Sustainable Business Models Can Unlock Over $1 Trillion In Latin American and the Caribbean
(3BL Media/Justmeans) The Latin American and Caribbean (LAC) region has made many social and economic improvements in 15 years. Those include reducing poverty, inequality and hunger. However, the region still faces big environmental and social challenges. Extreme weather events with a link to climate change such as hurricanes pose big threats to the region. The 2017 Atlantic hurricane season is the costliest one on record, with damages from just Hurricane Irma costing $30 billion. Average unemployment in the region increased above eight percent in 2016. Although women’s participation in the region’s workforce is 53 percent, nearly a third of all women have no income source of their own.
Sustainable business models can unlock opportunities worth over $1 trillion and generate up to 24 million jobs in Latin America and the Caribbean (LAC) by 2030, according to a recent report by the Business and Sustainable Development Commission. Companies that align their strategies with the 17 Sustainable Development Goals (SDGs) of the United Nations can take the region’s environmental and social threats and reframe them as potential development opportunities and growth potential.
The report, Better Business, Better World LAC, is “a call to action to companies—from Argentina to the Virgin Islands—to pursue sustainable business models by showing what is at stake: more than USD $1 trillion in new market value and a more inclusive, stable, prosperous region by 2030,” said Mark Malloch-Brown, chair of the Business and Sustainable Development Commission.
The LAC region has natural resources and large urban populations that can position it to develop a low-carbon economy that is more socially inclusive and aligned with the SDGs. If the region takes this route, 60 sustainable market hotspots will open as investment opportunities. The study found that new economic opportunities could be unlocked in four key systems: food and agriculture, cities, energy and minerals, and health and well being. Across the four systems, 20 of the biggest opportunities were also identified that account for almost 80 percent of the economic potential. The top five of those opportunities include forest ecosystem services, affordable housing, risk pooling in healthcare, circular models in automotive, and renewable expansion.
Investment will be needed to unlock the opportunities of sustainable business. UN estimates found that LAC region markets need to invest 6.2 percent of the GDP in infrastructure per year, or $320 billion through 2020. Public and philanthropic organizations taking on high risk and more policy sensitive parts of investment, known as blended financing, can fill in funding gaps and bring more private investors in at lower risk.
Some companies are already seeing the opportunities in sustainable business models. Mesoamerica, a private equity investor based in Bogota, Colombia, founded Globeleq Mesoamerica Energy (GME). It is the largest private renewable energy company in Central America, and generated over 1.5 TWh (terawatt hours) annually before selling its assets in 2017 to a local group. Mesoamerica partnered with Actis to build GME into what is is today. Both companies now invest in Zuma Energía, the second largest renewable energy company in Mexico.