The social or environmental impact of companies on Latin American GDP

Companies with social or environmental impact represent more than 6% of Latin American GDP, according to experts from IE University and Segib.

There are more than 170,000 companies with this objective, according to the report ‘Companies with a Purpose: The Rise of the Fourth Sector in Latin America’.

Companies designed to have a positive social or environmental impact already represent more than 6% of Latin American GDP and promise to play a decisive role in achieving the 17 Sustainable Development Objectives of Agenda 2030. This is one of the main conclusions of the study carried out by IE University’s Center for the Governance of Change (CGC) in collaboration with the Ibero-American General Secretariat (SEGIB), which analyses the current state of the “economy with purpose” in Argentina, Brazil, Colombia, Chile, Mexico, Portugal and Spain.

Photo: IE University
Photo: IE University

The study shows that in Latin America there are more than 170,000 companies of this type, employing 10 million workers in different sectors, from agrifood to technology, which combine their business activity with measures to combat climate change, alleviate poverty and reduce inequality. These companies operate different formulas, such as cooperatives, mutuals, b-companies, triple-balance companies, etc., and diverse movements, including the circular economy, social entrepreneurship or responsible banking, among others.

Given their particular commitment to the environment and social justice, these purposeful companies could play a decisive role in achieving the 17 development goals of Agenda 2030. However, most of them fail to reach the scale needed to have the impact the world needs. According to Diego Rubio, coordinator of the study, this is because there is no ecosystem conducive to them. “Once incubated, purposeful companies are forced to compete in an economic and regulatory framework that has not been created for them, but for traditional for-profit companies, which tend to prioritize profits over impact. In other words, the problem is not in the seed, but in the soil”.

To solve this lack, the study proposes the creation of a new regulatory space that adapts to the unique characteristics of these companies and helps them to grow without having to renounce their values and their desire for social impact. This space is called “the fourth sector” because it is at the intersection of the three traditional sectors (private, public and non-profit).

According to Rebeca Grynspan, Ibero-American Secretary General and co-chair of the Fourth Sector Development Initiative of the World Economic Forum, “Citizens are telling us that sustainable development, inequality and climate change are not just government issues, but demand a more active role for business.

In this sense, Diego del Alcázar Benjumea, Vice President of IE University, highlights the academic institution’s commitment to the development of projects with social impact. “At IE University we form leaders who face the challenges of managing institutions and companies in a global environment transformed by technology. And we work every day with the objective of having a social impact. To achieve this, we have designed an educational model based on innovation and technology that eliminates physical barriers to access to education, we have scholarships so that the best talent can access our training programs and we promote entrepreneurship as a means of creating employment, wealth and social welfare,” says Del Alcázar Benjumea.

DOWNLOADS

Download the full report (English) ( pdf 1684KB)

Download the full report (Spanish) ( pdf 1750KB)

Country Paper: Argentina (Spanish) ( pdf 731KB)

Country Paper: Brazil (Portuguese) ( pdf 865KB)

Country Paper: Chile (Spanish) ( pdf 997KB)

Country Paper: Colombia (Spanish) ( pdf 1180KB)

Country Paper: Mexico (Spanish) ( pdf 898KB)

Country Paper: Portugal (English) ( pdf 410KB)

Country Paper: Spain (Spanish) ( pdf 928KB)