Brazil hosts international forum on impact entrepreneurship

This year, the Global Social Business Summit, the main international event on social business, holds a Brazilian forum for the first time.

Organized by Yunus Negócios Sociais, founded by Muhammad Yunus, Nobel Peace Prize in 2006, the forum takes place this Tuesday (9), from 1:45 pm, with online programming and open to all interested parties (see this link)

Businesses with social and environmental impact are those whose mission is to transform society or the environment for the better while generating profit. In Brazil, there are 1,272, according to the 2021 edition of the Social and Environmental Impact Business Map, carried out by the Pipe.Social platform.

These are small and medium-sized companies that, according to Tulio Notini, 35, director of Corporate at Yunus Negócios Sociais, are starting to attract the attention of large corporations that need to meet ESG targets (acronym for environmental, social and governance).

“These partners have become strategic for the execution of goals and transformation of corporations”, says the specialist at Yunus, an entity that invests in social businesses and creates social innovation strategies.

Yunus accelerates small impact projects that are of interest to the production chain of large conglomerates with which it carries out projects, such as Itaú, Ambev and Neo Química. “It’s as if we were organizing an acceleration to choose new suppliers for the big ones”, he says.

When it comes to social entrepreneurship, are there topics that are more on the radar? In Brazil, we have a culture of entrepreneurship, of innovating, of surviving with creative solutions. When the challenges are too great, a space of opportunity opens up.

That said, health and education continue to have more cases of entrepreneurship. But the whole part of the green economy, circular economy, waste and carbon management, Amazonia, bioeconomy is also growing.

And there is great power in peripheral businesses, which are being undertaken by those who are close to the problem. The themes are diverse: housing, sanitation, health care and education. They are entrepreneurs who live the problem and create solutions for it.

Why develop social and environmental impact projects with large corporations? We had been working directly with the social entrepreneur for some time, but there came a time when we said: “It won’t help if there is no scale of change. How can I continue working with the small and creating more and more businesses if, on the other hand, I have the big companies practically reversing everything we’re doing?”. That’s when we decided to turn to the bigger corporations.

All large companies, even multinational ones, were born to solve a social or environmental problem. But, over time, they dissociated themselves from it, because the imperative of profit maximization entered.

Are large companies looking for small businesses to implement impactful policies that they don’t yet know how to do? Quite. Especially in the last two years, with everything that has been going on, social and environmental issues have gained a lot of importance. Now, the small ones will have more and more opportunities, because the impact has become a business agenda, there is commercial demand in the world.

These partners became strategic for the execution of goals and transformation of corporations. I have seen many new partnerships between big companies and high impact businesses. There are more investments, mergers, big companies buying this type of business.

There are business cases of four or five people who do diversity consultancy, for example, within companies. These demands are coming and there are great suppliers among small and medium that can help corporations to transform themselves.

In a little while corporations will compare: “Do I buy from a traditional business or an impact business, which is close to me, within a community, and that I can help grow through this partnership?” These criteria are also being used now.

I’m talking about companies, but this is also true for the government, which is a major buyer. Few of these businesses are able to sell to governments.

How does Yunus work with small impact businesses? In our Investment area, the focus is on medium impact companies, even for the sustainability of the investment fund itself. Although the company needs to pay the capital invested in it, our fund does not care about maximizing the financial return. The focus is on preserving the original value so that it can be reinvested in other high-impact businesses.

In the area that I coordinate, Corporate, there are companies with different profiles. We’ve even done a project that was to accelerate business in the periphery. Within the accelerations, there is freedom to bring projects that are still in the experimentation phase, starting sales or starting to feel the pains of growth. What we never work with is business in the ideation phase.

How can entrepreneurs access accelerations? Currently, we bring in a large corporation to create a joint acceleration process. And choose impact businesses that connect with her business so they can become her suppliers.

All programs of this type are open and highly publicized on our social networks. These are selective processes that we open to everyone and we make connections according to the themes sought by the companies.

It’s practically like creating an acceleration to look for new suppliers. We know that this is a place with more potential for both sides and it transforms more.

Because it is not enough for the corporation to exchange the end-of-the-year gift for a green gift. We want her to buy the coffee she sells, the wood she uses to make the brand’s furniture, from an impact enterprise.

Why are the difficulties for impactful small businesses so great? Is this a peculiarity of Brazil? No doubt. Not only business with impact, but all of them face difficulties in structuring themselves in Brazil because of the tax burden.

There is no law, special incentive or line of public investment for impact businesses, which grow at a different pace than a startup. The patience of the entrepreneur and of those who come to approach and invest has to be different, because the payback time is different.

If it is a business that has the potential for financial sustainability and is going to benefit society, why not create a financial instrument, more competitive, with lower interest rates, and geared towards it?

Should municipal, state and federal governments not enter, give a tax benefit? After all, these businesses do something that governments themselves should do. It’s almost a super smart investment. “If I invest here, these businesses will help me to ensure a better society” – this should be the primary role of public authorities.

Is the private initiative able to provide such support? I understand that there are no private structures doing this because it is difficult to stand up in terms of financial sustainability. Hence the suggestion that the government occupy this space with investment lines.

Although it works primarily with large companies, the BNDES has been moving more and more to that place. This year, BNDES Garagem, an entrepreneurship promotion program, is exclusive to high-impact businesses. It’s a new maturity.

Are there countries with legislation to encourage social entrepreneurship? NFrance yes, but Yunus does not have operations there. In the countries where it operates –Colombia, India and Uganda, among others–, there are no laws that typify businesses with impact, no law that guarantees, for example, the payment of less taxes.

Muhammad Yunus says that social impact businesses shouldn’t have any kind of tax benefit, but other types of support do. They should come in like any other company to show they can be as successful as others.

If you create a support ecosystem, which is access to competitive capital, government support, business support, access to customers, you ensure these businesses exist and evolve without tax benefits.

But, in a situation like ours, in Brazil, isn’t that very idealistic? Yes, super! Last year, there was a huge mobilization by Yunus and several partners in the Covid Alliance, with the World Economic Forum. We, who had been fighting for investment in impact businesses, realized that this agenda would go back many years if we didn’t receive support. Because if those businesses break down, it’s much harder for them to come back. And the Pipe Map shows that 6% broke.