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A territory-based approach to local development
Shared Value PlatformFebruary, 2019
LARGE SCALE INVESTMENTSCAN MAKES MATTERS WORSE, FASTER…
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CHILD
EXPLOITATION
INCREASED
POVERTY
LOSS OF TRADITIONAL
LIVELIHOODS
ENVIRONMENTAL
DEGRADATION
LOSS OF
BIODIVERSITY
INFLATION
LARGE SCALE INVESTMENTS
TURNING AN ISSUE INTO A SOLUTION… BUT THEY ALSO CAN ALSO CATALYZE SUSTAINABLE-LONG TERM-
INCLUSIVE DEVELOPMENT
3LARGE SCALE INVESTMENTS
DYNAMIC, DIVERSIFIED
ECONOMIES
EMPLOYMENT
HEALTH
EDUCATION
ACCES TO WATER
& SANITATION
VALORIZATION OF
LOCAL CULTURE
SVP IS THE MOST RECENT STEP OF A LONG JOURNEY.LEVERAGING 80+ YEARS OF EXPERIENCE INVESTING AND CATALYZING
LOCAL DEVELOPMENT
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2005
INDUSTRI FACILITY
EARLY THINKING ON SVP
2011
ROCKEFELLER
FOUNDATION
HOSTED AT BELLAGIO
NEXT STAGE SVP,
INCLUDING UN AND
INSURANCE INDUSTRY
[BRAZIL]
AMAZON
GUIDELINES
2015 2016
[GLOBAL]
SHARED VALUE
PLATFORM
2018
[PERU]
NEGOTIATION AND
IMPLEMENTATION
THE COST OF CONFLICTIMPROPER RISK MANAGEMENT CAN LEAD TO LARGE FINANCIAL LOSES
A study from the Harvard Kennedy School and the University of Queensland analyzing over 50 situations of prolonged conflict,
shows that in a mining project with capital expenditure between US$ 3 and 5 billion can have up to US$ 20 million in weekly loses
given conflicts with communities during operations.
THE COST OF CONFLICT IN THE EXTRACTIVE SECTOR
INITIAL EXPLORATION
$ 10,000Per day
ADVANCED EXPLORATION
$ 50,000Per day
DURING OPERATIONS
$ 20 MILLION
Per week
“Interviewees observed that effective management of community expectations requires “frontloading” the company’s investment in community relations.”
Source: “The Cost of Conflict on the Extractive Sector”, Harvard Kennedy School, The University of Queensland, Shift
“ […] it only gets more expensive to try to “buy support” later in the project lifecycle and [...] this almost never leads to sustainable relationships”
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LARGE SCALE INVESTMENTS IN REMOTE REGIONS:CHALLENGES TO PROPERLY MANAGE RISK
1. FOCUS ON ENVIRONMENTAL ISSUES - NOT SOCIAL
Focus on environmental issues has overshadowed social issues and/or mixed social and environmental issues.
2. NO GUIDELINES – BEST PRACTICES
No set of guidelines for best practices on how to mitigate risks for Companies, Banks and/or Communities
3. NO MECHANISMS TO LEARN THE LESSONS
Several projects have been implemented, but the lessons learned from each project seemed to be lost from one to the next
4. MONEY IS NOT THE MAIN ISSUE
Money is not the issue. There is plenty of money, the issue is the timing, the governance and the planning behind the use of resources.
5. MINIMUM AGENDAS
Lack of capacity at the subnational level results in “minimum agendas” where Companies meet mandated investments to get licensing.
6. NO PRE-PROJECT PLANNING OF TERRITORY
No comprehensive or legitimate planning of territories impacted. No pre project planning. No post project planning.
7. TOP DOWN APPROACH
Decisions are generally coming from the “top” whether at public level or the Company level, without sufficient local and grassroots support.
8. TIMING MISMATCH BETWEEN PROBLEMS AND FINANCIAL RESOURCES
Municipalities receive a windfall of taxes and royalties, but only once the project is operating. Social issues start before.
9. CONFUSION ON ROLE OF PUBLIC AND PRIVATE SECTORS
Communities in remote areas expect private companies to overtake the role of public sector, either because they are not present or because there is a lack of trust on the government
10. NO COORDINATION AT THE TERRITORY LEVEL
Institutions that invest on the territory tend to have competing instead of cooperative behaviors.
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INNOVATION: PROMOTION OF A SYSTEMIC APPROACHFOSTERING COORDINATED & SYNERGIC ACTION
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PRIVATE
SECTOR
PUBLIC
SECTOR
CIVIL
SOCIETY
SHARED
VISION
WATER
TRANSPORT
HEALTH
EDUCATION
TECHNICAL CAPACITY
GOV REVENUE MGMT
WOMEN
CHILDREN & ADOLESCENTS
INDIGENOUS POPULATIONS
ELDERLY
INTRODUCING THE SHARED VALUE PLATFORM (SVP)A TERRITORY-BASED INITIATIVE TO DE-RISK INVESTMENTS
Legitimate Local Governance
Efficient Financial Instruments
Territorial Development Plan
Productive Value Chains
Children, Woman & Indigenous Focus
Capacity Strengthening
The Shared Value Platform: A Territory-Based Approach
SHARED VALUE PLATFORM
Objective: To promote long term sustainable, inclusive and
climate friendly development in vulnerable regions in which
large scale investments are expected or already happening
UNLEASH
AN IMPACT
MULTIPLIER
INTRODUCE
SCALABLE,
GREEN SOCIAL
BUSINESSES
INCREASED
FOCUS
ON THE
VULNERABLE
INCORPORATE
BOTTOM UP
APPROACH
5
HOW TO WE EXPECT TO GENERATE SHARED VALUE?EXPECTED IMPLEMENTATION PROCESS
5
EX
PE
CT
ED
IMP
LE
ME
NT
AT
ION
PR
OC
ES
S
Productive Value Chains
Investable Business Plans
Local Governments Capacity Strengthening
Participative Governance
Continuous Dialogue and
Strengthening Process
Prioritization of Infra Investments by the Public Sector
Productive Infrastructure
Shared Vision of Development
CSR + Donors
Impact Investors
For Profit Impact Investing Mechanism
Non Profit Impact Philanthropy Mechanism
Public Resources for Investments
Local and Regional Governments and National Programs
INNOVATION: FINANCIAL STRUCTURE AND MECHANISMFINANCIAL INNOVATION FOR VALUE CHAIN DEVELOPMENT
Mechanism for Impact
Investments
Not-for-Profit Investment Mechanism
Impact Investors
Donors/ Philanthropists
Repays as “Structuring Fee” (1 a 5% of total funds raised)
BLENDED FINANCE STRUCTURE
1st LEVER2ND LEVER
~80%
~20%
Matching Funds
Philanthropists
Seed Capital
Companies
The objective of this structure is to coordinate efforts to promote more effective and long-lasting change for local populations. The companies have an important role in bringing the first
financial contributions to attract additional philanthropic capital, and their responsibility should not be diminished, but seen as a catalyst for joint-actions.
Productive Value Chains
Prioritization of Initiatives
Shared Vision of Development
Re-starts the cycle in another territory
3rd LEVER
SV
P F
INA
NC
ING
M
EC
HA
NIS
M
FINANCIAL STRUCTURE AND MECHANISMMAXIMIZING THE IMPACT OF PUBLIC INVESTMENTS
Local Governments Capacity
Strengthening
Shared Vision of Development
~80%
SV
P F
INA
NC
ING
M
EC
HA
NIS
M
Coordination ofInvestments in the
Territory
Municipal Resources
Regional Resources
Federal Resources and
Programs
COORDINATED INVESTMENTS IN THE TERRITORY
Public Services
Productive Infrastructure
Social Infrastructure
Matching Funds
Philanthropists
Seed Capital
Companies
SHARED VALUE PLATFORM IN PERUEXPECTED ESULTS & NEXT STEPS
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EXPECTED RESULTS
NEXT STEPS
1
5
2
6
3
7
4
8
UNLOCKS
INVESTMENTS
COMBINES QUICK
WINS WITH LONG
TERM VIEW
DEVELOPS A
STRUCTURE THAT IS
INDEPENDENT FROM
POLITICAL CYCLES
CREATES A
PARTNERSHIP MODEL
WITH GLOBAL,
EXPERIENCED
PARTNERS
IMPLEMENTS A
REPLICABLE AND
SCALABLE MODEL
MAXIMIZES THE
IMPACT OF PUBLIC &
PRIVATE RESOURCES
REINFORCES PERU’S
ROLE IN PROMOTING
SUSTAINABLE
EXTRACTIVE
INDUSTRIES
DELIVERS ON ITS
SOCIAL AGENDA
Marcelo de Andrade
Founder & Chairman, Pro Natura International
Hector Gomez Ang
Country Manager (Brazil), International Finance Corporation
CONTACT
For more information, please contact: