The global business community is undergoing a paradigm shift that is redefining the purpose of business from only maximising value for its shareholders to additionally benefiting its wider ecosystem.
This shift in awareness and understanding is also playing out across Latin America where there is a strong desire to build back better post-pandemic. Evidence of this is the transition of several businesses to become a Benefit Corporation (BIC), a company that goes beyond profit to incorporate specific practices to generate long-term social and environmental benefits.
BIC companies have respect for the rights of their workers, respect for the environment, transparency in their corporate governance practices, harmony in their relationships with the communities and innovation in their business model to generate social benefits.
In 2019, Colombia became the third country in the world to adopt a law regulating the model of the Benefit Corporation (BIC) in its legal system. In 2020, Ecuador and Peru followed suit. BICs have been approved by the Chamber of Deputies in Uruguay on its way to becoming law and Chile and Argentina are not far behind.
In Colombia, BIC companies must submit an annual report to the Superintendency of Companies to qualitatively and quantitatively measure their standards related to corporate governance, business model, labour, environment and community. These companies receive preferential access to some government services and credit lines as well as tax benefits for their employees.
A corporate social responsibility executive in Colombia commented, “Colombia is the only country in the region that has an approved public policy on BIC companies, although others are following. Leading companies in the country such as Bancolombia have already changed their corporate purpose to become a BIC and Arturo Calle is in the process of doing so too. There are others too, especially in sectors such as Agriculture, Financing, Technology and IT, and Construction.”
“Leading companies in the country such as Bancolombia have already changed their corporate purpose to become a BIC and Arturo Calle is in the process of doing so too.”
Corporate social responsibility executive, Colombia
Becoming a BIC company is a first step towards becoming a ‘B corp’ company (B certified corporation) that brings companies into an important international network. Certified B Corporations are businesses that meet the highest standards of independently verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.
An Executive Director at a Colombian investment promotion organisation believes that most BIC companies do have a strong commitment to ESG issues and are not just registered as a BIC for the incentives. He told us, “Many companies are advancing and structuring these programmes genuinely out of awareness of the social and environmental responsibility, and also through marketing strategies. There is a clear change in consumer perspective on these issues and they are increasingly demanding that companies respond.”
“Many companies are advancing and structuring these programmes genuinely out of awareness of the social and environmental responsibility, and also through marketing strategies.”
Executive Director, Investment promotion organisation, Colombia
It won’t all be plain sailing though, the Executive Director outlined some challenges he envisaged for BIC companies, “The challenges I see are: integrating social and environmental processes within their structures, making social responsibility profitable, complying with national and regional regulatory frameworks and most importantly, changing the entire culture of their organisation.”