or vulnerability. In order to build “resilience” – the ability to absorb external shocks such as financial crisis or natural disasters—without major social and economic setbacks, we need to further inclusive economic growth, i.e., growth that includes marginalized groups. Governments, international agencies and civil society have supported gender and age-responsive public policies to enable women and youth to engage in productive activities, generate income, and reduce poverty. Private sector has a key role to play; however, it has been slow in actively supporting inclusive growth.
- Turning individual initiatives into a new economy requires “thick networks”, ecosystems that support entrepreneurs and the transformation to inclusive growth and a new economy where well-being of people and nature are the purpose of economic policy and market integration. These networks need to offer narratives of common futures to inspire all actors to action, that promote cultures that value innovation and entrepreneurship with a purpose, and that allow for cross-pollination and critical connections to increase and support exponential growth and transformation.
Inspired by the role of pioneer species in nature, Sistema B was created in 2012 as a Latin American expression of the global citizen movement that encourages market entrepreneurship, societal leadership and community building, jointly pursuing an integrated economic, social and environmental DNA for business via B Corporations. Operating with a systemic vision, Sistema B acts in 12 countries to promote an ecosystem to further the trend of business with a purpose in the region, dealing with challenges by promoting collaboration of many actors. Citizens from all avenues of thinking and interests, consumers, investors, entrepreneurs, business owners and managers, academics, students, journalists, politicians and all range of professionals, are leading by example the redefinition of success of the economy.
In close alliance with B Lab in the US—the organization that created the B Corps for the world in 2007—since 2012 Sistema B promotes both Certified B Corps as a new market identity and business sector, and Benefit Corporations, as a novel legal status that introduces corporate options into the law.
B Corps have the potential to contribute solutions to inclusion, both directly by developing business models with such purpose, but also because these entrepreneurs are developing the innovations that disrupt markets and signal the profound change in societies that show the way for traditional companies and public policy.
In the last 4 years, Sistema B has:
- Promoted actions for massive public awareness, like the Festival Internacional de Innovación Social, in collaboration with 50+ different organizations; 60 international speakers, 25 rock bands like Café Tacuba and Julieta Venegas and 40,000 people attending free on parks and streets.
- Supported the collective creation of public policy solutions, such as “101 Soluciones”, and legal communities to create new legislation to allow for a new legal type of business in 5 countries.
- Incorporated social and environmental management in value chains of large companies, such as Bancolombia, the first large financial company in the world to use the B Impact Assessment.
- Invited municipalities to work with private sector to support a new economy via large scale programs such as Rio+B, Medellín+B, Santiago+B.
- Developed a bridge between the B movement and academia by creating Academia B, which promotes research, supports student-led networks, and offers public policy suggestions. Research is advancing on topics such as the relation between the B movement and climate change, its impact on diversity and inclusion, and the compared performance of B Corps in Australia, Canada and Latin America.
Supported trade missions with a purpose and new economic sectors, such as life regenerating companies;
Since 2012, almost 300 Latin American companies have obtained the B Certification. With overall annual sales of US$7 Billion, they represent more than 100 industries. The first publicly listed firm to obtain the B certification is the Brazilian Natura Cosmetics. To date more than 2000 companies have taken the B Impact Assessment in the region. Thousands of media cover stories have been published in papers, TV radio and social networks.
Further to the direct impact of Empresas B (B Corps) this collective is disrupting the market and becoming a reference for major economic players. Together with the communities in the 12 national and the several local Sistemas B we are advancing a new way to understand consumption and production.
B Corps are a new type of business with four characteristics:
- They commit to create positive social/environmental impact, including their commitment and purpose in by-laws, so it becomes legally binding for shareholders and management;
- They submit to the B Impact Assessment, an evaluation of the overall sustainability of the company. If the business reaches above 80 over 200 points, it is invited to become a B Corp;
- They commit to transparency;
- They join a global community of B Corps.
In Latin America B entrepreneurs are acting to collaborate in solving social and environmental problems, such as:
- Offering decent jobs and quality employment for single mothers, first jobs for young people, jobs for different abled workers, and jobs for people coming out of conflict situations, such as ex guerrilla or paramilitary in Colombia;
- Promoting positive leaders to create a sense of community;
- Promoting trust, cooperation and peace in Colombia and other countries;
- Healthy nutrition and conscious personal care;
- Solutions to reduce impacts of industrial and urban pollution (waste, water, air);
- Supporting the economic viability of small rural and urban producers;
- Regeneration of degraded ecosystems, working to improve the resilience of communities that depend on these ecosystems;
- Support for fair and equal access to basic services: energy, education , water, health;
- Improving social and environmental performance of companies and organizations;
- Communicating positive impact;
- Inclusive financial services.
Large and small B Corps operate in the region with inclusion as their core business, such as:
- Mujeres del Pacífico, promoting women entrepreneurs in 5 countries;
- Terrium, offering first jobs close to their homes to single mothers;
- Gulliver, developing entrepreneurial ecosystems in rural areas to support women and young entrepreneurs;
- Crepes&Waffles -one of the largest restaurant chains in Colombia- offering decent employment for thousands of single mothers;
- Maravill and Natura Cosmetics, offering business opportunities for low income women to work from their home;
- Balloon and Emprediem, supporting young entrepreneurs in rural areas;
- SiembraViva, supporting the return of young entrepreneurs from urban to rural activities.
Women and youth face significant challenges to insert themselves in the economy, but when there is favorable ecosystem and support, many young people and women find innovative ways to create a future and contribute to their communities. Instead of considering them as “vulnerable and poor”, which diminishes their perception of themselves and undervalues their capacities, we see them to as their own force for solutions, potential actors of development in their communities.
B Corps contribute to inclusion in their value chain, but also as the purpose of their business activities:
- Maravill, a small company in Chile, and Natura Cosméticos, a large Brazilian company, operate with direct sales distribution business models. Their products are sold by a large number of women: Natura works with almost 2 million women in 6 countries, and Maravill with 1,200 women in Chile. Maravill and Natura offer economic opportunities and autonomy for women with barriers for employment (for example, those who are taking care of small children or sick relatives, who in Chile are around 10% of working age women).
- Paloma y Angostura is a company created in Colombia to offer decent jobs for women who leave guerrillas or paramilitary forces. They sell organic tshirts and other design products in order to support reintegration.
- Fruandes was created to offer decent jobs for women who are displaced by violence, and sells organic dehydrated fruit, offering also a commercial channel for small producers.
- Crepes&Waffles, a large restaurant chain in Colombia with some 7000 employees, has defined as their purpose to support women. They hire mostly single mothers, offering not only decent jobs and health insurance, but also supporting women to acquire their homes and educate their children.
- Crepes&Waffles and Natura Cosméticos are sourcing products from other B Corps, creating new sales channels for smaller companies and increasing the positive impact of their value chains.
The transformative role of the ecosystem: new entrants in the market such as B Corps have individual impacts, but they are not large enough to produce changes relevant to the scale needed to impact on an inclusive economy. However, as a collective supported by organizations such as Sistema B, they have a role as market disruptors, furthering innovation and influencing change in traditional private sector actors.
- Cerco, a construction company in Chile, is working to reduce recidivism by hiring 20% of their work force from people who are in jail, mostly young immigrants. 75% of those who participate in this program are still employed and out of jail. Given the success, the founder of the company invited Cámara Chilena de la Construcción (the building trade association) to promote the program, and in few months the demand for workers in jail was larger then people with jail benefits. Impact was furthered by suppoting changes in legislation to increase the number of people in jail with working permits.
- Gulliver, a Chilean company, is successfully supporting the development of ecosystems to promote entrepreneurship in areas distant from large urban centers. Their work in Antofagasta has promoted many women and young entrepreneurs, as well as the development of new public policy directed to advance entrepreneurial ecosystems in various areas of the country.
Working together towards social and economic inclusion for women and youth: poverty, inequality, including gender inequality, and lack of gainful employment are complex challenges (“wicked problems”), and no single actor is able to produce all changes required. Further to individual impact of B Corps, and to their collective impact as market entrants, actors like Sistema B promote participation in atypical partnerships with varied actors from civil society, Governments, and even traditional companies, in order to promote social impact:
- Bancolombia, the largest commercial bank in Colombia, is not a Certified B Corps, but together with Sistema B, created a program called “Mide lo Importante” (Measure what Matters) to invite suppliers to use the B Impact Assessment as a requisite to enter their supply chain. The bank is evaluating resulting data (via B Analytics) to design products and programs to support improvement in social/environmental impact, and will soon invite their SMEs customers to use the B Impact Assessment. Bancolombia has some 5,000 suppliers and around 1 million SMEs customers, so the impact of this program can significantly help scale the B movement. This program is now promoted by Sistema B in Argentina, Chile, Brazil, Uruguay and Mexico with diverse partners
- Legal frameworks to support entrepreneurship with a purpose are not yet in place in Latin America. Shareholders who decide to extend fiduciary duty to include stakeholders and nature, particularly in large companies and those that are publicly traded, would benefit from legal certainty, especially in relation to the responsibility of boards and managers. Sistema B is supporting legislation to create new legal types in Brazil, Colombia, Chile and Argentina, together with a group of “B Lawyers”, corporate lawyers who joined Sistema B and are promoting research and new practices. The group met in Argentina in 2015 and will hold their international seminar in Lima in 2017.
- Sistema B promoted “101 soluciones” (101soluciones.org), an initiative to invite citizens in Chile and Argentina to offer public policy suggestions to advance entrepreneurship with a purpose. Working with some 30 diverse organizations, (civil society, business, government, individuals), the initiative has received hundreds of suggestions, and results have been presented to governments and are currently included in economic policy in both countries.
- Sistema B supported fiiS, the International Social innovation Festival (fiis.org), an open space to invite citizens to join in the movement for a better world. fiiS began in Santiago Chile in 2013, and in 2015 received some 40,000 people. In 2016 fiiS will happen in 7 cities in Latin America, and is supported by some 50 diverse organizations.
Learnings and questions
Sistema B exists because many people are looking for a new kind of economy, and Sistema B has illuminated and offered a concrete alternative. Sistema B is an on going project, where we are learning from practice. We are both an organization and a movement, able to act in 12 countries as part of a global movement and achieve impressive results, but we have had to discover new ways to deliver, both on the principles of the movement, and on the results of the organization.
Sistema B can be a source of inspiration for many, who want to accelerate an inclusive economy, create social capital and further community integration as basis for economic growth.
- Ecofloracares.com, Guayaki.com, Cultiva.cl, en.Ovis21.com.
- According to UNDP Human Development Report 2016, between 2003 and 2013 some 72 million people were taken out of poverty in Latin America. Between 2015 and 2016, however, there was an increase in the number of poor people, and some 25 to 30 million people, many of them youth and women, are at risk of returning to poverty in the region, given that women and youth work mostly in precarious employment, in low productivity and informal activities in the service sector.
- Human Development Report 2015. Work for Human Development. http://www.undp.org/content/undp/en/home/librarypage/hdr/2015-human-development-report/
- Women and youth in productive activities. UNIDO. http://www.unido.org/what-we-do/creating-shared-prosperity/women-and-youth-in-productive-activities.html.
- Jeffrey Broadbent, Social Movements and Networks, Published online November 2003. DOI: http://dx.doi.org/10.1093/0199251789.003.0009
- 6 Estrategias para Acelerar Ecosistemas de Innovación Abierta. Leonardo Maldonado. Chile, 2016.
- Human Development Report 2015. Work for Human Development. http://www.undp.org/content/undp/en/home/librarypage/hdr/2015-human-development-report/
- Estructura de Restricciones a la Participación Laboral y a la Autonomía Económica de las Mujeres: Estudio orientado a Mejorar las Políticas de Equidad de Género. Departamento de Estudios y Capacitación Servicio Nacional de la Mujer, SERNAM Diciembre 2014, Santiago de Chile