If you ask Leonardo Letelier why he does what he does – that being, leading the Brazilian impact investment organization he founded SITAWI Finanças do Bem (“finance for good”) – he’ll tell an inspiring story about blending his skills as a former McKinsey & Company management consultant with a desire to have work that would send him home each day feeling like a better person than when he awoke.
Of course, this is rooted in the fact that the work of SITAWI aims to make the world a better place each day, too, socially and ecologically both. In his home country and in the Amazon in particular, this is an uphill battle to say the least, which involves changing not only how money is disbursed but also the mindsets of those giving, spending or investing. The product of this philosophy is SITAWI’s crowdlending platform, which picks ventures that have been rigorously vetted for Brazilians to invest any amount of money from 2 Brazilian Reals (19 US cents) and up. The platform has undergone a recent makeover and in October will be relaunched, with an initial round of crowdfunded loans for organizations, businesses and cooperatives working in the Amazon biome.
For donors outside of Brazil, SITAWI’s other areas of expertise include coordinating complex socio-economic programs, managing philanthropic funds and consulting on impact investment in Brazil at all levels. Here, Letelier shares his wealth of knowledge on how the finance sector is engaging with the Amazon in particular – and what’s needed to finance its survival.
If you look at most decisions in life, they’re increasingly connected to money. They’re being objectified, then quantified, then monetized. That’s a trend that’s been going on for a long time. So the importance of the finance sector is greater and greater, and there’s only one language it understands, which is money.
Nothing about this is different for the Amazon – the Amazon is just more complicated in many aspects, so you have to be more creative, including with money. You have to find or create different layers of capital to do something that in another place could be done in a much more straightforward way.
Yes and no. If you have the right expectations and assessment of how easy or hard it will be to invest, you can get money invested into the Amazon. Our crowdlending platform has reached over USD 1 million invested now, which is nowhere near what’s needed to save the Amazon, but it shows there’s an appetite. People want to invest their money in alignment with their values.
But the Amazon needs time. Nature has seasons. Investors are not used to that. Everything in the Amazon takes longer, is harder, is more expensive. So you have to adapt to different parameters of investment: it’s probably going to take more time and yield less. If you look only from a financial perspective, this is typically less attractive than something you could find to invest in somewhere else. So, that’s why we have to be creative. We look for a layer of philanthropic capital to make a blended finance approach to make the transaction viable for investors who are looking for a return, even if it’s not a great return. Our crowdlending platform is an example of this blended finance approach.
I would like their approach to start from a place not of, ‘Oh, I have money to invest,’ but rather, ‘What do I want to achieve?’ If they really want to achieve a level of change, they’ll definitely need to not only invest but also possibly give. If you really want change, you need to take a combined approach of providing grants and subsidized capital.
You definitely need grants, tons of grants. These exist, mostly from international sources rather than Brazilian ones, which touches on another point here: the philanthropic culture in Brazil, which is very underdeveloped. Brazilians are used to giving in emergencies, for solidarity. We need more structured, recurring philanthropy. We also need more blended finance and more traditional finance.
But even if you have all the capital in the world, it would not be enough. We need rule of law, a functioning government, command and control initiatives that work. We need demarcation – what the Indigenous people are fighting for right now. We need a host of other things that are not only finance-related.
When people talk about needing help from the governments, the discussion usually goes to subsidies and tax breaks. These will definitely help, but I don’t think they are the bottleneck. I would give up any discussion on subsidies if we had a functioning, stable rule of law and effective command-and-control initiatives.
We have an expression that says, “It’s for the Englishman to see.” It’s when you say you’re going to do something, but you don’t. It’s similar to greenwashing. The problem is we have this with laws as well. We have laws that remain on paper while society doesn’t care about them – these are laws or policies for the Englishman to see. We have an “okay” legal framework, but in many instances, it is only on paper. For example, we do have fines for people who deforest. But if you reduce the budget of the enforcing authority, you can’t fine anyone. So the law is there, and it’s fairly okay, but the government is working around the system to undermine it. I think today this is a big problem for fostering sustainable development in general and more so for increasing impact investment in the Amazon.
We’re relative newcomers, so I can speak more about the recent stages than a longer arc of history. And in that, I think we’re seeing more professionalization of the impact investing sector, of the organizations on the ground that are getting discovered or being started for impact investment purposes – “impact businesses.” For the organizations and businesses on our platform, they’re all very different, and it’s easier to find them than ever before. I think people are finding out how attracting impact investing works.
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